Universities 'at risk' from £2.9bn cuts

Spending review in full

The move led to warnings that institutions across the country could be forced to close.

The Treasury said the overall teaching budget for higher education, which excluded research funding, would be cut to 4.2 billion from 7.1 billion over the next four years.

This was a 2.9 billion cut, or 40%.

Teaching for science, technology, engineering and maths-based subjects would continue to be funded.

A new 150 million National Scholarship Fund for poorer students would be established, Chancellor George Osborne confirmed.

Sally Hunt, general secretary of the University and College Union (UCU), said: "It is hard to see the rationale behind slashing college and university budgets when they generate massive economic growth for the country and when the alternative is more people on the dole and the state losing out on millions in tax revenues."

She added: "It's no good the Chancellor describing universities as the jewel in our economic crown and then following those warm words up with massive cuts. Every MP with a college or university in or near their constituency should be clear that the cuts will put those institutions at risk."

The cuts come as ministers are considering their response to Lord Browne's review of higher education funding.

Mr Osborne told MPs: "Our universities are jewels in our economic crown, and it is clear that if we want to keep our place near the top of the world league tables then we need to reform our system of funding and reject."

He added: "Clearly, better-off graduates will have to pay more - and this will enable us to reduce considerably the contribution that general taxpayers have to make to the education of those who will probably end up earning much more than them."

Under today's spending plans, the further education teaching budget will be cut by 1.1 billion, or 25% over the next four years.

Mr Osborne said: "Adult learners and employers will have to contribute more to further education."

The Browne review, published last week, called for the cap on tuition fees to be lifted, with the government underwriting fee loans to students up to 6,000 per year.

Universities who want to charge over this for a course would be hit by a tapered levy.

Business Secretary Vince Cable, who has responsibility for universities, said ministers were considering a new fee level of 7,000 per year - more than double the current 3,290.

Lord Browne's proposals to lift the cap, raising the prospect that institutions could charge as much as 12,000 a year for some courses, is being "considered carefully", Mr Cable added.