By Mike Baker BBC News education correspondent

There is a chill wind blowing through the quadrangles of some of our major universities.

It has meant a distinct lack of Christmas cheer for many academics and students.

Departmental closures have been announced, or proposed, at Cambridge, Exeter and Newcastle, among others.

Nor are these affecting minor subjects: they include chemistry, physics, architecture and music.

The Christmas post is now heavy with the honorary degrees being returned by famous scientists and musicians disgusted by what they regard as the destruction of key university departments.

Scrooge-like

So why are we getting this Scrooge-like delivery of bad news just before Christmas?

Two things seem to be concentrating the minds of vice-chancellors: the prospect of variable tuition fees for undergraduates and the next round of the Research Assessment Exercise (RAE), which determines the distribution of government funding for university research.

You might think these two would be unconnected but, increasingly it seems, universities are using research funds to subsidise teaching costs.

This becomes a serious problem in departments where teaching costs are high and research funding is falling.

This, in essence, has been the problem behind several of the recent closures or threatened closures.

Sciences are expensive to teach

Chemistry, physics and architecture are all expensive subjects to teach, requiring laboratories, research materials and equipment.

The architecture department at Cambridge, chemistry at Exeter and physics at Newcastle all fell from the top RAE rating of 5 or 5* to a 4 in the last rating round in 2001.

In the past this might not have mattered so much, as a 4 rating was still both prestigious and lucrative.

But government policy changed in 2003 when ministers made it clear they wanted to see greater focus on specialist excellence.

To drive this, the university funding body has now shifted its resources heavily in favour of 5 and 5*-rated departments at the expense of 4-rated departments.

It is a trend that is likely to continue.

'Winner takes all'

So this year there has been a 4.75% increase in the average unit of resource for 5 and 5*-rated departments compared to 2001-02, but a reduction of 42% in the equivalent for those rated 4.

So it is now, more than ever, "winner takes all" in research funding.

To see why it is happening you need only peruse the world university rankings produced by the Times Higher Education Supplement.

It highlights the increasingly tough global competition British universities face.

And global competition matters now that research contracts, top academics, post-graduates, and even undergraduates, are increasingly internationally mobile.

The world rankings for science, based on peer-review, look good to start with - Cambridge and Oxford in first and second place respectively.

Specialists

But from there on down it is harder to spot British successes. Apart from Imperial College London at 10th place, there are no other British universities until King's College London in 47th place.

In engineering and information technology only Imperial (5th) and Cambridge (8th) appear in the top 10.

A more worrying picture emerges from the rankings based on science research citations. On this basis, US institutions hold the top 16 places. The highest-placed British university comes in at 18th.

Another interesting trend emerges from these global rankings: the excellent performance of specialist universities such as MIT or Imperial College London.

The message is obvious: to compete globally it often pays to focus your efforts on a narrower range of academic subjects.

This, of course, is what the government has been promoting through the greater selectivity of RAE funding.

Regions

But would it matter if this policy led to a situation where, as an illustrative example, there were no chemistry departments on the west of England or no physics departments north of Birmingham?

Would this have serious implications for undergraduate choice or for regional economies? One suspects so.

It seems the government itself has become a little alarmed by the recent consequence of its policy of rationalisation.

So the Education Secretary, Charles Clarke, has now written to the Higher Education Funding Council for England asking it to come up with ways of protecting academic subjects which are of "national importance".

These include many of the sciences and languages such as Arabic or Japanese.

So which is it to be: a market-driven rationalisation of universities or a command economy with subsidised university departments?

It seems our universities will be going into the new year with some rather mixed messages.

It promises to be a tough 2005 for vice-chancellors, dons and students.

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