Blairite think-tank opposes Labour plan for top-up fees

The Government's hopes of avoiding a Commons defeat over university tuition fees has suffered a setback after Tony Blair's favourite think-tank came out against his proposals.

The Institute for Public Policy Research (IPPR), which has close links with Downing Street, yesterday said that ministers should delay controversial plans for variable top-up fees of up to £3,000 a year and opt for a flat-rate system. This compromise is favoured by many of the 157 Labour MPs who oppose the scheme.

Today ministers will meet two MPs, Peter Bradley and Alan Whitehead, who have proposed a £2,500 flat rate fee instead of allowing universities to charge different fees.

As MPs returned to Westminster yesterday from their Christmas break, the rebels said they had enough pledges of support to defeat the Government in a crucial vote at the end of this month. But ministers claimed some of the rebels had been won round by the Government's arguments.

The Higher Education Bill, which is expected to be published on Thursday, will include concessions such as measures to help students from poor families by increasing their maintenance grants to up to £3,000 a year and writing off debts from fees after 25 years. But Downing Street said yesterday the principle of variable fees was not up for grabs.

Although the IPPR accepts the case for variable fees in the long term, its preference for a flat rate system in the short term is a blow to Mr Blair because the institute has been influential in developing government policies since 1997.

Nick Pearce, the IPPR's director, told The Independent: "The policy on fees is fundamentally sound and more progressive than both the current system and simply funding higher education from general taxation. But the Government is struggling in Parliament because the debate has become confused."

Mr Pearce added: "The Government's 'funding crisis' argument would have been appropriate for an increase in the flat rate of fees but variable fees need to be justified on the basis of 'access, equality and social justice'."

Yesterday Charles Clarke, the Secretary of State for Education, ruled out flat rate fees in a letter to Nick Brown, Labour's former chief whip and a prominent rebel. "I am at a loss to see how a fixed fee scheme will be fairer," said Mr Clarke. "It would mean forcing universities that wanted and were able to charge a lower fee than that prescribed to set a higher charge and make their students pay the fee."

Mr Clarke added: "I am absolutely committed to widening participation and broadening access. I have every confidence that our proposals, when they are announced in full shortly, will progress rather than undermine this agenda."

Mr Bradley, parliamentary private secretary to the Environment minister, Alun Michael, said yesterday that it was "quite possible" the Government could come forward with a package which addressed many of the rebels' concerns. But he said ministers must give way on the key sticking point of variable fees.

Other rebels dug in, warning that the planned concessions did not go far enough. Frank Dobson, the former health secretary, said: "Nothing short of abandoning variable fees will be acceptable."

Glenda Jackson, a former minister, said: "These concessions will not change my opinion because this plan has not been thought through."