Cabinet split over cost of fees crisis

Tony Blair is today heading for a fresh crisis over university top-up fees amid growing tension in his Cabinet over the cost of buying off a massive Labour revolt.

Chancellor Gordon Brown and Education Secretary Charles Clarke appeared to be on a collision course over how to bridge the costly gap - expected to be hundreds of millions of pounds - of any significant retreat on the plans to make students pay, once they were in rewarding jobs, for the cost of their tuition.

Over the past few days Mr Brown has been reported to have taken a stance in favour of the scheme, despite initial doubts and earlier clashes with Mr Clarke. But today there was growing pressure on the Chancellor to make a public demonstration of support for the policy.

Continuing doubts over whether he was genuinely behind the scheme were reinforced by the fact that many of Mr Brown's long-time allies, including former chief whip Nick Brown and ex-Treasury minister Geoffrey Robinson, were among the rebels.

Mr Blair was today prepared to defy the stillgrowing Labour revolt with a renewed pledge to press ahead with the plan.

The Prime Minister, at his monthly press conference, was set to tell the rebels that he would not back down on the central plan to allow universities to charge variable extra fees.

But he was expected to confirm that the test of strength, in a Commons vote, will be delayed until the new year.

The Higher Education Bill was due to be published tomorrow with a vote two weeks later.

But the whips warned Mr Blair that, with the number of Labour MPs signing a Commons motion against the measure at 140 and climbing, he faced a real prospect of defeat.

Losing such a flagship measure would be a massive blow to Mr Blair's authority and would torpedo his hopes of reform across the public services.

But the rebels signalled that delay will not change their mind.

Labour MP Dr Ian Gibson, one of the leading opponents, said: "I think people are firmly opposed and will continue to be so."

He described the Bill as a "shoddy" plan that would create a two-tier higher education system with elite universities, as the Evening Standard revealed yesterday, threatening to charge up to £20,000 for some courses.

The decision to delay was taken last night after a day of wobble at Downing Street.

Education Secretary Charles Clarke was said to have urged Mr Blair repeatedly to press on to a swift vote. But the whips warned that they could not swiftly turn around the 50 mutineers they need to persuade in order to salvage a majority in the Commons.

The rebels say higher fees will deter students from poorer families from going to university.

Today, sources close to Mr Clarke disclosed that increasing the earnings threshold at which graduates would start paying the cost of their courses - from £15,000 to £20,000 - would present the Treasury with an immediate bill for at least £300 million, and more in later years.