Universities may have to cut 2 per cent from this year's teaching budget after the government ordered them to make ?82 million of savings in its crackdown on "wasteful" spending.

The coalition government revealed it will cut the 2010-11 higher education budget by ?200 million as part of ?6.2 billion of savings to be delivered across all government departments, a move announced on 24 May.

The higher education cut includes a ?118 million reduction in the University Modernisation Fund, which was unveiled in March by the Labour government.

The fund was intended to support 20,000 extra student places this autumn - mainly in science, technology, engineering and mathematics subjects - but will now provide 10,000 places.

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Universities, which have already set in motion a wave of redundancies, must also find another ?82 million in efficiency savings.

With cuts already announced to the ³ÉÈËVRÊÓƵ Funding Council for England's 2010-11 allocation in areas such as capital spending, those savings are likely to be found in the teaching budget.

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The teaching grant makes up ?4.7 billion of this year's ?7.4 billion allocation from Hefce.

Steve Smith, president of Universities UK, said: "This ?82 million reduction represents a further 2 per cut in the teaching grant and, against a background of rising demand for places and rising student expectations, it will represent a tough settlement for universities."

In the original ?0 million University Modernisation Fund, there were 10,000 extra full-time places available in the 20,000 total.

But some of the 11,000 bids received for the full-time places were viewed by the coalition government as disappointing. It decided that some universities had not offered strong supporting statements about where they would find the efficiency savings needed to fund the places beyond the first year.

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It is thought that the research-intensive universities did not bid for a high number of extra places. These institutions were publicly less critical of the cut in this area than the post-1992 universities.

Les Ebdon, chair of the Million+ group representing post-92 universities, said: "There are now more than half a million more university applications than there were before the student-numbers cap was put (in place) two years ago. Given that the new economy we are moving towards needs more people with high-level skills, it is terribly disappointing that we have lost these additional student numbers."

George Osborne, the chancellor, said that the ?6 billion total savings would target "wasteful spending".

The UK Centre for Medical Research and Innovation (UKCMRI), due to be built in London, was scheduled to receive ?250 million of state funding this year. That will now be spread over six years, with ?17 million paid this year.

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The Department for Business, Innovation and Skills said this would "have no effect on the scope of the project or the government's commitment to (it)". The ?233 million reduction in funding for the UKCMRI this year is listed among BIS' ?836 million of savings for 2010.

While cuts to the higher education budget announced since last year now total ?1.1 billion, many fear that the biggest test will come with the emergency Budget on 22 June.

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john.morgan@tsleducation.com.