Among the hardest hit were some of England's biggest and most prestigious institutions, including Oxford, Cambridge and Imperial College, London.
Last night the head of the Government's university funding agency admitted that the system could suffer serious damage if more money was not found in the next few years.
England's 170 universities and higher education colleges suffered real- terms cuts of 5 per cent overall, but budgets for buildings and equipment were reduced by 29 per cent.
Professor Gareth Roberts, vice-chancellor of Sheffield University and chairman of the Committee of Vice-Chancellors and Principals, warned that some universities could close. Four English institutions are known to be in trouble, though they have not been named.
He said the Government's inquiry into higher education, headed by Sir Ron Dearing and due to report in the summer of 1997, could come too late for some of them. "There is a limit to how much more can be achieved and still retain the capacity to impart the skills and knowledge that employers require from students," the professor said. "If further cuts are made, some universities may not survive until the results of the Dearing inquiry can be implemented in 1999 or beyond."
Making the announcement, Professor Brian Fender, chief executive of the Higher Education Funding Council for England, said universities should be able to make efficiency gains amounting to about 1.5 per cent of their budgets in the coming year, but in the longer term, quality could be hit.
"You clearly can't go on giving allocations of this sort without it having an effect, he said. I go around campuses and one of the things students prize most is the contact they have with their supervisors. Clearly, if staff-student ratios go higher, then that interaction is affected," he said. However, Professor Roberts added that he had great confidence in university managers and was sure that they could survive the next year. Some leading research institutions had lost out because of technical changes in the way different subject areas were funded, he said.
Officials denied that science funding was being cut in order to put more money into art and design, but among the very few institutions to see a rise in budgets this year were the Royal College of Art and Wimbledon School of Art.
In 1994, ministers announced that they would spend pounds 365m on university buildings in 1996-97 but the actual figure has dropped to pounds 245m.
A spokeswoman for Cambridge University said the university would lose pounds 6m in the next financial year.
"We are going to look at the figures very carefully and not make any hasty reactions or ring any alarm bells," she said. "We want to take our time and look at the figures very carefully over the next few weeks."
THE BIGGEST LOSERS
The 10 worst hit in percentage terms
Cambridge -pounds 4,046,727 (-4.5%)
Oxford -pounds 3,138,623 (-3.5%)
Liverpool -pounds 2,001,923 (-3.4%)
London -pounds 1,983,506 (-3.7%)
London -pounds 1,758,587 (-4.4%)
London -pounds 1,692,863 (-3.8%)
UMIST -pounds 1,213,222 (-4.6%)
Aston -pounds 717,717 (-4.3%)
Cranfield -pounds 698,683 (-4.5%)
Salford -pounds 684,869 (-3.1%)Reuse content