The Government will consider “all options” to deliver a more robust higher education sector amid reports of the “financial peril” facing universities, a minister has said.

Baroness Jacqui Smith, universities, skills and apprenticeship minister, said she is committed to ensuring that there are plans in place to mitigate risks to institutions which are “under financial strain”.

But addressing university leaders on Wednesday, Baroness Smith said the Government is looking at how it can help in a way where the state does not take on the “whole responsibility” of funding the higher education system.

She said: “You cannot have independence and then also expect there to be a wholly state-funded system, or for example to be in the public sector which would be a very different place for HE to be.”

Her comments come after university leaders warned of significant financial concerns and “danger” as a result of frozen tuition fees paid by domestic students and a drop in international students.

In July, the University and College Union (UCU) called on the Government to offer an “emergency rescue package” for the sector amid concerns about universities struggling financially.

Speaking to the annual conference of Universities UK (UUK), which represents 141 institutions, Baroness Smith said: “I hadn’t been in the job an hour before people were outlining for me the real financial peril that the sector faces.

“Higher education providers are rightly independent from Government and have a responsibility to plan prudently to ensure their long-term sustainability.

“However, I am well aware that providers are under financial strain.”

She added: “I’ll be working closely with the OfS (Office for Students) to understand the sector’s changing financial landscape, and I’m committed to making sure that there are robust plans in place to mitigate risks as far as is possible.

“And we’re determined in government that the higher education funding system should deliver for our economy, for universities and for students, and we are carefully considering all options to deliver a more robust higher education sector.”

In a speech to vice-chancellors in Reading, Berkshire, Baroness Smith said “improving access and progression for students” was a key aim for the Government.

“It’s absolutely vital that access to higher education should be based on individual ability and attainment, not fettered by where you happen to live or simply the success or otherwise of your parents,” she added.

University leaders have been calling on the Government to raise the annual tuition fee for domestic students in line with inflation to help institutions struggling financially.

The previous government raised the cap on university tuition fees in England to £9,000 a year in 2012 but it has been fixed at £9,250 since 2017.

There have also been widespread calls across the sector for more maintenance support for poorer students facing cost pressures.

But Baroness Smith did not set out any specific policies on the higher education funding system during her speech on Wednesday.

In a question and answer session with the minister at the event, Professor David Maguire, vice-chancellor at the University of East Anglia (UEA), said: “There are people in this room whose initial business plan for this year has been hit by tens of millions of pounds reduction in income from student fees.

“Across the sector, we’re looking at about a 50% reduction in the number of international postgraduate taught students.”

He added: “I just want to underscore the really significant importance and the clear and present danger which some universities face at the present time.”

During her speech, Baroness Smith said: “I’d like to state as plainly as I can that international students are, and will continue to be, welcome in the UK.”

She also spoke about the Government’s decision to put the Higher Education (Freedom of Speech) Act, which was due to come into force in August, on hold.

Addressing vice-chancellors at the University of Reading, she said: “We are completely clear that higher education must be a space for robust discussion, where students and staff hear and express a host of diverse opinions and are able to challenge each other and ideas.

“But concerns, of course, have been raised about the Act as it stands, that that wasn’t the way to achieve those ends, and indeed risk making matters worse not better.

“Academic freedom and freedom of speech are too important for us to risk getting this wrong, and that’s why we will consider further and we’ll be announcing what the future holds for this Act as soon as possible.”

On Thursday, Dame Sally Mapstone, president of UUK, and Peter Kyle, Secretary of State for Science, Innovation and Technology, will address the UUK annual conference at the University of Reading.