Extracts from Charles Clarke's speech at University College, Worcester on April 8.
"In 1976, the then prime minister James Callaghan caused a storm because he dared to question the role of education in his famous Ruskin speech... The questions he raised caused a whole degree of thinking about the relationships between the state and universities. I think a re-assessment of that kind is necessary now.
"The other day I heard a vice-chancellor argue that the purpose of a university was, in his words, the unfettered pursuit of truth and excellence. Another distinguished academic wrote a paper in which she argued that we should get back to a medieval concept of the university as a community of scholars unfettered by difficulties and problems of the wider society.
"These are perfectly legitimate approaches and justifications that stand up in their own account as to what institutions do and how groups of scholars come together. They don't, in my opinion, add up to an explanation or justification for how the state provides resources for universities in the modern world.
"I have to ask, as a guardian of these resources, why the state should fund universities and what is their value. My central argument is that universities exist to enable the British economy and society to deal with the challenges posed by the increasingly rapid process of global change... "It is the main reason I want to put more resources into universities. It is critically important for our society to have intellectually independent, articulate university communities to help us master this process of change."
• On research: "Research has the purpose of trying to understand the causes and effects of change."
• On teaching: "If universities are not able to help the people in this country understand the changes that are taking place it will be difficult for them to address those changes and act in a proper way. I justify funding teaching because it is the way we help people understand this process of change."
• On knowledge transfer: "Universities can help all institutions in our society understand change.
"Each university needs to have a pretty ruthless discussion with itself about its own mission: research, teaching and knowledge transfer - whether it is good or not; and how it can assist the process of change.
"There is a woolly minded approach to universities in this country that says that all universities are basically the same.
"Actually, we have a highly diverse higher education system today. I think that is a strength of our university system."
• On reviewing institutions' missions: "I think it is very difficult and very tough for a university to have a frank assessment of this, particularly when there are many people in universities who believe that what they are doing is just completely spot-on and that anybody who questions what they are doing is basically a dishonest and nasty individual who cannot be trusted to engage in any serious conversation at all."
• On the importance of collaboration: "Even if one university cannot do all of these things to the ultimate, there is no reason why a group of universities cannot do all of these things to the ultimate. But that means facing up to how they work together and what they do, and that is very tough.
• Conclusion: "I argue that what I described as the medieval concept of a community of scholars seeking truth is not in itself a justification for the state to put money into that. We might do it at say a level of a hundredth of what we do now and have one university of medieval seekers after truth that we thought were very good, to support them as an adornment to our society. But I don't think that we will have the level of funding that we do now for universities unless we can justify it on some kind of basis of the type I have described.
"If the analysis that I have discussed tonight is accepted - it may not be because there may be one or two medievalists in the room - the question is what does it mean to universities now?"