Universities are expected to shed thousands more jobs and cut back on teaching equipment after next year’s budgets were slashed by up to £150 million, The Times has learnt.

The scope of the cuts, which will enrage university vice-chancellors, is the first sign of how the Government’s attempt to claw back £15 billion in the next four years will affect services.

The cuts will make it harder for the 130 universities in England, which receive annual state funding of £8 billion a year, to meet the Government’s target of getting half of all young adults into higher education by 2010.

John Denham, the Skills Secretary, will warn university and further education chiefs in a letter today that they will have to find savings of £300 million — the lion’s share of a £400 million cut across his department next year.

The cutback is a result of Alistair Darling’s decision to reduce public spending next year by £5 billion.

Mr Denham will also make clear that inflation at minus 0.4 per cent should be taken into account in pay settlements, given the relatively generous 2.5 per cent rise in funding this year.

But his intervention will infuriate unions. They are threatening action over a 0.3 per cent pay offer for nearly 200,000 university lecturers after putting forward an 8 per cent pay claim this year.

The 120,000 college teachers and lecturers have demanded a 6 per cent pay rise for this year with a meeting scheduled with employers next Wednesday.

Sally Hunt, general secretary of the University and College Union, said last night: “These cuts will be a disaster for education and any government plans to use education as a driver for recovery.” The union claimed that 100 universities have admitted they are already shedding jobs.

Vice-chancellors are reeling from an enforced reduction in the number of extra student places they can offer this year from 15,000 to 10,000.

One vice-chancellor of a leading institution described the cuts last night as “nonsensical”, adding that he was having to cut 250 staff before the cuts kick in next financial year. He knew of another top university planning to cut 300 jobs.

The nine education quangos including Ofsted, the schools’ inspectorate, will also be told to shave £100 million off their £590 million budget, which is likely to result in hundreds more job cuts. They have 4,000 staff. Mr Denham told The Times that he was looking at a radical slimming of quangos as part of savings.

“Next year the [higher education and further education budgets will rise again but as the nation tightens its belt in tough times it is right to ensure we are being as efficient as we can be,” said Mr Denham. “That’s why I will be writing to both the Higher Education Funding Council for England and the Learning Skills Council, asking them to ensure we get the best return for taxpayers’ money, by cutting back on bureaucracy, inefficiencies and administrative overheads, and by concentrating spending on teaching and learning.”

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