Could the rebels take the House?

Top-up fees have bitterly divided Labour MPs, and the Government faces defeat unless it can sell its plans better or come up with concessions. Lucy Hodges hears how the rebels plan to make life difficult for the Prime Minister in the months ahead

Yesterday, Labour MPs opposed to top-up fees met to plan their tactics. They know they have the Government on the run and they plan - with the help of the Conservatives and the Liberal Democrats - to wreck ministers' plans or at the very least to wring concessions out of them. The two Labour ring-leaders, Ian Gibson, MP for Norwich North, and Paul Farrelly, MP for Newcastle-under-Lyme, are confident they will succeed in making life difficult for Tony Blair and Charles Clarke, the Education Secretary, in the coming weeks.

"Opposition is strengthening by the day," says Gibson. "The TUC has come out against top-up fees. The Labour Party might do the same. The pressure is building up."

The Labour rebels reckon they have hardcore support from 130 colleagues. The Government's majority is 169. If, as expected, the Tories and Lib Dems oppose ministers' plans for variable fees, it will only take 85 Labour members voting against to defeat the proposal. "The Government has a mountain to climb, given the scale of opposition to a policy that breaks a Labour manifesto pledge," says Farrelly. "The Government should listen so that we don't pick unnecessary fights and indulge in months more self-inflicted damage."

Gibson opposes the Government's plan to give universities the freedom to charge up to £3,000 a year for tuition from 2006 on the grounds that (a) it won't give universities the amount of money they need; (b) it won't encourage young people from working-class backgrounds to go to university; and (c) it will leave graduates with huge debts at the end of three years. "It's a fudge," he says.

He is hoping to make common cause with Anne Campbell, Labour MP for Cambridge, who has put down an early-day motion calling for an increase in the flat-rate fee. So far Campbell's motion has attracted 74 signatures. Her argument is that allowing universities to charge more will create damaging division. "Taken to its logical conclusion, it will mean that rich kids end up at [the elite] Russell Group universities and poor kids end up at the former polytechnics," she says. "I hope my motion means that the Government will think again about what it is trying to do."

Her argument assumes that the new universities - the former polytechnics - will charge less than prestigious institutions such as Bristol and Durham.

There is some doubt about this. When asked, vice-chancellors of the new universities say that they will charge £3,000, just like their privileged colleagues. But, when it comes to the crunch, and they are trying to find students to fill empty places, won't institutions simply employ the law of supply and demand? A likely scenario is that universities will price courses according to the number of students they can attract. So, the ones that are hard to fill will come at bargain prices. Expect science and engineering to be priced to reflect the marketplace.

Campbell thinks that this too will have damaging consequences. "At the moment people choose their university and their course on the basis of interest and ability," she says. "Higher charges will not matter to middle-class students but they will matter to those who come from low-income backgrounds. They will bias their choice of subject or institution."

The Government's reply is to point to the fact that it is abolishing the current up-front tuition fee which should mean that students from less well-off backgrounds are not deterred. From 2006, students pay nothing until they have graduated and are earning £15,000 a year. And even then they pay only in line with their income. So, the average graduate on a starting salary of £18,000, will be repaying just over £5 a week, the cost of a couple of pints of beer. As Alan Johnson, the Higher Education minister, said in a speech last week to the Universities UK annual meeting in Warwick: "If your salary falls, your payments deducted through the tax system also fall. If you drop below the threshold, payments stop. There is no real rate of interest and no pressure to pay over a short period. This is a universe away from credit card debt. You won't find a better financial package anywhere for university entry."

The Labour rebels acknowledge that the Government's repayment plan is a lot better than the current system. But they nevertheless believe that poorer students will be put off by the thought of having to pay back £9,000 in tuition fees once they graduate in addition to loans for living expenses.

