UK government funding for high-cost subjects and other “strategic priorities” is set to be cut by another £100 million in the coming academic year, Times Higher Education���ܲԻ������ٲ��Ի��.

Despite calls on ministers to redress declines in the amount the state pays to universities, the Department for Education (DfE) is planning to announce the Strategic Priorities Grant for 2026-27 will be cut back to about £1.25 billion – down from £1.35 billion last year.

The grant, which subsidises courses in areas such as healthcare and technical skills, was already reduced by £100 million for 2025-26.

It is the main source of direct state funding for universities and institutions have previously highlighted how cuts may force them to abandon teaching in key areas or give up other priorities such as access initiatives and mental health support.

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Although not yet formally announced, details of the policy seen by THE show the grant will come alongside £336 million in capital funding over the next three academic years, to be used to improve university and college buildings and pay for specialist equipment. 

The DfE is expected to defend the decision by citing difficult economic circumstances and stress that programmes for the disadvantaged will be protected.

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But university leaders are likely to react with anger, pointing out that they are increasingly being asked to do more with less and such cuts push more of the burden of paying for higher education on to the student, fuelling much of the current anger around the student loan system.

Vivienne Stern, chief executive of Universities UK – who last week raised the alarm in Parliament that the grant was set to be cut – said the news was “extraordinarily frustrating” and could undermine the government’s promise to stabilise higher education funding.

“We’ve got a long-term decline in the funding that government puts into the cost of teaching, coupled with a system where the fees universities charge for undergraduates are capped by law and have been frozen for a decade,” she said. 

“The government started to do something about that, and it’s great that they’ve committed to let the fee rise in line with inflation. But the bottom line is, if you further cut the [SPG], we’re just continuing to make things worse.

“The real irony of that is that the government said in the post-16 White Paper that they were going to set out to stabilise the funding of higher education. It’s just the opposite of progress towards the goal that the government itself set.”

While the details of how the grant will be allocated to individual universities are yet to be announced, last year’s cuts saw some institutions receive millions of pounds less than they had the previous year.

The move comes as many cash-strapped institutions are already cutting jobs and courses in a bid to shore up their finances. 

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A DfE spokesperson said: “We are still finalising decisions on the Strategic Priorities Grant for the coming academic year and we will provide an update in due course.

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“We are committed to putting universities on firmer financial footing, including by raising the maximum cap on tuition fees and refocusing the Office for Students on monitoring the financial health of the sector.”

Last year the government announced a strategic review of the SPG along with the OfS which administers the funding.

It is understood the results of this review will not be enacted until the 2027-28 academic year at the earliest but could see future funding targeted towards priority skills areas and disadvantaged students. 

The government has already announced that £80 million will be awarded to 24 universities and colleges to create 2,500 new places for students on defence-related courses.

Some £30 million of the funding, which is part of the SPG, will also be targeted towards improving facilities for courses “vital to national defence”, the government said in a statement. 

“My big worry is that this is…a starter and the main course is a much bigger redistribution of funding when the Strategic Priorities Grant is reviewed,” said Stern.

She added that the grant should make up the difference between how much universities are allowed to charge domestic students and the actual cost of delivering a course. 

“It isn’t doing that and it would only make things worse if you took that funding and…moved it around so you could support industrial strategy priorities.” 

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helen.packer@timeshighereducation.com