Universities outside the research elite will "get out of the market" for PhDs amid ÖйúAƬ cutbacks unless more funding is injected, a government review has heard.

Malcolm McCrae, chairman of the UK Council for Graduate Education, delivered the group's submission to the Department for Business, Innovation and Skills' review of postgraduate provision at a meeting with Adrian Smith, BIS' director-general of science and research.

Professor Smith is leading the review, which closed last month and is scheduled to report in the spring.

Professor McCrae told Times ÖйúAƬ that with universities making a loss of up to ?80,000 for each PhD student they recruit, budget cuts could prompt "a lot of middle-ranking universities" to reconsider their provision.

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As the financial squeeze on institutions tightens further, he said, "we are concerned that ... some institutions will effectively get out of this market ... Central management will discourage departments from taking on postgraduate research students."

As THE reported last week, the 1994 Group of smaller research-intensive universities wants state-funded PhDs to become the preserve of the research elite. It has told Professor Smith that doctoral students should be supported by the state only if they work in departments of a certain standard.

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But Professor McCrae, a virologist at the University of Warwick, said that if universities outside the elite are pushed out of PhDs, it will reduce the UK's postgraduate capacity and hit the UK economy.

He said: "While some people talk about the ability of research-intensive institutions to ramp up postgraduate research activity, the practical reality is it's extremely unlikely that over any realistic time span an institution could increase its postgraduate activity by a sufficient percentage to take up the slack."

The UKCGE's submission says that if the Smith review tries to make PhDs sustainable by focusing cash on a small number of universities, this would "diminish national capacity to provide skilled and highly trained manpower to fuel the knowledge economy in the short to medium term".

The UKCGE urges the review to consider "innovative measures", such as shifting a portion of government funding for undergraduate teaching into PhD provision.

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Professor McCrae cited research by the ÖйúAƬ Policy Institute, which found that institutions currently make a loss per PhD student of between ?30,000 and ?80,000.

Another topic raised by the UKCGE submission is the "confused and confusing" usage of the title "masters". It applies to one-year postgraduate and four-year undergraduate courses in some sciences, as well as degrees from Scottish institutions and the universities of Oxford and Cambridge.

UKCGE recommends using prefixes to denote whether a masters degree is postgraduate, undergraduate or honorary.

In other submissions to the Smith review, the Russell Group of large research-intensive universities argues for more concentration of research-degree funding to address an "unsustainable" system. Doctorates "must be underpinned by world-leading research supported by world-class facilities and a critical mass of researchers", it says.

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The National Union of Students calls for more data on "the numbers of potential postgraduate students who do not undertake postgraduate study for financial or other access-related reasons".

It adds that PhD supervisions should be undertaken by teams of academics rather than individuals, because "the stakes of failure ... are still too high".

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john.morgan@tsleducation.com.