Employers will have to pay higher taxes next year, Rachel Reeves has announced, heaping further costs on cash-strapped UK universities.

Outlining her first budget in the House of Commons, the chancellor confirmed a 1.2 percentage point rise in employer national insurance contributions, taking the total paid to 15 per cent.

The threshold at which employers start paying national insurance will also be lowered from ?9,100 to ?5,000.

Universities?have raised fears?that such a move would add millions to their annual pay bills and may result in further cuts and redundancies.

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Modelling by mission group Universities UK estimated that a 1 per cent rise would cost the sector ?130 million and Ms Reeves has gone further still.

Pleas for exemptions for universities ¨C already battling a funding crisis caused by the long tuition fee freeze and stalling enrolments ¨C appeared to have fallen on deaf ears, with protections only extending to small businesses.

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Ms Reeves¡¯ budget included ?40 billion in tax rises as part of efforts to plug what she said was a ?22 billion ¡°black hole¡± in the public finances left by the last government.

Further education will receive ?300 million in more funding but there was no mention of higher education or universities in Ms Reeves¡¯ hour-long speech.

On research and development, Ms Reeves said: ¡°To drive innovation we are protecting record funding for research and development to harness the full potential of the UK science base.¡±

She later added: ¡°We will protect government investment in research and development with more than ?20 billion worth of funding. This includes at least ?6.1 billion to protect core research funding for areas like engineering, biotechnology and medical science through Research England, other research councils and the national academies.¡±

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tom.williams@timeshighereducation.com