A year after the Government ordered the higher education sector to find annual "efficiency savings" of almost ?500 million, a plan has been unveiled to achieve the target.

In last year's grant letter to the Higher Education Funding Council for England, John Denham, the Universities Secretary, demanded savings of ?490 million by 2010-11.

Of this, ?363 million had to found by Hefce, and ?1 million by Mr Denham's Department for Innovation, Universities and Skills.

In board papers now published online, Hefce sets out how its target will be delivered.

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Some ?236 million will be saved through "reprioritisation", including reductions to funding streams, cutting funding for equivalent or lower qualifications and "reducing bureaucracy".

The remaining ?1 million will be saved through "improved use of resources", such as more efficient procurement, shared services and better use of assets and technology.

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The figure was achievable, said Philip Harding, chairman of the British Universities Finance Directors Group, but he warned that goodwill would soon drain away if the sector was not reassured that the money would be reinvested.

"I think a lot of the energy that goes into generating efficiencies would start to dissipate if this was seen as a means of squeezing the sector to support public finances more generally," he said.