Up to 200,000 students could miss out on university places this autumn because of cuts of £450m which were unveiled yesterday.
The Higher Education Funding Council for England (Hefce) put the flesh on the bones of Business Secretary Lord Mandelson's pre-Christmas demand for a reduction in spending.
A circular to universities revealed that spending on teaching would be slashed for the first time in decades, by 1.6 per cent, or £215m in real terms. Capital spending projects, such as new buildings, will be reduced by 15 per cent.
However, vice-chancellors and student leaders warned that the burden would also fall on potential students. One estimate put the number of applicants facing rejection at 200,000.
Last year saw a record 600,000 students applying for places but 130,000 missed out, despite an extra 10,000 places being made available.
Les Ebdon, chairman of university think tank million+ and vice-chancellor of Bedfordshire University, said: "The cuts imposed by the Government are going to hit teaching, research and the number of places available at a time of record demand."
Wes Streeting, president of the National Union of Students, said the cuts would cause "irreparable damage".
Hefce will tell universities their individual budgets next month.
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