Chancellor George Osborne announced in his autumn statement on 5 December that a spending review covering 2015-16 - the year after the next general election - will be held in early 2013.
The autumn statement also unveiled additional cuts for non-protected departments of 1 per cent in 2013-14 and 2 per cent in 2014-15 - meaning £430 million of reductions for the Department for Business, Innovation and Skills.
Andy Westwood, chief executive of GuildHE and former special adviser to the Labour MP John Denham during his time as secretary of state for innovation, universities and skills, noted the Institute for Fiscal Studies’ analysis of the autumn statement.
It suggests further cuts of 3 per cent for non-protected departments (including BIS) in 2015-16, bringing the reductions for those departments since 2010-11 to 20.9 per cent.
Mr Westwood added of the 2015-16 spending review: “I think most things are up for grabs - including the science ring-fence and whether it is ring-fenced for blue-skies or applied research.”
Cutting student numbers in England could also be seen by the government as a potential way to make further savings, Mr Westwood said.
Imran Khan, director of the Campaign for Science and Engineering, said that Vince Cable, the business secretary, had gone “on the record saying that he expects the ring-fence to be maintained. But ultimately it’s a decision that will be made by HM Treasury and there is some nervousness within BIS and in the science sector that the ring-fence is under threat - so it’s something we’ll be looking to emphasise the importance of.”
Liam Burns, president of the National Union of Students, warned that the government could make savings by reducing the public subsidy for student loans.
“For over a year now, we’ve warned that the terms and conditions of student loans are being seen by some as the low-hanging fruit in higher education funding,” Mr Burns added. He called for the loans’ terms and conditions to be protected by primary legislation so that they could not be turned into “a real and toxic debt” on a government “whim”.
On the £430 million in additional cuts for BIS in the current spending review period, Mr Westwood said: “There will be departmental reserves and underspends that will contribute a fair bit to this…on top there is still a fair amount of savings to harvest from BIS quangos - especially in [further education] - and the lower-than-expected [higher education] enrolments this year.”
However, Pam Tatlow, chief executive of the Million+ group of new universities, feared that the additional retrenchment might prompt BIS to make further savings by cutting student numbers.
The savings delivered by lower-than-expected higher education enrolments in 2012-13 could be cancelled out by BIS’ fast-increasing spending on students at private providers, she added.
Ms Tatlow argued that it would be “very short-sighted to cut funded student numbers as a result of the autumn statement”, given higher education’s benefits to the Treasury and to society at large.