Maximum charge of £3,000 'will be set by all universities'

Every university will charge the maximum £3,000 top-up fee for courses, a leading university vice-chancellor said last night.

Professor Michael Driscoll, the chairman of the Coalition of Modern Universities, which represents the former polytechnics, said the Government's rescue package for students from the poorest homes would give his members the green light to introduce the maximum fee.

His warning came as Labour MPs rounded on Charles Clarke, the Secretary of State for Education, making it clear they would not compromise over plans for top-up fees of £3,000 a year (index-linked) from 2006, set out in the new draft of the Higher Eduction Bill, published yesterday.

Professor Driscoll, who is Vice-Chancellor of Middlesex University, said: "My own gut feeling is that every university in the country will charge £3,000. Charging the maximum will not put off students from poorer homes if they are not going to have to pay it."

Under the Government's package, the 30 per cent of students whose parents come from the bottom income groups will be spared any fees, with the introduction of new £1,500 maintenance grants, compulsory bursaries of £300 from universities charging the maximum and the waiving of the flat rate £1,200 tuition fee.

Academics said if all universities charged the maximum, it would avoid creating a two-tier system in higher education. Professor Driscoll said all universities needed the extra income. Meanwhile, the leader of the Russell Group, representing the country's leading research universities such as Oxford and Cambridge, warned that the £3,000 a year cap on fees was not enough and would have to be increased in future if universities were to continue to provide a world-class education.

Both wings of Universities UK, representing university vice-chancellors, yesterday acknowledged: "If the Clarke roadshow is the only game in town, we'll have to have it."

They spoke as Labour MP after Labour MP in the Commons left Mr Clarke in no doubt that they would not accept variable fees. Nick Brown, the former Labour chief whip and a key rebel organiser, asked Mr Clarke how he would stop top-up fees rising above £3,000 a year.

"Will you also say how, once the cap is lifted, as it inevitably will be, youngsters from homes of ordinary means or even just above ordinary means will ever be able to afford to go on the most prestigious courses at the more prestigious universities?," he said.

Martin Salter, Labour MP for Reading West, told Mr Clarke: "You are asking an awful lot of us to play fast and loose with your own manifesto on which you, I and every other Labour MP was elected."

Tim Yeo, the Tories' education and health spokesman, said the proposals were "a clear breach of a very specific pledge given by every Labour MP at the last general election".

Mandy Telford, the president of the National Union of Students, dismissed the package as a "disaster for the future of higher education".

Sally Hunt, the general secretary of the Association of University Teachers, added: "We're desperately disappointed that the Government has ignored the nation over variable fees." She expressed "relief", though, that ministers were "listening to people about grants".

Yet yesterday's package, from the higher education sector's point of view, was better than they had hoped.

The Russell Group had warned of the dangers of the original package, where a student-support package of £3,000 for those from the poorest homes meant universities would have to award bursaries of £800. As a result, it argued, they would have to increase the numbers of overseas students, whom they could charge full-cost fees of £11,000 a year.

But Professor Michael Sterling, chairman of the Russell Group and Vice-Chancellor of Birmingham University, said yesterday: "It is a difficult juggling act for the Government and they've come up with a neatly balanced package."

Universities will only have to pay bursaries of £300 a year to the poorest students, as a result of the Government's decision to increase maintenance grants from the planned £1,000 a year to £1,500 and waive the flat rate tuition fee of £1,200 a year for the poorest students. As Professor Sterling put it: "If, as the Government says, 30 per cent of students will be exempt from top-up fees it means we will be able to keep £2,900 worth of the £3,000 fee income from every student."

He added: "I think it's a good outcome and balanced - but it is not enough."

Professor Driscoll added: "All universities are faced with a dilemma if they are not comfortable or enthusiastic with the variable fees environment. Even if they don't support the proposals, they feel they have no option if this really is the only game in town."

The key elements

The Government's long-awaited Higher Education Bill paves the way for universities to charge up to £3,000 a year for courses from September 2006. The legislation is coupled with a raft of concessions aimed at protecting students from the poorest homes and persuading rebel MPs to drop their opposition. Key elements of the package include:

£ Grants of £1,500 a year for students whose parents are on low incomes, an increase on the £1,000 outlined in the original package. The current fees of £1,200 would also be waived for this group.

£ Universities who charge the maximum £3,000-a-year fee will have to pay compulsory bursaries of £300 a year to poor students. The combination of this grants and waivers would mean that an estimated 30 per cent of students won't have to pay any fees at all. Universities had feared they would be forced to pay bursaries of £800 a year, thus robbing them of income which could have been used to improve research facilities and lecturers' pay.

£ Signalling an intention to move towards an up-front grant of £2,700 a year in future.

* The introduction of top-up fees will be reviewed within three years - a demand made by rebels backing a flat-rate fee of £2,500 a year.

£ Any vote to increase the maximum top-up fee would have to be voted for in both houses of Parliament.

* No graduate will have to start repaying fees until they are earning £15,000 a year, up from the current threshold of £10,000 a year. Ministers rejected a suggestion this should be increased to £18,000 or £20,000.

£ The Government will set up a new regulatory body, the Office for Fair Access. It will have powers to refuse universities permission to charge top-up fees if they fail to do enough to widen participation among youngsters from low income groups. As a first step, any university which refuses to pay the £300 bursary to poorer students will be denied the right to charge the maximum top-up fee.

£ Universities will now have the right to lower fees for less popular courses. The proposals will allow them to make charges ranging from a nil payment to £3,000.

£ All student debts will be written off if they are not repaid within 25 years.

£ The maximum student maintenance loan will be raised to cover average basic living costs from September 2006. Loans will be free of real interest charges.