The indicative budget for the sector, announced on January, is ?1.041 billion. This is 2 per cent down on the figure announced at the same time last year, although the Scottish Funding Council said that the totals could not necessarily be compared directly.

Institutions¡¯ key concern is the suspension of the global excellence initiative, which is providing ?14 million of funding for world-leading research during 2014-15.

Alastair Sim, the director of Universities Scotland, said that Scotland¡¯s universities had performed ¡°exceptionally well¡± in last year¡¯s research excellence framework.

¡°In that context it is disappointing, even if it comes as no surprise, that research funding will be spread more thinly across universities rather than capitalising on the value of university research which has been independently found to deliver outstanding impact for Scotland¡¯s economy, society and culture,¡± Mr Sim said.

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Universities Scotland said that the combined impact of the suspension of the global excellence initiative and the cancelling of further planned increases in teaching and research funding would leave institutions with ?21.5 million less than they had hoped for.

¡°As this funding has been held back, rather than cut entirely, we are hopeful that the Scottish government might be able to return it to universities within a year,¡± Mr Sim added.

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The funding council said that ?18 million would be spent on creating 3,284 new university places, with the majority of these earmarked for students from poorer backgrounds or those articulating from college.

It added that research funding, excluding the global excellence initiative, would be increased by 0.5 per cent, but a consultation on how this should be distributed is still happening in the wake of the REF. In total, ?282 million will be spent on grants supporting research and knowledge exchange.

Laurence Howells, the funding council¡¯s chief executive, said that Scottish universities made an ¡°enormous difference¡± through their research, teaching and industry collaboration, and that the funding settlement ¡°will help to support this into the future¡±.

A Scottish government spokesman said: ¡°Next year our overall provision of funds for post-16 education and training will rise, reflecting our commitment to new education and training facilities and the reforms that are part of Developing Scotland¡¯s Young Workforce.

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?¡°As expenditure can vary in the course of the year, we have asked the funding council not to allocate their budget for next year in its entirety in the first instance, as was made clear last year. This provides flexibility going forward to align resources where needed across our funding for post-16 education.¡±

chris.havergal@tesglobal.com