Any fee increase must be linked to widening access, says Lord Mandelson
Universities must protect access for poorer applicants if they are to be allowed to raise tuition fees, said Business Secretary Lord Mandelson.
In a speech on the future of higher education, Lord Mandelson said university admission processes must do more to promote social mobility.
"We are doing better, but not well enough," he told university leaders.
Conservative university spokesman David Willetts said the government should "get on with the tuition fees review".
The lecturers' union, the University and College Union, said the business secretary appeared to "give a green light" to raising tuition fees.
Lord Mandelson's speech, delivered at Birkbeck, University of London, set out the major issues facing the university sector.
Funding remains the biggest concern. "Bluntly put: excellence is not cheap," Lord Mandelson said.
Lord Mandelson: "Graduates face the toughest job market in years."
A review of tuition fees is to begin in the autumn - and Lord Mandelson said any higher charges to students must take into account the needs of poorer families.
"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 said.
Last week, former minister Alan Milburn delivered a report on social mobility which was critical of universities' performance in recruiting students from disadvantaged backgrounds.
Lord Mandelson, highlighting the lack of progress, suggested universities should engage with potential applicants at a much earlier stage, becoming more involved with schools.
"We are doing better, but not well enough. I am impatient about this progress and intend to turn up the spotlight on university admissions," he told university leaders.
But he said that such decisions on admissions would remain with individual universities and there would be no "straitjacket" of regulations from government.
"I'm less interested in social engineering than getting a supply of good engineers," said Lord Mandelson.
Lord Mandelson rejected as outdated the idea that there was a contradiction between the pursuit of excellence and the expansion of opportunity.
"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," said Lord Mandelson.
"But the only way to square that circle is a higher education system that widens access and increases social mobility even as it fosters excellence."
If this language suggests the end of Oxbridge-bashing, he also presented the tuition fees debate in the context of a university sector rapidly moving away from its traditional image.
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
Fees and loans would have to reflect the changes in the student population, he said, with the growth in mature and part-time students, many living at home.
Only one in three students is now in the straight-from-school 18 to 22-year-old age bracket, Lord Mandelson told the university leaders.
This raises the prospect of a fees system which will also become more diverse, with different levels of fees and loans for different types of student.
Lord Mandelson is to launch a framework for higher education in the autumn, setting out a blueprint for its future.
This is likely to consider developments across the UK. Lord Mandelson's responsibility is primarily for English higher education, but much university funding comes via research councils which are UK-wide.
But ahead of that framework, he announced a review of postgraduate education, to be carried out by Professor Adrian Smith, director general of science and research in his department.
Postgraduate courses have become an important source of income for universities, particularly from overseas students.
But there have been concerns about the quality of some courses and questions about whether there should be greater strategic planning.
"It is a major export earner for the UK, and one which we have perhaps taken too much for granted," said Lord Mandelson.
The framework document is also expected to review how the quality of university courses is assured - and in his speech Lord Mandelson will call for "ways of incentivising excellence in academic teaching".
Dr Wendy Piatt, director general of the Russell Group which represents leading universities, said that the level of fees was not the barrier to applications from young people from disadvantaged backgrounds.
"It may be counter-intuitive, but actually we know from the evidence that finance plays very little role in determining whether a child goes to university."
Professor Paul Wellings of the 1994 Group, research-intensive universities, welcomed the review of postgraduate education, saying "there are a number of issues that need urgently to be examined".
The Conservatives' university spokesman David Willetts called on the government to bring forward 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."
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