Dr Evan Harris, writing in the Guardian, summaries the controversy quite clearly, quoting James Wilsdon of the Royal Society who explains why Cable got it so wrong:
'In the last Research Assessment Exercise, 54% of the work that was submitted for assessment was classed as 3* or 4*, which means it is, by definition, world class. This research receives £980m from Hefce. Research that is 2* (which Hefce still regards as 'internationally recognised') gets £115 million and 1* research gets nothing. So Hefce allocates the vast majority – nearly 90% – of its funding to world class research.'Elsewhere others are exasperated at Cable's call for UK science to be more efficient and 'do more with less.' '1% of the world’s pop. but contributes 8% of its sci papers, and 12% of journal citations,' quotes one tweet, which speaks for itself, whilst Chris Tyler says 'just read Cable's speech. So spending more on science would be good for UK AND we will see science budget cuts.'
Finally, to finish up the round of rumours, there's talk of how large the cuts will be. The current rumour is that 'BIS may settle with Treasury next week -10% plus inflation is best case but -15/-20% more likely.'
We'll wait and see.