In a letter to institutions from Madeleine Atkins, ³ÉÈËVRÊÓƵ Funding Council for England chief executive, it has been revealed that most teaching budgets will drop by 5.85 per cent in 2014-15.

This is a higher cut than previously expected when the higher education budget was unveiled in the government¡¯s annual grant letter, which was released last month.

That is because the remaining teaching grant, which totals about ?1.9 billion, must stretch to cover an extra 30,000 full-time undergraduates due to enter higher education in the autumn, as reported in ³ÉÈËVRÊÓƵ last week.

It must also cover the Access for Learning Fund, whose earmarked ?37 million budget in 2013-14 was removed, and support a ?25 million National Collaborative Outreach Network ¨C a lower-cost version of Aimhigher, the school outreach programme scrapped in 2010.

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This outreach work will also include a ?3 million national data tracking service, the ³ÉÈËVRÊÓƵ Access Tracker (HEAT), which will track participants taking part in widening participation outreach activities, their entry into university and their progress through higher education.

With these extra spending commitments, the ¡°underlying reduction to the 2014-15 teaching grant baseline is considerably more than the net reduction of ?45 million¡±, Professor Atkins says.

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The letter indicates that the 5.85 per cent reduction to student opportunity funding ¨C funds known previously as the ¡°widening participation premium¡± ¨C will be taken entirely from work done to widen access, rather than the fund devoted to improving retention or supporting disabled students.

The 5.85 per cent cut will also apply to funds received by universities for students in high-cost subjects, where the cost of providing the course are not met by ?9,000 tuition fees.

However, the cut to the allocation for high-cost courses at small and specialist institutions will be limited to 3 per cent, the letter said.

Hefce has also released an additional ?15 million ¡°as a temporary measure for 2014-15¡± to provide funding for students in high-cost subjects.

This should allow Hefce increase the unit of funding and support institutions to deliver high quality provision in science, technology, engineering and maths subjects until new cash, announced by the Treasury, becomes available in 2015-16, it says.

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Meanwhile, the science and research ring-fence is protected, with budgets for the 2014-15 academic year at the same level as 2013-14: ?1,558 million for research and ?160 million for knowledge exchange, the letter says.

Despite the cuts, overall funding for universities is still set to increase, Hefce predicts.

Funding from tuition fees will increase by ?1.4 billion to ?7 billion in 2014-15, while overall funding will go from ?10.6 billion this year to ?11.1 billion, though Hefce¡¯s figures suggest the unit-of-resource will be reduced.

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Institutions will be informed about their individual teaching grant allocations on 24 March, with sector-wide information becoming publicly-available on March.

Meanwhile, Universities UK has released figures which estimate the impact of inflation on the tuition fee cap, which was frozen again yesterday for the 2015-16 academic year.

With inflation running close to 3 per cent since higher tuition fees were introduced in September 2012, the real value of the ?9,000 tuition fee will be ?8,200, based on 2012 prices, by the time of the next election in May 2015.

If the upper fee cap of ?9,000 was to remain in place until 2017, tuition fees would be worth ?7,700 at that point, UUK estimates.

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Other statistics produced by UUK also shows institutional costs tend to increase faster than elsewhere in the economy, increasing by 1.3 per cent on average above the retail price index between 2000 and 2010.

jack.grove@tsleducation.com