There will be no “large injection of public money” into England’s higher education system in the coming government spending review, Jacqui Smith has warned.

Speaking at an event hosted by the Resolution Foundation thinktank, the skills minister said a “longer-term solution” on tuition fees was coming but those expecting the state to take on more of the cost of funding the system will be left disappointed.

“These are difficult times for government finances and there won’t be a large injection of public money,” Smith said.

“Therefore, there will need to be strong sector collaboration and much more effective spending.”

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Smith gave the speech at the launch of a new report by former universities minister and Resolution Foundation President David Willetts, which argues that higher education is still “worth it”, both for the graduate and wider society.

The current minister said she agreed with this core argument but stressed that the importance of higher education should be a “spur for further reform”, warning the sector against “complacency”. “There is no blank cheque to act as a cushion,” she said.

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Confirming that a programme of “broader reform” of higher education will be outlined by the government this summer, Smith said this will focus on key priorities including access and participation and developing new models of collaboration and partnership working.

Referencing the coming Lifelong Learning Entitlement, she said that a system allowing people to experience higher education in different ways, at different points in their lives, “implies greater diversity of provision”.

Responding to a question about university bailouts in light of the current financial circumstances in the sector, Smith said “one of the strengths of our higher education system is we have autonomous higher education institutions”.

“It is not for government to substitute itself for what needs to be happening – yes more broadly in the financing system of HE – but particularly in the governance of higher education at those autonomous organisations in order to ensure they can continue to be successful and continue to achieve. They may need to organise themselves differently in order to do that.”

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She said that an efficiency task force recently launched by Universities UK was a “good start”, expecting its findings to be “challenging and ambitious” and added it was right that these decisions will be “sector-led”.

Returning to the funding question, Smith said it was recognised that there needed to be a “longer-term solution on tuition fees”. Vice-chancellors have called for her to allow fees to rise with inflation yearly after bringing an eight-year freeze to an end last November.

“It is already of course the case that whilst we do have a high proportion of contribution from students repaid through the loan repayment system there is some central government resource that goes into the higher education sector,” Smith added.

But she said that in the current wider financial situation “it will not be the case that there will be an enormous transferring of the funding of higher education from the current student contribution system to a taxpayer-funded system”.

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Smith did mount a defence of courses that are less directly linked to economic success for the graduate and society.

“I think it is perfectly reasonable to say there is an economic benefit from higher education but there are some courses which don’t bring the graduate premium or the economic benefit but which are nevertheless important for those individuals and more widely for us as a society and I wouldn’t want us to therefore say that somehow they are of lesser worth.”

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tom.williams@timeshighereducation.com