Clarke offers new deal on top-up fee to stop rebels

Charles Clarke is offering the incentive of higher student grants for the poorest youngsters in a bid to quell the rebellion by backbench Labour MPs over top-up fees.

The scheme will push maintenance grants rise to their highest level for thousands of youngsters, after leading rebel Labour MPs warned Tony Blair he faced certain defeat over the legislation unless he ditches variable fees. That the rebels volunteered to show the Prime Minister their list of opponents illustrate the depth of opposition he faces.

The Government is backing a move to offer maintenance grants of £2,700 a year to the one in three students from the poorest homes.

The Secretary of State for Education, who made it clear yesterday he would not resign if the Bill was defeated, has already signalled to MPs that he is in favour of the idea, which will be set up in a discussion document on university finance next week.

The scheme will present all students except those in London with the highest level of maintenance grants they have received. The grants were frozen by the Conservatives in 1990 when those outside London were receiving £2,265 a year (in London the figure was £2,845). They were abolished by Labour in 1998.

The £2,700-a-year grant can be achieved by paying students the £1,200 fee remission planned by ministers upfront, instead of just exempting them from having to pay back that element of the fee after they have graduated.

It is one of the main demands made by Labour MPs Peter Bradley, for the Wrekin, and Alan Whitehead, for Southampton Test, who have headed rebel MPs demanding a flat-rate instead of variable fee.

They have indicated they will drop their opposition if their demands are met. Mr Bradley said: "There is no point in banging our heads against a brick wall if we want to reach agreement."

Mr Clarke has not yet signalled when a £2,700 grant would be brought in. An option would be to give students the choice between the upfront grant or exemption fromrepayment when the top-up fees legislation allowing universities to charge up to £3,000 a year comes into force in 2006. On BBC Radio4's Today programme, he insisted he would not resign if the Bill fell although he acknowledged that the Government's authority would be "very, very seriously damaged".

Mr Clarke added that he had played straight with the rebels and hoped they would be persuaded to back his Bill. But the prospect of defeat looked a lot nearer last night as rebel MPs accused Government whips of "bluffing" and misleading Tony Blair by telling him opposition was falling away. George Mudie, a former deputy chief whip and Higher Education minister who is organising backbench opposition, challenged Hilary Armstrong, the Government chief whip, to reveal her supporters.

Mr Mudie, who helped gather names for the Prime Minister ahead of the Iraq vote, urged Mr Blair to hold urgent talks with the rebels to avoid a defeat. He added that variable fees was the key issue for MPs and other concessions would not buy them off.

"Support is absolutely firm," he said. "I am being absolutely straightforward about the number because I do not want to see us defeating the Government on this. The whips seem to be telling the Government there are only 68 rebels. If that is what she is saying, she is bluffing. "I will show Tony Blair my names. If he thinks he is not facing defeat he is mistaken. There's enough in the bank and lots to spare. I think the Government chief whip should show Tony Blair her numbers."

Downing Street has denied that Mr Blair was distancing himself from the Bill despite failing to attend Thursday's statement on top-up fees. Unusually, also, his name does not appear on the Bill.

The Prime Minister's official spokesman insisted that it would be wrong to read anything into Mr Blair's omission. He said: "The Prime Minister's commitment to this piece of legislation is well known as he has demonstrated many, many times." Peers warned yesterday that ministers could encounter severe difficulties in the House of Lords even if he wins the crucial Commons vote on top-up fees. They warned that proposals to create a new access regulator, one of the main measures used to justify variable top-up fees, would be "massacred" in the House of Lords.

The regulator, called the "admissions tsar" will have the power to refuse universities permission to charge higher fees if they have not done enough to recruit students from working-class backgrounds.

Both Conservatives and Liberal Democrats are committed to opposing the Bill although Labour may be able to call on the support of the ranks of senior academics plus former vice-chancellors in the upper house. The results of the first opinion poll on top-up fees since the Government published its legislation were also announced yesterday.

A poll of 1,433 adults done for the Association of University Teachers revealed that 77 per cent were against variable fees. Only 15 per cent agreed.

Sally Hunt, general secretary of the AUT, said: "The results of this poll prove once again that the nation does not want this tax on education. Parliament now has the chance to pull back from the brink. The chance must not be wasted."