Mandelson delivers warning on university funding

Lord Mandelson today warned the UK needs to "face up" to paying for excellence at its universities.

But if universities want to charge students more they will be expected to ensure the poorest applicants are not priced out of higher education, he said.

It is likely to be taken as the strongest indication yet that the Government is looking at raising the cap on tuition fees.

In a speech to university vice-chancellors at Birkbeck University in central London today, Lord Mandelson said: "I do not believe that we can separate the issues of fees, access and student support. Any institution that wants to use greater cost to the student to fund excellence must face an equal expectation to ensure that its services remain accessible to more than just those with the ability to pay."

The Business Secretary said it was time for the debate on higher education funding to reach some "hard and fast" conclusions.

He said: "Whatever funding mix for higher education we develop, there must always be a link between what an institution charges and its performance in widening access and supporting those without the ability to pay."

He added: "We have to face up to the challenge of paying for excellence."

Lord Mandelson said he did not want to pre-empt the outcome of a tuition fee review which is due to begin later this year.

The review is expected to take around a year, Lord Mandelson said.

This means it will not finish before the next general election.

In a wide ranging speech, Lord Mandelson set out the major issues facing the sector, including the economy, social mobility and funding.

On the issue of funding he said: "Bluntly put, excellence is not cheap."

The Government has to ensure UK universities remain world class while addressing the pressure on public resources, he said.

But the University and College Union (UCU) said it was concerned Lord Mandelson appeared to give a green light to higher fees.

UCU general secretary Sally Hunt said: "Education is vital to our future prosperity, not something to be rationed and higher fees would be about as popular as the poll tax with hard working families.

"In a time of recession the Government should be considering how to make access to education cheaper, not giving a green light to universities who wish to charge higher fees."

Wes Streeting, president of the National Union of Students (NUS) said: "Lord Mandelson's emphasis on social mobility and supporting poorer students ahead of the review of tuition fees is encouraging, but those universities pressing to charge higher tuition fees are the very same institutions who have made insufficient progress in ensuring that their doors are open to those from poorer backgrounds.

"There is no evidence to suggest that bursaries offered by elite institutions have made a dent on widening access. Given that, last year, £19 million of student fee income earmarked for bursaries went unspent, it is not clear that universities can be trusted to ensure that poorer students are properly supported and encouraged to apply."

Shadow universities secretary David Willetts said: "The Government needs to get on with the tuition fees review.

"Lord Mandelson touches on a number of important issues in his speech but everyone in the university sector is waiting for the fees review and there is no need to delay any longer."

Lord Mandelson also told vice chancellors the UK is at risk of failing to exploit the role of universities as a way of improving social mobility.

"I think that the historic anti-elitism of some parts of the left on education policy has often been a dead end because it has confused excellence and privilege.

He warned he was impatient about the progress made in getting more poor students to university and said he would "turn up the spotlight" on university admissions.

A university education is still the "gateway" to the professions, he said.

"I think we have to ask: why, for all the work in the sector and all the seriousness with which it has tackled this question are we still making only limited progress in widening access to higher education to young people from poorer backgrounds - especially at our most selective universities?"

Professor Paul Wellings, chair-elect of the 1994 Group of universities and the vice chancellor of Lancaster University, said: "1994 Group universities are strongly committed to improving access and are using a significant amount of income from fees to offer variable bursaries to assist fair access and encourage students from lower socio-economic groups to attend world-class research-intensive universities.

"Widening access and encouraging social mobility is at the heart of the founding vision of many 1994 Group universities."

Dr Wendy Piatt, director general of the Russell Group of leading universities, said: "With regards to the admissions process, our universities already draw on a range of factors and information in order to identify potential, which may not be reflected in traditional qualifications. For example, some universities will take into account any particular barriers the candidate may have faced during their education such as spending time in care."

Lord Mandelson also revealed there will be a review of post graduate education, which will be carried out by Professor Adrian Smith, director general of science and research at the Department for Business Innovation and Skills.

A spokesman for university think tank million+ said: "Million+ welcomes Lord Mandelson's recognition that universities are an engine for social mobility and a 'social trust' which contribute to the economy and to society in its broadest sense.

"The holistic fees and funding review to which Lord Mandelson committed today will also be welcomed by those who believe that students of all ages and backgrounds should have access to support so they may take advantage of all of the opportunities that universities provide."

Diana Warwick, chief executive of Universities UK which represents vice-chancellors, said: "Lord Mandelson's speech this morning was a thought-provoking and encouraging insight into his view of the future direction for higher education in England.

"Universities share his commitment to excellence and his acknowledgement that this 'does not come cheap" is particularly welcome in the current economic climate, when difficult decisions will have to be made."