The letter from the Department for Business, Innovation and Skills to the Higher Education Funding Council for England, published on 25 January, says that maximum student places will be cut by 5,000 in 2012-13.

Previously, Hefce has set the maximum number of students that can be recruited slightly above what the government envisaged and planned funding for, the letter says.

However “the recent trend for strong recruitment across the sector now makes this approach unnecessary”, the letter says.

“As a result, we are now asking the council to reduce its entrant control maximum by 5,000 places in 2012-13. This brings it in line with our original spending plans and reduces the risk of over recruitment,” it continues.

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The letter claims that this “does not represent a reduction in the total number of students the government expects to fund”.

However, the National Union of Students said that, coupled with the letter’s confirmation that the 10,000 extra “stimulus” places allocated in 2011-12 would not be repeated, this represented an “incredibly short-sighted” cut of 15,000 places.

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The letter also makes clear that the fine for over-recruitment will increase in the coming years, from the £3,800 per student set for 2012-13.

The letter confirms funding levels for teaching and research indicated in last year’s letter.

Total teaching grant will fall from £4.645 billion in 2011-12 to £3.815 billion in 2012-13, an 18 per cent decline, with the letter giving an indicative total of £2.883 billion for 2013-14.

In its place, BIS will provide institutions with up-front student loans of £3.6 billion in 2012-13 rising to £5 billion in 2013-14.

As expected, the recurrent grant for research will rise very slightly to £1.587 billion in 2012-13.

The letter does not include any new announcement about the government’s policy to allow unlimited recruitment of students achieving AAB at A level.

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It had been reported that the letter had been delayed as ministers contemplated changing the grade threshold to ABB.

However, the letter says: “We said we would monitor the impact of this new approach and its effect on supply and demand.

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“We will write separately setting out our proposals for contestable places for 2013-14.”

The letter also demands that it is “essential that the sector exercise effective pay restraint, at a time when there is currently a pay freeze in place across other sectors in receipt of public funding”.

It asks institutions to make efficiency savings from quality related recurrent research costs of £45 million in 2012-13, £73 million in 2013-14 and £104 million in 2014-15.

These savings will be reinvested in research, it adds, suggesting that universities share research equipment and infrastructure.

Key Information Sets, which the government hopes will give students better data on which to base their university choice, should be prepared by September this year, the letter says.

Meanwhile, the premium universities receive for taking in students from poorer backgrounds remains the same, despite fears it could be cut.

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david.matthews@tsleducation.com