Lord Mandelson, Secretary of State for Business, Innovation and Skills has announced a £398 million budget cut for UK universities for the 20102011 financial year. The prominent Lord has also asked universities to protect the quality of, and access to, higher education.

Lord Mandelson has further stated that last year’s U-turn on extra places was “responding to the particular needs of the time” and will not be repeated in 2010-11. Universities are given quotas for the maximum number of home students that they are allowed to admit each year to each department, and Lord Mandelson says some have recruited more than their share. £3,700 per student will be reclaimed in each such case, which the million+ group of universities estimates will cost £60m overall.

David Willetts, who shadows Lord Mandelson commented that “we now have the bizarre situation that universities are being fined for meeting targets set by this government…unlike the government we don’t believe in artificial targets. Our view is that higher education should be available to all those who are qualified by ability and attainment to pursue them and who wish to do so.” One reason for the surge in demand for university places is thought to be lack of paid employment opportunities for young people in the current climate.

“A reduction in the public funding per student could seriously threaten our ability to offer the high-quality experience our students deserve and expect,” said Professor Steve Smith, president of Universities UK, an organisation for UK university vice-chancellors.

However, Higher Education Minister David Lammy defended the cuts saying, “this government recognises that a high quality student experience with excellent teaching and research is vital to maintaining the world-class higher education we enjoy in this country today. Fast-track, part-time and two-year degrees do not represent a reduction in quality in the higher education offer, but an increase in choice for the would-be learner…it was not a question of whether efficiencies should be made, but of where the efficiencies should be found.”

The cuts include £84 million from buildings and equipment, and £51 million from teaching. However, a promise of a £109 million increase in research funding will be kept.

The government is also planning to try out two-year bachelor’s degrees as a way of reducing costs and appealing to a wider range of backgrounds.

Meanwhile, Scotland’s SNP Government has promised a real terms increase of 2.1% in its universities budget.