Two-year degrees, which Lord Mandelson has identified as key to the future of UK higher education, may not be economically viable, evidence suggests.
The Higher Education Funding Council for England financed seven projects to pilot fast-track degrees alongside other forms of flexible learning from 2005 to 2007.
But a review by the Higher Education Academy found that most were viable only because they were backed by at least £250,000 in development funds from Hefce.
It concludes that it is not clear whether the programmes would remain stable once the funding ran out, which suggests that extra cash and more sophisticated funding mechanisms may be required if the sector is to expand accelerated degree programmes significantly.
In a speech to the Lord Dearing memorial conference at the University of Nottingham earlier this year, Lord Mandelson said that he wanted to see "more two-year foundation degrees and three-year honours courses delivered intensively over two years ... as part of the mix".
With this in mind, he said he had asked Hefce to advise on "how we best use the public funding system to offer the right incentives" to promote fast-track degrees.
Hefce indicates in a consultation document on the future of teaching funding launched last month that it is looking at ways to use funding allocations to drive "policy priorities", giving the example of "a shift away from three-year degrees".
One of the universities that participated in the pilot scheme complained that it would be "providing a three-year syllabus in return for two years' tuition fees", the HEA review notes.
Universities also had to bear the additional costs of student support throughout the summer, and found that course preparation for distance and "blended learning" pilots was more expensive than for traditional face-to-face teaching. For most of the pilot courses, recruitment was "below target", says the HEA report, which was completed last year.
'We'll lose out'
Steve Wyn Williams, director of academic development at the University of Staffordshire, one of the participants in the pilot, said: "Under current funding arrangements, any university that is experiencing a cap on recruitment must lose money if it recruits students to a fast-track degree.
"This is because the level of funding per student is insufficient to cover the costs."
The viability of fast-track degrees would be "substantially enhanced" if universities were allowed to charge a higher annual fee for accelerated programmes, he added.
Some universities have already rejected Lord Mandelson's suggestion on the grounds that academics need the summer free from teaching to conduct their research (see box left).
There are also concerns that European universities will not recognise two-year degrees, as the Bologna Process states that a bachelor's degree should be three years.
Bahram Bekhradnia, director of the Higher Education Policy Institute, said the government was attracted to two-year courses because they were cheaper.
He said: "The government saves 30 per cent or so of the cost of tuition and maintenance loans. But universities still have to teach them, and given that the main cost to a university of providing for a student is the cost of academic staff, the HEA report's findings are not a surprise."
In the early 1990s, the Conservative government encouraged two-year degrees, he added. "They were not a success then, and I believe that none has survived," he said.
"Our degrees are already the shortest in Europe by some margin, and less is required of our students in terms of the study hours they put in. Any widespread adoption of truncated degree courses would risk damaging our reputation," Mr Bekhradnia concluded.
NEWCASTLE'S COOL RECEPTION FOR FAST-TRACK COURSES
The introduction of two-year degrees would "undermine the idea of research-led teaching", the senate of a Russell Group university has argued.
Minutes of a meeting of Newcastle University's governing council say that the senate argued that fast-track degrees would require the academic year to be extended to at least 45 weeks, which would reduce the time for research.
The minutes note that Newcastle mainly attracts 18- to 21-year-olds, who are thought to prefer three-year degrees, particularly as they allow time for summer work placements.
"Students were also thought to benefit from the maturing process provided by three-year degrees," they add.
Responding to the arguments at a council meeting in February, governors note that a two-year degree "would be an appealing prospect to those unfamiliar with the operations of a research-intensive university", and add that Newcastle would "therefore need to communicate clearly its reasons for not wishing to pursue this option".