Gordon Brown's budget could saddle universities with a Pounds 100 million a year bill, according to university finance officers.
Miles Hedges, head of the British Universities Finance Directors Group said the new arrangements for national insurance will wipe out the additional money announced in the university allocations earlier this month.
And vice-chancellors believe Mr Brown's budget pledge to "lock in fiscal tightening" for 1998-99 and to knock another Pounds 1 billion off borrowing has dampened hopes of additional resources from the comprehensive spending review to be completed in the summer.
The Committee of Vice-Chancellors and Principals has been waiting for the review. Last week its submission to the review called for Pounds 265 million a year for expansion and Pounds 900 million to replace equipment. It has held its fire over tuition fee income, which will not be ring-fenced for universities, in the hope the review would compensate the sector.
On the face of it education did relatively well out of the budget with another Pounds 250 million, bringing the total additional investment since Labour took office to Pounds 2.5 billion. Mr Brown announced Pounds 100 million to bridge the information technology skills gap over the next year but failed to say that this is to come out of the Pounds 250 million. There is also a Pounds 50 million seed fund to encourage university research and commercial development to which the government will contribute Pounds 20 million.
Tony Bruce, policy director for the CVCP, said: "We welcome the government's recognition of the positive role university research can play, but if that is to be sustained then full recognition needs to be given to investment in research through the comprehensive spending review."
Phil Willis, Liberal Democrat higher and further education spokesman, said that the extra education cash would be swallowed by higher inflation and that the Pounds 50 million would not go far. He said: "There will be no extra money to address acute funding problems."
Conservative further and higher education spokesman David Willetts said:
"This budget has nothing to say about education. After almost a year the government is still at the level of bit-by- bit announcements rather than making any substantial policy decisions. Everything now hangs on the spending review."
Education and employment secretary David Blunkett focused on jobs during his speech in Wednesday's budget debate. He said the New Deal, which also offers training options, would help people opff benefits into work.
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