Labour goes boldly where the Tories feared to tread

To realise just how big a decision tomorrow's response to the Dearing report on higher education represents - easily the biggest, surely, the Blair government has taken on domestic policy - it is worth travelling back for a moment to 1984. Sir Keith Joseph made a terrible error, or rather two errors. That is to say that he acted in a way that was logical and truthful, and was mercilessly punished for it. First, faced with an urgent demand from the vice chancellors for more science funding, he tried to make middle class parents pay a contribution to university tuition fees; then, seeking to explain himself to an outraged Tory backbench education committee he spectacularly compounded his troubles by murmuring in passing that the way ahead for higher education funding lay in at least partial loans for students. As Nigel Lawson would later point out, Joseph had attacked not the poor or the rich but those in the middle who incidentally "comprised the bulk of the [Conservative] party activists in the constituencies and in particular the local party officers". The uproar was deafening; the retreat total and abject. And the idea of tuition fees became taboo for the 13 years it has since taken for Sir Keith's Cassandra-like prophecy to come true.

For the party is now over. Under the new system of higher education funding David Blunkett will unveil tomorrow, all university students except those from families earning pounds 16,000 or less will be charged fees. Those from families earning pounds 34,000 or more will be charged a full pounds 1,000 a year or so. Those whose family income levels are between pounds 16,000 and pounds 34,000 will be charged on a sliding scale between zero and pounds 1,000 per year. To cover the fees the students will be able to take out a loan, repayable at a rate and over a period - of up to 20 years - dependent on what they earn. This is as fundamental as anything Sir Keith Joseph envisaged even in his wildest dreams. True, averagely well off parents - who currently expect to pay around pounds 2,000 per year in maintenance for each child at university - will not themselves have to pay any more as a result of the reform. Unlike Sir Keith, Labour has neatly transferred the burden to their children, who will - slowly - pay the cost of their fees as they start earning money. But that does not alter the bare facts. Free university tuition for the middle and upper classes is finished. A great scam is dead, and about time too.

The present system of university funding is a mess. While university participation has gone from one in 20 in the Sixties to one in three now, funding is based on a rickety mix of diminishing maintenance grants (for the poorest), loans and parental payments. And if you doubt that fees and what amounts to a graduate tax are the way to guarantee stable revenue for higher education, consider this: as Margaret Hodge, the chairman of the new Commons Select Committee on Education, has been pointing out, graduates last year earned pounds 457 a week and non-graduates pounds 237. A young person is on average considered to increase his or her earning power by 20 per cent by going to university. This illustrates both the good sense of thinking graduates capable of repaying loans over a lengthy period, and the nonsense of expecting non-graduates to fork out their taxes to send richer kids through college.

There will, no doubt, be real worries that the poorer students will lose their (only partial) maintenance grants, having them replaced by a bigger loan. But the Government has been more generous about this than Dearing, one of whose options is that that income-related repayments should start when the graduate is earning as little as pounds 5,000 a year: instead repayments will not start (and then only gently) until the graduate is earning more than pounds 10,500.

But having been guaranteed this stable source of funding, universities should not get too greedy. While the savings should certainly go back into education, that should not mean the universities alone: the case for ploughing much of it into colleges of further education is incontestable. Two-thirds of those in post-18 education are in CFEs (and a quarter of them, like most part-time mature students in higher education, already pay their own fees). The revenue from fees should not be siphoned off into roads or defence; but it should not, as the vice chancellors will surely want, be kept solely for the 125 universities either. Moreover, a government rightly against elite universities charging top-up fees is not for long going to tolerate making premium state payments - over and above normal grant - to rich Oxbridge colleges. What I know of Dr Kim Howells, the junior education minister entrusted with reviewing Oxbridge funding, does not suggest he will leave this anomaly intact.

And as the new system will - in characteristic Blairite fashion - entail new responsibilities, as well as rights, for graduates, so it should mean new responsibilities for universities too. Dearing, by all accounts, will have some harsh things to say about dons who do not regard good teaching as among their prime duties. Now the consumers are to pay for higher education, they are entitled to some quality control. Could it be time for Ofuni, a new regulator of academic teaching quality?

We should tolerate fees for higher education and not for state secondary education, because the latter is compulsory and the former is not. And the Tories should think twice before rushing into an opportunistic crusade on behalf of the middle classes and the well off. Shrinking from making a decision before the election, they set up Sir Ron Dearing's enquiry in the first place; and these are essentially Dearing's proposals. And if that does not shame them they should remember that Sir Keith Joseph was there first.