The Big Question: How badly will £900m cuts damage the quality of British universities?

Why are we asking this now?

On a quiet day just before Christmas the Business Secretary, Lord Mandelson, announced cuts in university spending. This amounted to £518m being lopped off higher education funding next year (2010 to 2011). There was an outcry from vice-chancellors, students, lecturers and opposition MPs, and the Russell Group of research-intensive universities did a fast calculation, adding in some other cuts already announced (£600m in the pre-Budget report, plus a further £180m of "efficiency savings, for example), and came up with the figure of £900m. Michael Arthur and Wendy Piatt, the Russell Group's chairman and director-general respectively, said such "huge" cuts could lead to the closure of 30 universities. On Monday Higher Education Minister David Lammy said universites need their own sources of income.

What was Lord Mandelson's justification?

Pointing out that universities' income was now at record levels, he said that universities could not avoid the coming funding squeeze and that their income for research and teaching would still grow between 2009 and 2011. "These new constraints are very small in the context of overall university income," he said. Insisting that the Government's credentials in investing in higher education should not be in doubt, he said that universities had never enjoyed such a long and sustained period of public and financial support, and that more students would be studying next year than ever before.

Is the Business Secretary basically right?

Yes, under Labour universities have experienced what will undoubtedly be seen as a "golden age". Flush with money for capital projects, much of which they raised themselves, they have rebuilt their campuses, erected swish halls of residence with en suite bathrooms, put up new laboratories, research facilities and lecture theatres, not to mention sports halls and impressive student venues. They have also taken in large numbers of extra students, improving the participation rate and giving a whole generation of people a chance to get a degree. The Labour Government has improved spending on research, helping to burnish Britain's international reputation for higher education.

So why the complaints?

The cut amounts to a 12.5 per cent reduction in the Higher Education Funding Council for England's budget. From the point of view of total university income, it is a 4 per cent cut. The universities will be able to live with this, though it is bound to affect them. It will mean staff cuts, course cuts and cuts in student numbers – though it is unlikely to mean a university being forced to close. The leaders of the Russell Group must have decided that they had to start complaining about the prospect of all these cuts to try to head off any further slashing of their budgets.

Will the complaining prevent future cuts?

It might – but there is no guarantee. If the Conservatives win the next election, there is no knowing how much they would chop off the higher education budget. Certainly, education is not being protected by the Tories like the National Health Service is, and the party has indicated that it will reduce the national debt more rapidly than Labour, which raises the spectre of faster and deeper cuts.

But Arthur and Piatt must be hoping that their noise will deter the Conservative Party as well as Labour from setting about them with an axe. And they must be hoping that their arguments – about training the future workforce and boosting the economy with overseas student spending – wins support from the public because such backing is essential if universities are to be protected.

Why are we making cuts at our universities when other countries are investing more in theirs?

It's a good question, and one that has been asked by the Russell Group. Britain has the second best higher education system in the world – after the US – with 18 of our universities in the world's top 100, according to Times Higher Education World University Rankings. The French President Nicolas Sarkozy has just announced a programme of €11bn investment in higher education in France, Germany is putting €18bn into promoting world-class research while Barack Obama has poured an extra $21bn into federal science spending. The reason France and Germany are investing is that their universities do relatively poorly in the league tables, and they want to improve their standing.

Obama's commitment to science spending shows where his priorities lie (he also reversed opposition to stem cell research). If there was more public support for universities, our politicians might do the same.

How can support for universities be nurtured?

The vast majority of the population in the UK has not attended university. Although the participation rate has now reached 43 per cent, that has only happened relatively recently, so the bulk of people have no experience of university life and do not appreciate the part higher education plays in improving society and acting as a generator for the economy. With time, that should improve.

But universities can do their bit to build support in their local communities and the nation at large by forming links with companies and other organisations, putting on courses to train workers in local firms and generally opening their doors to the public. That way, they should be able to raise more money and make more friends and show that they are not mere ivory towers.

How do universities help the country out of recession?

Higher education institutions are keen to argue that they are instrumental in getting Britain back into positive economic growth because they provide the entrepreneurial students and the start-up companies that are going to make a difference. There is little evidence, however, that they are able to turn the economy around in the short term or have much effect on a recession. Universities are in the business of providing long-term benefits to a nation. Those long-term benefits are important because they give companies and other organisations the skills and ideas they need to prosper and be healthy. Governments ignore that at their peril.

Should universities be viewing the cuts as an opportunity rather than a punishment?

Yes, if they can. Lord Mandelson wants the cuts to force the higher education sector to adapt. He has said that they need to change what they offer to students to meet their needs and the employment needs of the economy.

It will only be by becoming more independent of the state and finding external sources of funding that universities will become stronger and able to weather the many further challenges they are bound to face.

Will British universities survive the impending funding squeeze?

Yes...

* It will jeopardise Britain's overseas student market, which generates £2.9bn a year for universities as well as off-campus expenditure of £2.3bn

* Hundreds of courses will close; job losses and bigger classes are certain

* It will undermine a system that contributes £33.4bn – 2.3 per cent of GDP – to the economy

No...

* The cuts are manageable and universities are showing they're already making cuts without undue effect

* Every other sector of state funding is preparing for austerity; it's right that higher education pay its share

* It will force them to look for alternative sources of finance and find new friends in local communities