University purchasers must feel like they are teetering on the brink of a precipice. On Friday, Universities UK head Professor Steve Smith emailed all higher education institutions saying he had seen what was in the plans for universities in the Comprehensive Spending Review, to be made public this Wednesday.
The plans, he says, are to slash government funding by £4.2 billion, including £1 billion on research and £3.2 billion (or a whopping 79 per cent) off the teaching budget. State finance for just about all arts and humanities courses will fall away, in favour of the sciences, mathematics and some modern languages courses.
Last Tuesday, the long-awaited report by Lord Browne into university funding recommended lifting the cap off tuition fees altogether, allowing universities to charge what they like for courses and in effect creating a market for university places. Many say that while those institutions in the Russell Group of elite universities, such as Oxford and Cambridge, will fill courses whatever they charge, other institutions may face having to restrict fees or face falling revenues as poorer students are put off higher education by the prospect of such a large debt. It heightens the prospect that some institutions will face bankruptcy or a private takeover.
The coalition is known to favour raising tuition fees over a graduate tax as a means of funding higher education. But at the weekend, the Institute for Fiscal Studies said Lord Browne's recommendations would create a graduate tax in all but name for most students. IFS claims that, with student fees at £7,000 a year, more than half of graduates would not be able to pay off the loan before the end of their working lives. At £9,000 a year, the figure rises to almost two-thirds.
But the real danger ahead for universities is highlighted by Professor Smith in his email. If the cuts turn out as deep as feared on Wednesday, then to stand any chance of recovering the status quo, the new fees regime would have to be up and running quickly and without pressure for a watering-down from nervous Lib Dem MPs looking to save face.
And the biggest question for university purchasers is one of timing. While the CSR comes into force in April, the necessary legislation to remove the cap on fees (assuming the coalition follows Lord Browne's advice) will follow some time later, bringing the flow of income on stream perhaps as late as 2013. What will the profile of the cuts look like across the three years? Will universities face a precipice-like drop in funding, forcing massive cuts in courses and jobs before the new fees can come on stream?
Only time will tell.
Andy Davies is director of London Universities Purchasing Consortium