In a surprise announcement, universities and science minister David Willetts has said the £150 million National Scholarship Programme (NSP) will be reduced to £50 million next year.

The scheme, which provides awards worth £3,000 to undergraduates from households earning £25,000 or less, was due to remain in place next year and be replaced by a new £50 million scholarship scheme for postgraduates from 2015-16 under plans announced in June’s Spending Review.

However, in a written statement to Parliament on 28 November, Mr Willetts said cuts will now come into effect from next autumn, with just £50 million available to potential applicants.

Students applying for the scheme in 2014-15 will only receive support worth £2,000, though the £1,000 cap on cash payments has been lifted.

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Among the biggest losers from the cuts are students at post-1992 universities, with allocations for the universities of Anglia Ruskin, Bedfordshire, Brighton, Central Lancashire, Derby, De Montfort and East London among those falling by more than £1 million next year.

Director of access Les Ebdon said the cuts were “disappointing”, but emphasised that spending by institutions from their higher fee income would not be reduced.

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“It’s important to emphasise that the government contribution to the NSP is only a small part of the total financial support available to students,” he said.

Universities will also be required to re-submit their access agreements to the Office for Fair Access, which were signed off in July, given the change in resources available to institutions.

They have until 16 December to alter the agreements to reflect the lower NSP allocations.

Professor Ebdon added that he was “relieved” that the £332 million Student Opportunity Allocation – otherwise known as the “widening participation premium” - distributed by the Higher Education Funding Council for England for outreach work and educating poorer students - had not been cut.

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In Mr Willetts’ statement, a one-off £25 million to improve collaborative outreach among universities has also been announced.

Graeme Atherton, head of AccessHE, which organises collaborative outreach in London, said the new support is “extremely welcome”, calling for universities to “build on the collaborative networks that exist to avoid duplications and waste of resources”.

The shock announcement on the NSP follows claims that the Department for Business, Innovation and Skills has “lost control of its budget” after a higher-than-expected number of taxpayer-backed entrants to private colleges, which are not subject to student number controls.

The latest news follows several controversies over the NSP, which was announced shortly before the 2010 decision to increase tuition fees to £9,000. It was initially marketed as a “student premium” to ensure that poorer students may be put off university by £9,000 tuition fees.

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It has been frequently criticised as unfairly distributed among the sector, while students have complained it is poorly advertised and its eligible criteria unclear.

In his statement, Mr Willetts said the “decision was based on evaluation which has shown that there are more valuable ways of widening access and enlarging the choices students make about higher education through the negotiated access agreements of universities”.

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jack.grove@tsleducation.com