Mandelson wants students to be treated as customers. That means requiring universities to produce data on how they teach, the prospects of graduates and so on. You do not need a degree in statistics or behavioural economics to know what this will lead to. Universities able to invest in creative accounting for spending will rise to the top of the tables that will look just as they do now. The majority of students will continue to choose their university on the basis of geography (how close it is to home or how much they want to live in a particular city) and on an assessment of where they can easily get a place.
Contrast Mandelson's ideas with another development in higher education, publicised last weekend. The Financial Times report