Universities in England have learned how massive reductions in state backing will affect them as funding chiefs announced how they would distribute almost ?1 billion in cuts.

All but five institutions will see their recurrent grants fall in cash terms next year, while total reductions between now and 2012-13 - the point at which universities can charge up to ?9,000 in tuition fees - will be almost 13 per cent.

However, some institutions have been spared drastic cuts after the ÖйúAƬ Funding Council for England increased its "moderation fund", which is used to smooth sudden changes in grant allocations, by more than 50 per cent to ?30 million.

Most research-intensive institutions have also avoided large cuts in their overall grants thanks to the greater concentration of quality-related research funding, which itself is part of the relatively protected science budget.

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Overall, Hefce will hand out ?6.5 billion to 130 universities and colleges, as well as to 124 directly funded further education colleges, for the academic year 2011-12. This includes ?4.34 billion for teaching and ?1.56 billion for research, plus capital and other funding.

The figure represents a 9.5 per cent cash reduction of ?685 million compared with the allocation for the current academic year - a cut that jumps to 12.6 per cent, or ?940 million, once the loss of one-off payments for 2010-11 is taken into account.

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A large element of this is the University Modernisation Fund (UMF), which funded an extra 10,000 student places for one year only.

In total, the teaching grant will be cut by 8.2 per cent compared with 2010-11, with the "base" allocation per student now 7 per cent lower than a year ago, at ?3,670.

Research funding falls by 2.8 per cent and capital funding is reduced by 58.1 per cent.

Owing to the four-month overlap between the government's financial year, which starts next month, and the academic year, which begins in August, ?150 million of the teaching and research cuts will come from this year's recurrent grant allocations.

This also has the effect of lowering the year-on-year reductions in the final grant tables.

The lucky few

In terms of individual institutions, the "winners" are mainly research-intensive institutions that have benefited from the reweighting of Hefce's formula for distributing research funding towards "internationally excellent and world-leading research".

They include the University of Oxford, the London School of Economics and Imperial College London, which are among the few institutions to see cash rises in their recurrent grant funding - although for most this still represents a real-terms cut.

In contrast, institutions with lower-rated research have suffered heavy reductions, as have those given moderation or special funding in 2010-11 but not in 2011-12.

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If these institutions benefited from the UMF last year, too, the cuts appear even more pronounced.

An example is Bishop Grosseteste University College Lincoln, which loses 13.4 per cent of its funding even without factoring in the UMF.

Others to suffer large drops include City University London (8.4 per cent), London Metropolitan University (7.6 per cent) and specialist institutions such as the University for the Creative Arts (7.8 per cent).

Other institutions have seen their teaching grants fall markedly as a result of the end of targeted money for foundation degrees and the phasing out of funding for equivalent or lower-level qualifications.

Some universities have benefited from large moderation payments that help to keep their percentage losses down.

They include Liverpool John Moores University (?1.84 million); Manchester Metropolitan University (?1.26 million); the University of Plymouth (?1.31 million); and London Met (?1.22 million).

Some new universities will also be helped by the fact that funding for widening participation has been maintained in cash terms.

The ÖйúAƬ Innovation Fund to support universities' knowledge-transfer activity is also being held at ?150 million, although final allocations have yet to be announced.

Sir Alan Langlands, Hefce's chief executive, admitted it was a "challenging settlement".

"The withdrawal of the University Modernisation Fund and one-off funding in 2010-11 for moderation has led to significant reductions in some cases," he said. "We will continue to work with institutions as they adjust their activities to meet the growing financial pressures."

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The funding council also repeated its warning that if the government changed its plans for grant funding in 2012-13, it may yet be forced to make further cuts in 2011-12.

simon.baker@tsleducation.com