The high price of top up fees

But what's it all about? Nick Morrison looks at the issue which could topple a prime minister.

AS Confucius may have said, there are more ways for a politician to wriggle out of a promise than there are grains of sand on a beach. Somehow, what they actually said is not the same as what you thought - what you're sure - they said, and, in any case, the circumstances are completely different now, so it doesn't apply, see?

But sometimes it's there in black and white and no amount of wriggling will make it better. If you turn to page 20 of a document called Ambitions for Britain, the manifesto on which Labour fought the last election, there is one such occasion. Just over halfway down the left hand column is the line: "We will not introduce 'top-up' fees".

On January 27, the House of Commons is due to vote on the Labour Government's proposal to introduce top-up fees. And such a clear betrayal of a promise carries a high price: Tony Blair is facing the biggest rebellion of his premiership.

More than 150 Labour MPs have registered concerns about the plan, enough to guarantee a Government defeat if those concerns lead to votes against, and it has prompted former Cabinet ministers to call for Blair to go. The Prime Minister, for his part, says his authority will be on the line if the vote is lost.

A series of Government concessions have placated some, but the rebellion ringleaders still claim significant support. Amid rising panic, Blair went on the offensive yesterday, claiming the fees would help more young people go into higher education, while his Education Secretary Charles Clarke confronted backbench MPs.

But just what is the issue that could bring down a Prime Minister?

Q What are top-up fees?

A Under the present system, university students pay a flat fee of £1,125 a year towards tuition costs, but the actual cost to the university of providing the course is much greater. Top-up fees would allow universities to charge something nearer the real cost, up to a maximum of £3,000, 'topping up' what they receive now.

Q Why does the Government want to introduce them?

A Universities say they need more money or they risk losing their best academics, tempted away by higher salaries on offer overseas. On top of this, the Government wants to increase the number of people going into higher education - it has set a target of 50 per cent of 18-30-year-olds, but can only do this if universities get more money.

Q Will all universities charge top-up fees?

A Not necessarily. Universities will be given the freedom to charge their own tuition fee, from £0 to £3,000. The Government reckons around 75 per cent will charge £3,000, and the rest will stick at the present £1,125, but some universities fear they may be seen as 'cheap', and therefore less attractive, if they don't charge the full amount.

Q How will top-up fees work?

A From 2006, students will be charged up to £3,000 a year, but will only pay once they have left university and are earning more than £15,000 a year. Then, they will pay a minimum of nine per cent of earnings over £15,000 per year, until the total is paid off. Debts which have not been paid off within 25 years will be written off.

Q Will everyone have to pay?

A Families earning less than £30,000 will be exempt from the first £1,200. In a concession to backbench MPs, students from families earning less than £21,185 will get a grant of up to £1,000 to help with living costs, rising to £1,500 from 2006. Universities will also be required to fund bursaries of £3-400 for the poorest students.

Q How does this differ from the present system?

A At the moment, the £1,125 fee is paid up-front and is the same for all courses at all universities. Students from families earning less than £21,000 pay no fees, while families earning from £21,000 to £31,200 get part of the fees paid. Loans are available to cover living costs, repaid once the student starts earning £10,000 or more, at nine per cent of earnings over £10,000.

Q What are Labour rebels concerned about?

A Their principal objection is that top-up fees could put off students from poorer families from going to university, and there is research evidence to suggest that the people most likely to be deterred by the prospect of debts are those from less well-off families, the very people the Government wants to attract into higher education. It was to try and ease this concern that the Government pledged to restore grants for living costs for some students.

Q So why aren't they happy now?

A Some MPs fear that once the principle of top-up fees has been accepted, then it will be a slippery slope until universities start charging what they like, creating a two-tier system of elite universities, which only the well-off can afford, and the also-rans. The Government says the £3,000 ceiling can only be breached by an Act of Parliament, but its refusal to compromise on allowing universities to charge different amounts may still be too much to swallow.

Some MPs also feel that, as it is the students themselves who start paying after they graduate, it is unfair to take their parents' income into account when deciding how much they will pay. Two doctors could be earning the same amount, but one could have a much higher debt than the other because of their different backgrounds.

Q What do students think?

A Student Unions are campaigning against top-up fees, which they say will land students with enormous debts on leaving university. They fear some students will choose which university they go to, or even which course they apply for, on the basis of how much it costs, rather than what they are best suited for. There are also concerns that the Government may go on to reduce funding for universities, forcing them to push up their fees or cut courses.

Q How much will top-up fees raise?

A The Government calculates that the scheme will bring in a total of £1.8bn in fees, but the cost to taxpayers of running it will be around £1bn, making an extra £800,000 for universities.

Q Are the universities happy?

A Unfortunately for the Government, they are not. The Russell Group of 19 leading universities, including Newcastle, feels the £3,000 maximum is too low to make a real difference, and the need to fund bursaries will eat into the amount they get. They claim universities could try and recruit more students from abroad, who can be charged whatever the university wants, denying places to British students.

Q Why has the Prime Minister pinned his future to this issue?

A This is perhaps the most puzzling one. For some, it is a matter of showing he won't back down in the face of pressure from his own party, following his determination to face down his critics over both Iraq and foundation hospitals. The unofficial Downing Street line is that this isn't just about top-up fees, but is about reform of public services in general, with the presumption that if the party can't accept radical change, then Blair may as well pack up and go home. But there are still those who find it surprising that a leader who has fought so hard to get where he is would risk it all on such a complicated and unpopular issue which appears to have only marginal benefits.