Mandelson says cuts a "chance" for universities

The rooftops of the university city of Oxford are seen from the south west, January 22, 2003.

LONDON (Reuters) - Business Secretary Peter Mandelson said planned cuts to university funding should be seen as a chance for institutions to rethink how they are organised.

He said the proposed 950 million pound cuts over the next three years affected only a small proportion of university resources.

"Tighter budgets can be a spur to further diversifying the funding of British universities," Mandelson wrote in the Guardian newspaper's Education section

"It can also focus minds on teaching and research excellence and new ways of delivering higher education," he added.

A group of leading British universities has complained that the cuts would send the university system into meltdown and risk harming the long-term competitiveness of the British economy.

Mandelson said Labour, in power for 13 years, had been a strong supporter of university expansion.

"UK universities have never enjoyed such a long and sustained period of public financial and political support. Since 1997, we have put higher education at the centre of our strategy for building a modern knowledge economy."

Britain faces a new era of public spending curbs after this year's general election as the government will need to cut a budget deficit in excess of 12 percent of GDP.

Mandelson said the cuts would be tough but denied that they would cripple the system.

"I don't deny that this is a challenging agenda. But by no stretch of the imagination does a 5 pct reduction in public support over a number of years for universities reverse a decade of committed investment in universities, or leave our best institutions on their knees."

(Reporting by Keith Weir; Editing by Steve Addison)