Wakeham: Cut fEC Indirect Costs by 5%

On 24 June Bill Wakeham, former VC of Southampton, announced the outcomes of a review to implement the recommendations made by the Full Economic Costing (fEC) Review published in November 2009.
Whilst recognising the success of research in the UK, he said that 'in the current economic climate we will see restrictions in public expenditure and higher education in the UK will need to play its part in demonstrating greater efficiency.'
'Greater efficiency' means cutting 5% p.a. off the Indirect Costs rate for university fEC budgets for the next three years. For those with a lower rate - including Kent - this will be 2.5%. This seems to go counter to the original ethos of fEC, which was to ensure the sustainability of research in higher education. If it was decided that the current indirect costs were set at a sustainable level, surely 5% below that is not sustainable?
The press release from RCUK/UUK is available here, and the full report is available here.