Northern Ireland's universities are facing a "substantial" cut of £21m in the Stormont funding they receive to teach students.

The top official at the Department for the Economy (DfE), Ian Snowden, said the universities were facing a reduction of 6% on the opening funding they received in 2024/25.

The potential cuts come as the Northern Ireland Executive remains seven months into the financial year without a budget.

Snowden said both Queen's University Belfast (QUB) and Ulster University (UU) are expected to have financial deficits in 2025/26.

With no agreed budget for 2025/26, Stormont departments have been operating under contingency arrangements allowing them to spend up to 95% of last year's funding. The DfE is the Stormont department with responsibility for higher and further education in Northern Ireland. Universities are mainly funded through student fees and a "teaching grant" provided by DfE. Further education colleges have already announced big cuts to student places and courses.

Ulster University, meanwhile, is making 450 staff redundant across its campuses to save about £25m.

The chair of Stormont's economy committee, Democratic Unionist Party assembly member Phillip Brett, said a further cut in university funding could mean that the universities would not receive money for three months for students they have already enrolled. "The universities have taken students on in the anticipation that they will receive funding from the department," he said.

"We're now six months into the financial year and they still haven't received a formal letter of offer from the department.

"And despite students enrolling in September, one of the contingencies from the department is now that come January, February, March you might say 'actually we're not going to pay you for these three months of the students that you've taken on'?" "It's a possibility," Snowden told the committee.

He also said the universities could only get confirmation of how much funding they would get when the executive agreed a budget. "At this point we still don't know how much money we have to spend," he said.

Amy Smith, the National Union of Students-Union of Students in Ireland (NUS-USI) president, said it was "disappointing to hear that our universities will be facing cuts to their teaching grants".

"Any cuts directly impact students, their access to their education and the quality of the experience they receive while at university costs to them remain the same," she added. "Students and staff must not be left to shoulder the cost of underfunding.

"We stand together in calling for the investment needed to protect jobs, access to education, and the quality of teaching."

A spokesperson for Queen's said the university was "operating in a challenging financial environment and has consistently highlighted that the current higher education funding model, and continued budget uncertainty, are unsustainable".

"We continue to work constructively with the Department for the Economy and government partners to secure a long-term solution that will benefit students and the wider economy," they said.

"Queen's continues to monitor the financial and funding environment closely and remains focused on managing resources responsibly to protect the university's long-term financial sustainability while continuing to deliver for our students, staff and wider society."

A spokesperson for Ulster University said it was "already enacting a substantial savings plan".

"Given the deteriorating funding situation from the department, which we regard as very serious, we will continue to enact appropriate caution in relation to our finances," the spokesperson said. They also said 735 university staff had applied for voluntary redundancy.