Universities this week condemned cuts of Pounds 500 per student in real terms over three years as "short-sighted" and "an act of vandalism" as they considered the implications of the budget.
Staff cuts, out-of-date equipment and books, poorly maintained buildings and higher halls fees for students, were predicted as the results of real-terms funding reductions of more than Pounds 550 million by 1998/99.
But institutions are still opposed to introducing an entrance fee to help them survive the financial pressure without compromising quality.
A telephone poll conducted by The THES found that the Government's plans to make higher education institutions borrow from the private sector to cope with a 52 per cent drop in capital funding would hit the richest universities as well as the poorest.
Both Oxford and Cambridge universities said the budget proposals were a recipe for future problems, and voiced concern over the likely impact on science and information technology equipment, as well as buildings for teaching and research.
A spokeswoman for Cambridge University summed up the feelings of most institutions about the Government's promotion of the Private Finance Initiative. "PFI requires a guaranteed income stream to service interest on borrowing, which academic buildings do not provide. Most of the PFI projects we know of are for residential or conference buildings, from which it is easy to raise funds. But teaching and research buildings do not bring a profit element," she said.
John Bull, vice chancellor of Plymouth University, described the cuts as "an act of vandalism bereft of any coherent strategic direction".
Jim Bradshaw, deputy vice chancellor of Oxford Brookes University, said students would be the ultimate losers as a result of the cuts, with reductions in equipment and possible increases in hall fees where new accommodation was paid for through PFI.
Bob Boucher of UMIST said that the budget sends the "disappointing and negative" message to institutions that their cooperation with government in the past has no reward and "only leads to further exploitation". He would not yet consider entrance fees "although the Government would no doubt like us to be their tax collector".
Sir Ronald Oxburgh of Imperial College said that the new levels of funding for equipment were "derisory" and would be particularly damaging to institutions with a heavy commitment to engineering and experimental science.
Patrick Dowling of Surrey said the budget was "very disappointing" and would mean increasing difficulty in maintaining quality and provision of equipment.
David Wallace of Loughborough said that students are already being taught for two-thirds of the cost in real terms of five years ago. Top-up fees might have to be considered to maintain quality.