Recognising that universities need the money, Campbell is proposing a "measured" increase in the flat-rate tuition fee, which now stands at £1,125 a year. "I would prefer a flat-rate fee because then your choice of university and choice of course in not affected in any way," she says. Labour MPs supporting Campbell's motion include Val Davey, MP for Bristol West, another university constituency, who has opposed top-up fees during the last two elections and is opposing them again in the current debate.

In addition, one or two vice-chancellors are throwing their weight behind Campbell's idea, notably Sir David Watson from Brighton University. At the Universities UK (UUK) conference in Warwick last week he raised the issue formally in a session that was closed to the press, saying that the flat-rate fee should be increased to £2,000 a year. At least two Scottish vice-chancellors were privately sympathetic to him - Professor Tim O'Shea from Edinburgh and Professor Graeme Davies from Glasgow, but they are not affected by top-up fees. Only one vice-chancellor spoke out in support when the issue came up.

Speaking against, Baroness Diana Warwick, a Labour peer and the chief executive of UUK, said that the Government plan should be supported because it gave the universities money and introduced some important reforms such as removal of the up-front fee and raising the threshold at which graduates have to pay back. If the plan was defeated now, universities would not get the chance of fee reform for another 20 years, she said.

In a question and answer session with the press, Alan Johnson suggested that variable fees were justified because universities have different cost structures. In addition, there is some evidence that graduates from Russell Group universities earn more than others - so they can afford to pay back more money.

None the less Campbell will persevere with her crusade for raising the flat-rate fee. She has been granted a meeting with Clarke to talk about her ideas but no date has yet been agreed. She will also press for him to introduce a national system of means-tested scholarships for the very brightest, along the lines of the American national merit awards.

The Education Secretary is expected to listen to her courteously. Campbell, who resigned as Parliamentary Private Secretary to Patricia Hewitt in opposition to the war in Iraq, does not talk like someone who wants a fight with the Government. It is unlikely, however, that the Education Secretary will offer concessions in a hurry.

At the UUK meeting last week, Alan Johnson made clear that ministers were in no mood for significant concessions. And he ruled out increasing the proposed student grant during the current spending review from its modest £1,000 level. "The problem is that there is only one pot of money," he said. "We haven't got any more money to make the grant higher."

But he did say that the Government would like to help poorer students with the proposed £3,000 fee. Under the new plan they will get part of their fees - the £1,125 which is currently waived - paid for. They will also receive a grant of £1,000. That will leave them having to find £875. "This is where attention should be focused," he said. "I think we ought to look really hard to see whether we can resolve that."

If ministers can find a bit more money to help this category, it could see some of the rebellion fading away. So expect concessions next year, either before the Bill comes to the House of Commons for its Second Reading or later during committee stage. It is difficult to see Labour MPs scuppering a Bill that the universities want, particularly if the Government moves in their direction.

l.hodges@independent.co.uk

HOT TOPIC: A BRIEF GUIDE TO TOP-UP FEES

Why is the Government reforming student fees so soon after the new system was introduced?

Because the elite universities belonging to the Russell group want it. They argue they are underfunded compared to international competitors, particularly the American universities. Students are taught in much bigger classes nowadays, buildings are shabby and equipment outdated.

Why can't the money come from taxpayers?

Because taxpayers probably wouldn't cough up. It is widely agreed that higher education confers a big private benefit to individuals, giving them higher salaries on average. So it is argued that individuals should contribute more.

Why are so many Labour MPs opposed?

Because the UK higher education system has traditionally been seen as part of the welfare state. The MPs believe that all universities should be treated the same. The Government is proposing to let universities charge up to £3,000 a year. Some will charge that; others will charge less. That will create inequality, the MPs believe. It could mean that poorer students will end up at the cheaper, less prestigious universities.

Why has the Government opted for variable fees rather than increasing the current flat-rate fee?

Because universities are not the same. The Russell Group universities spend more pro rata on academic staff and premises than others. Moreover their graduates earn more. Therefore, it is argued, they should be able to charge more to reflect their position in the marketplace.