Source: World Economic Forum

Speaking to journalists before delivering a speech at Universities UK in London on 20 February, the former business secretary said that “any solution that leaves universities less well funded than they are at the moment is not the right solution”.

He added that in his view it was “inconceivable” that a Labour government would do “any less” than the coalition has done to maintain funding for higher education.

Labour has been considering whether to pledge to lower the fee cap from £9,000 to £6,000 as an election commitment.

Lord Mandelson acknowledged that Labour had still not agreed its policy on university funding, despite suggestions that it intends to announce its plans next week.

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The party’s position on fees “is not finally landed”, he said, adding that while he was not speaking on the party’s behalf, he was not personally “wedded to any particular level of tuition fees”.

He argued that “we need patient discussion and consultation because it is a very complex area of policy, and any new policy needs to be fully informed by the facts – facts which are always easier to come by in government than in opposition. I would hope that…whatever conclusions the Labour party reaches, if they want to change the current approach they leave the door slightly ajar.”

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There have been suggestions that Labour is considering making a pledge to hold a major review of higher education after the election – potentially giving it cover to avoid announcing a detailed funding policy before the election.

If the fee cap were lowered, Lord Mandelson said, it was “absolutely vital that replacement funding from taxation is identified and announced at the same time, not in a generalised way but in a specific way, because that will ensure that no credibility gap opens up either around university funding or the Labour Party’s commitment to reducing the fiscal deficit”.

In the speech itself, delivered to an audience of vice-chancellors, Lord Mandelson warned that in a “more fiscally tight environment…none of the parties’ manifestos are going to expand state funding, that is obvious, so you will have to continue to look to the existing combination of fees, foreign students, industrial collaboration and private sources to maintain existing numbers and standards in the universities.”

Any cuts to the overall higher education budget would threaten to undo some of Labour’s achievements while in office, he added.

On “student teaching and facilities and support for wider access”, he said that “if overall financing falls, inevitably all these will be the early targets of cost savings”.

“Nor would I like to see research intensive universities cutting back or a reduction in the more costly science, technology, engineering and mathematics courses if overall funding is threatened,” he added.

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“Critically, universities need long term planning and stability,” he concluded.

Lord Mandelson, the last Labour cabinet minister with responsibility for higher education, said he was broadly supportive of the university funding reforms introduced in 2012.

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Those reforms had followed the Browne Review – set up by Lord Mandelson while in office.

“In effect, on behalf of the Labour government, I was inviting the universities to strike a deal with us: as a result of the necessary reduction in public funding, they would increase sources of non-state funding – from foreign students, industrial collaboration and private sources – in return for higher tuition fees from individual students,” he said.

Labour’s progress in increasing the number of students, particularly those from poorer backgrounds, has “not been dented by the steep increase in tuition fees since 2010”, he added.

Sally Hunt, general secretary of the Universities and College Union, said: “Labour’s sideshow on the level of university fees has become something of an embarrassment for the party with even the likes of Peter Mandelson wading in to the debate.

“The time has come for the party to make clear its policy.”

She added: “If we are to continue to thrive as a global academic power we need stable funding and if we are to ensure that everyone who would benefit from higher education is able to attend, we need to follow Germany’s example and make tuition free.

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“We can continue to featherbed big business with a corporate tax regime which is more generous than even the United States, or we can change direction and ask the most profitable companies to pay fair tax in order to fund access to university for the next generation.”