Universities in Northern Ireland have warned that multimillion pound in-year funding cuts ordered by the Stormont executive could have a serious impact on the sector.

The University of Ulster has said it will get £3.15 million less than expected from the Department for Employment and Learning (DEL) – equivalent to 4 per cent of the institution’s total budget – while Queen’s University Belfast faces a £3.9 million shortfall.

Ulster vice-chancellor Richard Barnett has told employees that the staffing budget will have to be reduced by £2 million, with “careful management of recruitment for new or replacement posts” planned to make the savings. A percentage of a 2013 research grant will also be used to make up the deficit.

The university said it had received a grant letter from DEL earlier this year confirming its expected funding, but just days later it was told of the cut.

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The DEL, like other Stormont departments apart from health and education, had its budget cut by 2 per cent in July as ministers struggled to cope with the fallout from welfare reforms.

Professor Barnett told ����Vlog that “systematic devaluing” of higher education in the long term “could be detrimental to our economy as well as our social and cultural wellbeing”.

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“Under the current proposed cut of £3.15 million and uncertainly around potential future cuts, it is increasingly likely that the number of people in higher education will fall if we are to sustain a high quality educational experience,” said Professor Barnett.

“This poses a significant threat to Northern Ireland’s position as the top UK region for inward investment, as all investors have cited the calibre of our graduates as one of their key reasons for investing here.”

In an email to staff, Professor Barnett warned staff that Stormont could order further in-year cuts later this month.

There have been indications that some executive departments may face additional cuts of 6 per cent in October.

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The grant Northern Ireland receives from London has been reduced on the assumption that welfare reforms passed by Westminster last year have been implemented, and have achieved savings. But benefits have been protected by the Stormont executive, triggering the current crisis.

A Queen’s spokeswoman said: “The university is considering how it will meet this funding gap, but an in-year cut on this scale is extremely challenging.”

A DEL spokesman said the £16.3 million cut in its budget in June was set to be followed by an additional £18.5 million reduction this month which, if approved, would put the department a total of 4.4 per cent down on its expected funding.

“The full extent of this reduction to date has not been passed on to the higher education institutions which have been contacted regarding a 3.95 per cent funding allocation reduction in the current academic year,” the spokesman said. “This position may be revised if there are further cuts agreed beyond those already anticipated in the October monitoring round.”

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chris.havergal@tesglobal.com