Labour's Universities Secretary, John Denham, has used his annual grant letter to HEFCE (Higher Education Funding Council for England) to inform Universities of caps that will be placed on the number of new students in the 2009-2010 session.
This follows the admission by The Department for Innovation, Universities and Skills that the government had underestimated the number of students who would be eligible for student loans and grants, leaving a huge budget short-fall. In the letter, Mr Denham confirmed that the number of additional university places next year would be cut from 15,000 to 10,000 - dashing any hope of Labour acheiving their target of having 50% of young people attending university by 2010. The proposed budget for universities for the 2009-2010 session will be cut by £19million in-line with the reductions.
The letter also said that the time had come for universities to use their time and resources to help businesses and the unemployed, after years of investment from the business sector. It was suggested that universities should offer "practical help" to those who need it most during these tough economic times. Universities are also expected to tackle the issue of climate change, with the "greenest" universities being rewarded during budgeting.
Mr Denham continued by saying that universities should not make provisions for an increase of students for the 2010-2011 session, until a review of the situation has been carried out. The move will be a blow to both first and second year A-Level and Diploma students, who will now face increased competition over university places.
The move has faced opposition by many, including the Conservative Party. Diana Warwick, of Universities UK, said that high levels of UCAS applications in recent years show that there is a huge demand for higher education, adding that, "there is a danger in placing limits on growth ? UUK believes strongly that the UK's knowledge-based economy needs more, not fewer, graduates ? and we urge the government to discuss the impact of this and future decisions with the sector."
HEFCE is now working on a package of grants to offer to struggling institutions, with universities expected to match any funding requests. It is expected that this funding will be provided to help universities set up new projects.