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A £100m cut in research funding has been proposed as part of a plan to find £570m in emergency savings for the Department for Business, Innovation and Skills. Photograph: DCPhoto / Alamy
A £100m cut in research funding has been proposed as part of a plan to find £570m in emergency savings for the Department for Business, Innovation and Skills. Photograph: DCPhoto / Alamy

BIS blew its budget, and now the entire higher education sector will have to pay

This article is more than 10 years old
The department has to save £570m in the next financial year, and the axe will fall on research funding and student grants

No one is going to be happy with the news coming out of the Department for Business, Innovation and Skills (BIS). Not students, not private higher education providers, not researchers, not the thinktanks, and certainly not the Russell group of 24 elite UK universities, which have previously been inured from the more deleterious effects of the higher education reforms introduced by the coalition government.

The news that the department has spectacularly mismanaged its budget affects everyone in the sector. BIS must locate emergency savings of £570m in 2014-15 – the next financial year – and £860m the year after (from an operational budget of £13bn). Research, funding for undergraduate study and student support budgets are expected to take most of the hit in the second year to make up for the fact that ministers allowed undergraduate recruitment at private providers and established universities to run out of control – meaning government expenditure on student loans has been far higher than expected.

On Monday, we learned that the department had written to more than 20 private providers begging them to halt current recruitment to lower level higher education qualifications. Universities and colleges are also implicated after numbers controls were relaxed for the most recent undergraduate application cycle. With enrolments buoyant the knock-on funding impact will now be felt in the current recruitment cycle and beyond. The Higher Education Funding Council for England – responsible for funding established universities – should now anticipate a further £50m cut in 2014-15.

The planned abolition of the National Studentship Programme is to be brought forward a year in order to save £75m – pending the approval of the deputy prime minister, as this programme was one of the policies that carried him and most of his MPs into the 2010 vote for higher tuition fees alongside the Conservatives).

With it gone, he really does have nothing to show for breaking his electoral pledge and he should really be apologising again. Not least to most of this country's students – in 2015-16, in order to save £350m, maintenance grants will be cut by £1,000 per year. There will be higher loans to compensate, but students would then graduate with at least an additional £3,000 of debt.

But those manoeuvres aren't enough, so David Willetts, minister for universities and science, is proposing a £100m cut to the annual research budget starting this coming April. That £4.6bn budget had been protected in cash terms for the last few years though its real value will have been eroded by around 10%.

In this summer's spending round for 2015-16, cuts were made to teaching and widening participation budgets in order to continue to ringfence research and science. That cannot be maintained anymore and a leaked ministerial briefing dated 13 November outlines the possible consequences of either closing a large UK-based facility – such as the Science & Technology Funding Council's central laser facility – or cutting "quality-related" funding leading to the loss of 700 PhD students and 1,900 full-time equivalent academic salaries.

Universities and academics have just invested years of effort to prepare for the Research Excellence Framework: it determines how the pot for "quality-related" funding is distributed. Many of them will now worry that what is to go in the pot is so small that the returns do not repay the time and money spent on submissions.

Doctoral applicants may see hard-won places withdrawn and careers abandoned; the next academic posts lost represent the generation of senior researchers and professors.

The briefing memo recommends announcing a figure for cuts to be achieved and leaving it to the research and funding councils to decide where the axe falls (within months!). With an increasing concentration of research in the Russell Group, they would likely take the majority of that hit. Some expansive business plans may now also be threatened.

Like many others, I thought the government was taking a gamble with the shape of the sector, with market mechanisms likely to create more and more inequality. I had not expected ministers to fail at the basics – handling their budgets.

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