Leading article: Higher education, too, must adapt to more austere times

The universities of England received the dreaded news yesterday, and for the overwhelming majority, it was as bad as they had feared. Almost three-quarters will see their funding for next year severely reduced or frozen in real terms – which elicited a furious response from lecturers' representatives and some vice-chancellors.

Not that they had not been warned. With the NHS and schools assured that their budgets would be protected, higher education had been waiting for the axe to fall. But this does not make the experience any more tolerable. The universities have enjoyed a bonanza since Labour came to power; this is the first major reduction in funding for 13 years, and, whoever wins the election, it is unlikely to be the last. Higher education must share the national pain of austere times.

The distribution of funds announced by the Higher Education Funding Council for England yesterday offered some useful pointers about official thinking on this score. Worst hit, by and large, were the newer universities. The Russell Group of 20 leading establishments emerged less badly, while the top five universities for research – Oxford, Cambridge, University College London, Imperial College London and Manchester – together received one third of the funds available. This amounts to a blessing on the creation, or preservation, of an elite designed to hold its own with the world's best. In the global world, this is as necessary as it is inevitable.

But there are other pointers, too. Priority has been given to universities with specialist departments in science, maths and technology – subjects where Britain has long had a shortage of expertise, but which also tend to be more expensive to teach. If, as is forecast, the number of university places overall is set to fall, it is right that students are gently channelled into areas where skills are most needed. For all the complaints that will come from champions of the liberal arts, this is nothing like a wholesale redirection of funds, but a helpful nudge towards a higher education sector better tailored to the country's future requirements.

Nor is a decline in the number of university places necessarily a bad thing. The rapid expansion of tertiary education has been a success for this government, with applications continuing to rise, despite fee increases and, for most, less generous assistance from the state. But the Government's target of getting 50 per cent of school-leavers into higher education was always of dubious worth. A little more selectivity could help raise standards and reduce drop-out rates. There is also an argument for speeding up the Browne review of student funding, with a view to freeing, or removing, the cap on tuition fees sooner than might have been envisaged.

On the negative side, however, any decline in the number of places and any rise in fees risk leaving would-be students from poorer families at an even greater disadvantage than they already are. The provision of more bursaries, an extension of needs-blind admission and better information about available grants should all help, but they will go only part of the way.

In the immediate future, higher education as a whole will have to look much more critically at how its spends its money – from the salary rises granted to many vice-chancellors in recent years, through the building projects that habitually run over budget, to the actual contact hours between teacher and student. After a period of comparative largesse, all universities must learn to do more with less.