Universities face cuts of £4bn, leaked memo says

Universities in England have been warned to expect cuts of more than £4bn in the Comprehensive Spending Review, a leaked document reveals.

Funding for teaching will be cut by £3.2bn, and a further £1bn will be cut from research funding, according to a secret memo sent to vice-chancellors by the head of Universities UK, Steve Smith. The scale of the cuts reveals the extent to which university funding will be shifted on to the shoulders of students. Some courses will be threatened and there is an expectation that several struggling universities will merge or be closed.

In the note, Professor Smith warns his counterparts that the cuts set out this week in the Browne review "confirm our worst fears". He added that the figures for possible cuts were becoming "worse and worse".

Lord Browne's assessment of university funding concluded that the Higher Education Funding Council for England (HEFCE), responsible for distributing public money, will only have £700m to hand out for teaching, down from the current sum of £3.9bn. It represents a 79 per cent reduction.

Universities UK has already pleaded with the Treasury to reduce the savings it hopes to gain. It has argued that George Osborne's aim of cutting Whitehall department budgets by between 25 and 40 per cent over five years could leave universities out of pocket by as much as £6.6bn. "There remains a terrible danger of the valley of death becoming a reality for all institutions, and avoiding that is our core concern," Professor Smith said in the email, leaked yesterday. "Browne's figures confirm our worst fears."

Whitehall sources said they could not confirm the figure, but it is understood to be realistic. The stark warning immediately provoked concern from unions and student groups.

"It is hard to believe that any government could contemplate making £4.2bn cuts to higher education given that it generates massive economic growth," said Sally Hunt, general secretary of the University and College Union. "Cuts of this magnitude will leave many cities and towns without a local university and our students paying the highest public fees in the world."

Aaron Porter, president of the National Union of Students, said the "devastating scale" of cuts to the public funding of degree courses had been exposed. "The true agenda of the Coalition Government this week is to strip away all public support for arts, humanities and social science provision in universities and to pass on the costs directly to students' bank accounts," he said.

A spokeswoman for the Department of Business, Innovation and Skills said the figures were speculation. "Lord Browne made recommendations to Government this week on a new funding system," she said. "His proposals are for graduates to make a greater contribution to the cost of their education, linked to their ability to pay. These recommendations are currently under consideration and are informing our Comprehensive Spending Review negotiations with the Treasury."