The bruiser has grappled with a thorny conundrum. But has he solved it?

Mr Clarke has even admitted to doubts himself. He agrees with worried MPs that fear of debt is a real issue for the poor

The Education Secretary, Charles Clarke, has the image of being something of a bruiser. His bulky presence conveys a sense that he is seeking confrontation with those around him: Get in the ring with Mr Clarke and you will be bashed around a bit and come out feeling at best a little dazed. But that obscures a more nuanced political personality. He can be a listener and a seeker of compromise. The White Paper on the thorny issue of university funding is a case in point. It is the most elaborate compromise yet conceived by a government that is fairly keen on compromises, and on seeking a third way.

Indeed the White Paper is a totemic document highlighting the hugely complex conundrum facing ministers on a range of issues relating to public services: how to give away power from the centre without losing the ability to ensure their own policy priorities are met? This is the question that has caused tensions over plans to introduce foundation hospitals in the NHS and is at the heart of the debate over variable top-up fees, the policy that gives universities the option of raising more cash from their students.

Predictably, this has been portrayed as a debate between Old and New Labour. Even more predictably, it has been portrayed as the latest round in Gordon Brown's leadership bid, not least from cabinet ministers in a neurotic frenzy about the Chancellor's every move. Unfortunately for us all, the debate is much more complicated than that. Many devoutly New Labour MPs are opposed to top-up fees. As for Mr Brown, no doubt it has crossed his restless mind that his positioning might help his ambition to be leader. But he too is wrestling with this conundrum: if the Government has certain policy goals, how does it give away power while still securing its objectives?

On some elements of university funding there is a surprising degree of consensus in the Cabinet. As far as I can tell, there is unanimity that on top of a generous settlement from general public spending, it is the students rather than the general taxpayer who should pay for any additional funding. Ministers are also concerned about the issue of access to universities. I would go further. I can think of no other issue that arouses their passion in quite the same way. Many of them are aware from their own constituencies that inequities arise because poorer kids tend to leave school at 16, while the more privileged head for the universities and subsequently earn a lot more.

Opponents of top-up fees argue they undermine the objective of widening access, and reinforce élitism. The alternative view, held by some New Labourites, is that freeing up universities, creating a marketplace, will not only help them to compete globally, but could raise standards. Universities have got to earn, literally, the right to attract students. They must have the freedom to decide how to do it.

Enter the consensual bruiser. Mr Clarke's statement to MPs yesterday was the most interesting attempt to address the broader conundrum of central versus local control. He was pulling existing strings, creating new strings to pull, but letting go a bit as well. He made clear that the Government was going to accept no complacency from universities. Evaluation of research at these institutions would be "rigorous". The era of extensive university research combined with "shoddy teaching" was "gone". The key test to measuring university standards would be "high quality" teaching. There would be a new access regulator to ensure that universities charging high top-up fees accepted students from poorer backgrounds: What a lot of string pulling. Then Mr Clarke let go of a string. The universities would have the freedom to charge variable top-up fees.

In his compromising spirit, he confirmed that the fees would not be paid up-front, but only when graduates were earning, and would be capped at £3,000.

But while Mr Clarke attempted to address the conundrum of allowing universities the freedom to flourish while meeting government objectives, I doubt if he has solved it. Mr Clarke admitted to doubts himself. In the Commons yesterday he told one worried Labour MP that "fear of debt was a real issue," especially for those on low income. The precise role of the access regulator is a little vague. It has been reported that this proposal was hastily added as a gesture to Mr Brown. This is not the case. My guess is that if the Chancellor has doubts about top-up fees, they will not be assuaged by a regulator attempting to make them work.

This is what is so striking. Everywhere there are doubts. Mr Clarke expressed one publicly on potential students' fear of debt. Lots of normally loyal Labour MPs have doubts. In the meantime, considerations of a more progressive graduate tax have been hastily brushed aside in favour of a less progressive loan system. Which begs the most striking question of all: given all the doubts, why has the Government announced this package now? This is an administration that tends to have a review and then announce another review soon afterwards. In this case, it has rushed into making a controversial policy announcement years before it will be implemented.

Almost lost in the heat of the controversy is the timing. The top-up fees will not come into effect until the second half of this decade. Until 2006 the universities will be getting generous real-term increases of at least 6 per cent a year. If the top-up fees are introduced as planned, graduates will not be repaying loans until 2009. Mr Clarke has announced a policy that could cause a political storm for another six years, and that is before anyone has handed over a penny in repayments.

At which point universities could be receiving a higher increase in funding than the NHS. It is already doubtful whether the NHS can cope with the level of funds currently flowing through the system. Goodness knows what some of our creaky universities, not known for innovation and dynamism, will do with it all. There is quite a high chance they will reward themselves much bigger pay rises and declare the whole exercise a triumph.

The sequence is very odd. Usually the Government plots the introduction of a sensitive policy for years. In this case there has been no detailed assessment of the funding needs of universities for the second half of the decade and beyond. There has been no attempt to explore whether universities have done enough to raise cash from the private sector, a potentially rich source of funding. More bizarrely, there has been no demand for the universities to reform in advance of any additional cash. Yet in some cases these institutions can be inefficient and conservative, full of people talking to each other at meetings going nowhere.

Mr Clarke has produced a package that, for all its deft compromises, will cause a political storm. Given the large amounts of taxpayers' cash being paid to universities over the next few years, the great mystery is why he felt the need to announce, at this stage, any package at all.

s.richards@independent.co.uk