A review of all higher education funding agencies was formally announced today by Lord Mandelson, the First Secretary.

In a speech at the London School of Economics, Lord Mandelson said the Department for Business, Innovation and Skills, which is responsible for universities, would ¡°play its part¡± in public-sector reform.

He announced ¡°a comprehensive review of the role played by national-level institutions such as the Higher Education Funding Council for England, the Skills Funding Agency, the research councils and the Technology Strategy Board, and their relationship to central Government¡±.

The review will aim to cut ¡°overlapping bureaucracy and duplicated programmes¡±.

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In July, Liam Byrne, Chief Secretary to the Treasury, asked Whitehall departments to review their quangos with a view to their possible merger or abolition.

Lord Mandelson added: ¡°A renewed focus on reform must be a core ingredient in the mix if we are to continue to deliver quality public services in a different climate for public spending.¡±

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The pace of that reform will be accelerated because of the economic crisis, he said.

The peer contrasted new Labour¡¯s ¡°invest-and-reform¡± policy with the Conservatives¡¯ ¡°thinly disguised zeal¡± for ¡°deep, savage, indiscriminate across-the-board spending cuts¡±.

David Cameron, leader of the Conservative Party, has also pledged to cut the number of quangos ¨C and their executives¡¯ pay ¨C if he comes to power.

Hefce is already committed to its own efficiency review this autumn, chaired by Dame Sandra Burslem, former vice-chancellor of Manchester Metropolitan University.

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This review will scrutinise Hefce¡¯s policy development and advice; funding administration and policy implementation; regulation of the sector; accountability for public funding; and promotion of good practice.

Hefce said the review will focus on the body¡¯s performance over the past five years and ¡°will not consider wider questions about the existence per se of a body such as Hefce¡±.

Andrew Haldenby, director of Reform, the free-market think-tank, said in July that responsibility for university funding was a ¡°fundamentally political question¡±, so Hefce should be taken in-house so that ministers were accountable for such decisions.

melanie.newman@tsleducation.com