Howard ridicules Blair over his public schooling as Labour rebels turn up the heat on top-up fees

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Rebel Labour MPs warned Tony Blair yesterday that his decision to make a crunch Commons vote on university top-up fees an issue of confidence in his leadership could backfire on him.

Amid speculation at Westminster that Mr Blair could resign if he loses next month's vote, the Prime Minister came under fire from Labour MPs and lost a bruising Commons battle with Michael Howard, the Tory leader, who taunted him about his public school education.

Mr Howard, who was educated at Llanelli Grammar School and Cambridge University, told Mr Blair: "This grammar school boy isn't going to take any lessons from a public school boy on the importance of children from less privileged backgrounds gaining access to university. You seem to have forgotten that we both stood at the last election on manifestoes which promised not to put top-up fees on students. The difference between us is that I am honouring our manifesto pledge and you are breaking yours."

Mr Howard mocked the Prime Minister's "big conversation" with the electorate, challenging him to say whether he would back down over fees if they are rejected by the electorate.

Mr Blair, who attended Fettes College in Edinburgh and Oxford University, replied: "Of course we will listen to people. But we've got to deal with the facts. There are lots of people in this country who went neither to grammar schools nor to public schools. So let's look at their interests. Surely their interest is to be able to go to university and have the places available."

Claiming that the Tories had admitted universities were underfunded, Mr Blair challenged them to say how they would raise the money to extend opportunity. He issued a defiant message to the 150 Labour MPs threatening to defeat the Higher Education Bill. But organisers of the revolt said they would call his bluff by refusing to back down.

If Mr Blair lost the critical vote at the end of January, he would table a vote of confidence in the Government the following day. Losing that second vote would trigger an immediate general election - but the Government would almost certainly win it comfortably because the Labour MPs who oppose top-up fees would swing behind Mr Blair.

One rebel organiser told The Independent: "The Prime Minister is playing the vote-of-confidence card. It has worked for him in the votes on Iraq and foundation hospitals. But it might be third time unlucky." He said it was "utterly cynical" of Mr Blair to delay the Commons vote until after the publication of Lord Hutton's inquiry report into the death of the weapons expert Dr David Kelly in the hope that Labour MPs would not add to the Government's problems by defeating top-up fees. "He has ratcheted it up, but we are not going to give way," he said.

Last night aides of Mr Blair denied that he would threaten to resign when he holds meetings with potential rebels. "Resignation and a confidence motion are not part of the equation," one said.

The Prime Minister tried a different tack when he addressed the weekly meeting of Labour MPs, urging his backbenchers not to aid the Tories' revival under Mr Howard. He said the Tories were trying to move into "attack mode".

Mr Blair said Labour must pursue a radical, reforming agenda based on fairness. "If we fail, it will be because we have been insufficiently radical," he said. "We need to take on this challenge rather than opt for a quiet life."

About half the questions fired at Mr Blair were hostile to top-up fees but other MPs rallied behind him.

Charles Kennedy, the Liberal Democrats' leader, also attacked Mr Blair's decision to break with his manifesto pledge. He said: "What you are saying is you are prepared to force your own MPs through the lobby on a confidence vote to introduce a promise of a policy in direct contravention of what you said in your own manifesto. Is that the actions of a Prime Minister who is a strong leader or in fact an increasingly desperate one."

Mr Blair told Mr Kennedy: "Until you have got a serious alternative to put forward you won't have a serious party."

Charles Clarke, the Secretary of State for Education, announced he would publish the Bill "right at the beginning of January" to allow a proper debate before the vote.

He told the Commons: "The reforms which I have put forward and which we will debate in the Bill are a package. They are not a pick-and-mix solution. They are generous to students, they are fair to universities, fair to the taxpayer."

Few of the Labour rebels were in the chamber as a bullish Mr Clarke insisted that variable fees would allow even elite universities to waive charges for hard-to-fill courses, such as physics, and insisted that the package would help persuade vice-chancellors to offer generous bursaries to students with financial difficulties. He defended the principle of allowing different universities to charge different fees. He said: "I remain of the view that it is necessary to vary fees from zero to a maximum of £3,000 across different universities and different courses, which reflects the reality of our diverse system.

"To insist that every student on every course at every university pays exactly the same amount would be unfair.

"Every university would be forced to charge the same amount, across the board, irrespective of the demand, nature or quality of the course and the potential rate of return for the student."

But Tim Yeo, the Tories' Health and Education spokesman, lambasted ministers for breaking their manifesto pledge. He said: "This is a policy on which Labour misled the voters two years ago and if the Government presses on with it, families up and down Britain will find it hard to trust anything you say in future. At the very time when concern is already mounting at the level of debt many families have incur, it is grossly irresponsible for the Government to introduce a policy which makes the debt problem much worse."

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