All but 24 of England's universities and colleges of higher education will get a real-terms increase in grant, and no institution will be cut by more than one per cent next year, the Higher Education Funding Council for England said.
Professor Brian Fender, HEFCE chief executive, said the pounds 3.8bn budget represented a 2.7 per cent increase on the current year, slightly above inflation.
The allocations would limit cuts in funding per student to one per cent; significantly better than the 35 per cent fall absorbed by universities over the past eight years. "Some movement in the right direction is how we would describe it," he said.
The allocations include proceeds from the pounds 1,000-a-year tuition fees to be imposed on undergraduates for the first time in October.
Vice chancellors welcomed the announcement, but warned the settlement did nothing to meet Sir Ron Dearing's recommendation that an extra pounds 200m should be ploughed into improvements to university buildings and equipment.
Diana Warwick, chief executive of the Committee of Vice Chancellors and Principals, said: "While this is a welcome step in the right direction for England, there is a long way to go in addressing the financial crisis still facing universities and colleges."
Lecturers praised funding chiefs for limiting the cuts, but warned of the effects on the 24 universities and colleges facing a fall in income in real terms. Institutions facing a slight real-terms cut include Oxford, Manchester and the London School of Economics.
An LSE spokeswoman said: "It's really not very good, but it's a lot better than we thought it was going to be."
David Triesman, general secretary of the Association of University Teachers, said: "The universities are hanging on by their finger nails. We recognise a serious effort is being made to inject stability but it remains a constant problem while all the big policy decisions for higher education are on ice."
Professor Fender said he hoped the Government's fundamental spending review would yield extra money for universities in future years.
The total number of university places funded will rise by 6,000 to 738,000 next year; universities will learn later this month whether their numbers can increase.
But Professor Fender said he had no details about how many people would enter university as part of Prime Minister Tony Blair's pledge to offer 500,000 extra university and college places by 2002.
"We have been arguing for a fair share of these 500,000 places, but they certainly cannot be offered on the cheap; we will need this to be fully funded."
This year's allocations will not affect college fees, which channel an extra pounds 35m into Oxford and Cambridge. The HEFCE had sent a confidential report to ministers, and was awaiting a decision on the issue, Professor Fender said.
Last week it emerged that Tony Blair had backed down over plans to cut the extra Oxbridge grant.Reuse content