University funding for 2012-13

Here is the letter  from BIS. There is going to be a cut in teaching funding but research is mostly ok, with Willets saying "Our universities play a vital role building the skills and knowledge Britain needs to grow. That is why we have protected HEFCE funding for research " 
but it looks like he does not think teaching plays a role in the knowledge economy? We knew the teaching cuts were coming but the £830M drop is still staggering!