Clarke calls for student vouchers

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The Chancellor is urging the Government to press ahead with plans for a radical education voucher scheme for 16- to 19-year-olds. Kenneth Clarke aims to slash the pounds 3bn higher education budget under a scheme to replace the existing local authority grants.

Expansion of higher education has stalled because of mounting costs after a decade of rapid growth. In a leaked memo to Cabinet colleagues last month, Gillian Shephard, the Education and Employment Secretary, spoke of the dangers of disappointing expectations if growth could not be resumed.

It was revealed last night that two weeks ago Mr Clarke wrote to John Major and Tony Newton, co-ordinator of the Government's legislative programme, saying: "I am convinced that learning credits are the right policy for 19-year-olds."

Under the scheme, vouchers would be available to anyone who secured admission to a recognised university or college, but they would cover only a minimum fee. Higher-value vouchers could be available to students with high grades, or on acceptance to higher-ranking institutions. But colleges would be entitled to require a top-up if they still fell short. Students could borrow the top-up fee from student loan schemes, charging commercial rates of interest, and repay it through tax or national insurance.

The scheme would save pounds 1.8bn a year, which Mr Clarke believes would allow the Government room to resume expansion of higher education.

The Department for Education is currently reviewing the financing of higher education, and Labour has said it is prepared to look at the idea of a graduate tax.

But the proposed voucher scheme goes further than any politician has been prepared to do so far, in suggesting graduates pay towards the cost of their education as well as their college living expenses.