Minister rejects ‘blank cheque’ funding for universities in crisis, urges reform instead

Universities Minister Jacqui Smith has rejected “blank cheque” government funding for higher education, instead warning the cash-strapped sector against “complacency”.

Baroness Smith, the Minister of State for Skills, suggested that tuition fees will remain the primary source of higher education funding, in a speech delivered at an event by the Resolution Foundation think tank on 20 January.

Bridget Phillipson, the Education Secretary, confirmed a rise in tuition fees on the same day.

Smith emphasised a need for sector-wide reform, while blaming a lack of further funding on the precarious state of public finances left by the previous Conservative administration.

Her focus on efficiency savings comes as Labour juggles calls from trade unions for investment with the sluggish state of the economy and high borrowing costs.

Smith’s speech was responding to a report launched at the event by the Conservative former Universities Minister David Willetts, which dismissed so-called “edu-sceptics” and criticised “government micro-management” limiting students’ choice of course.

The report, titled “Are universities worth it?”, concluded that higher education remains an economic and cultural net positive for the country, but requires more funding from increased tuition fees.

Smith […] stated that “there is no blank cheque to act as a cushion” in place of substantial reform

Smith agreed with Willetts on the economic benefits of universities as well as on the importance of autonomy for higher education institutions, but stated that “there is no blank cheque to act as a cushion” in place of substantial reform.

She questioned whether the sector was doing enough to support the government’s ‘growth mission’, given that “tangible results” are key to maintaining the global reputation of British higher education.

Her speech anticipated “challenging and ambitious” results from an ‘efficiency task force’ led by Universities UK, which will examine opportunities for savings and income-generating collaboration.

Smith also pushed back against critics of less economically beneficial courses, suggesting that those courses are “nevertheless important for those individuals and more widely for us as a society”. Her refusal to label certain courses as “of lesser worth” marked a less combative approach compared to the Conservatives’ criticism of “Mickey Mouse” degrees.

Economic growth was not the only focus of her speech. She stated that increased accessibility should accompany growth, and highlighted the “greater diversity of provision” made possible by the Lifelong Learning Entitlement (LLE).

The LLE, launching in September 2026, will standardise the existing student finance system by allowing under-60s to take out a loan for four years of post-18 study. The loan can then be used throughout the recipient’s lifetime.

This will be accompanied by Alternative Student Finance for those whose faith prevents them from taking out loans with interest.