Blunkett warns Blair over top-up fees

David Blunkett has warned Tony Blair that his own legacy as Education Secretary is being "undermined" by the proposal to allow universities to charge students top-up fees.

Mr Blunkett, who headed the education department from 1997 to 2001, was the main author of Labour's election manifesto promise not to introduce top-up fees. He fears that the families hardest hit by the introduction of fees will be those on incomes between £20,000 and £30,000 a year – because anyone on a lower income will almost certainly be exempt.

Most state school teachers fall within this category – putting them in a position where they will be grooming pupils for university places which their own children cannot afford.

Mr Blunkett's opposition means that if Tony Blair goes ahead with the proposal, he will have to deal with opposition from his two most powerful Cabinet colleagues. Gordon Brown, the Chancellor, has also criticised an idea which he thinks could stand in the way of Labour's target of getting 50 per cent of young people through university.

Top-up fees have been opposed by Britain's two main higher education unions in their first joint policy statement on university funding.

The document will make uncomfortable reading for Charles Clarke, the Secretary of State for Education as the political row over extra tuition charges rumbles on. Its conclusions will be a blow to Mr Blair and his education advisers who are working furiously behind the scenes to galvanise support for the controversial fees system.

But the lecturers' unions have put themselves firmly in Mr Brown's camp. While finding no justification for top-up fees to be introduced, they did have some sympathy with the idea of some form of "graduate tax" understood to be supported by Mr Brown.

The Government appears to base its thinking on the idea that a graduate will earn, on average, £400,000 more than a non-graduate over a lifetime.

Mr Blair has been warned repeatedly by his own ministers that the idea of top-up fees is "unsellable" and that the Labour Party is certain to oppose them. He has even been told that this is the kind of issue which "people march in the streets over".

But the proposal seems stuck to his agenda. Recent reports claimed Mr Blair had summoned the heads of eight universities to Downing Street to discuss a range of possible fees with Mr Clarke and the head of England's Higher Education Funding Council.

The trade unions, so far silent, are determined that their voices will be heard as the Government drafts its higher education strategy document, due to be published early in the new year.

Natfhe, the university and college lecturers union, and the Association of University Teachers blame the crisis in higher education on "decades of under-funding". Their joint document says that a new system of fees is being presented as "inevitable".

But the unions judge each proposed system against six key tests:

* whether a new system will extend access;

* whether it will encourage social equality and mobility;

* whether it will free up new money for teaching;

* whether places will be awarded on merit;

* whether it will enhance the existing system;

* and whether it will draw its funding from all who benefit – students and employers as well as society as a whole.

According to the joint document, top-up fees would "fail every one of the above tests". It concludes: "The Scottish system does pass these tests. Students do not pay fees up front but only when they have graduated and are earning more."

Sally Hunt, the AUT general secretary, said: "People are incredulous that ministers are even considering introducing top-up fees – which are seen as elitist. If brought in they could easily become this government's poll tax."

'We couldn't have paid higher fees'

By Jonathan Thompson

Hannah Fox and Katie Taylor both graduated from Reading University in 1997. While Katie earns £42,000 a year as a PR in the private sector, Hannah earns half that working for a charity.

Hannah rents a flat in Clapham, south London, and finds she cannot keep up with the expensive lifestyle led by her friends. She has paid off her student debts, but says top-up fees would have prevented her from following her chosen career path. "I wasn't motivated by promoting products for large corporations," she said. "I wanted to do something that was worthwhile.

"My friends can shop in more luxurious places than I can and it shows in terms of holidays and security for the long term. I would never go back to the corporate sector but I can't say it's not tempting, especially when I have to make hard decisions now. I don't own my own house and I don't have any idea how I ever could."

Katie admires Hannah's principles, but says she couldn't afford to do the same."If I had the kind of debts that graduates are facing now I wouldn't have my own house," she said. "Hannah made a decision that business wasn't for her. I would find it hard to take such a big pay cut.

"Everybody has to consider the financial aspect in the beginning but once you've got more disposable income after a few years you can afford to ask, 'is this job for me?'. But the immediate thing to ask is, 'do I have enough money to live on?'."

Graduates are £400,000 better off (so how come?)

By Andy McSmith

We asked the Department of Education how they estimated that a graduate will earn an extra £400,000 over a working lifetime; this is the answer:

"This figure is based on data taken from four quarters of the Labour Force Survey (LFS), between autumn 2000 and summer 2001. The analysis is based on gross weekly earnings of full-time employees (including people on government employment and training programmes) in Great Britain, between the ages of 20 and 59. Graduates are defined as individuals whose highest reported qualification is a first degree.

"Average weekly earnings were obtained from the LFS for the following age groups: 20-24; 25-29; 30-34; 35-39; 40-49; and 50-59. Information on the employment rate of graduates and the national employment rate was also obtained for the same age groups. The gross weekly earnings figures were deflated by the respective employment rates, to account for the fact that not all individuals are employed at any point in time.

"The deflated weekly earnings were averaged over the four quarters, and grossed up to annual estimates, for each age group. Since the averages relate to the age groups, they were taken as proxies for the average (deflated) annual earnings at each age in the group. Multiplying the average earnings by the number of years in the age group, and summing across all groups, provides an estimate of average lifetime earnings for graduates and the national average. Taking the difference between these two summations, gives the £400,000 premium figure.

"The £400,000 is an estimate based on a snapshot of earnings differentials at one moment in time, as a 'pseudo-cohort' and thus an estimate of what people could earn at different ages in their careers – between ages 20-59. The assumption is that these earnings differentials by age will be unaffected by future changes in the supply of and demand for graduates, and therefore will be enjoyed by future graduates. The lifetime earnings differential is simply the sum of the differentials at each age."

Hope that clears that up.