Graduate loan figures 'will fail to add up'

Government plans to expand higher education will turn out thousands of graduates unable to find jobs to repay their investment, it is claimed today.

Economists say recent graduates are increasingly failing to find employment matched to their qualifications and that salaries are falling.

The research challenges the central assumption behind the Government's top-up tuition fees policy 48 hours ahead of a crucial Commons vote on the Higher Education Bill, against which dozens of Labour MPs are expected to rebel on Wednesday.

Ministers have forecast that many more jobs will require university-level qualifications and that higher salaries will enable graduates to repay tuition loans of up to £3,000 a year out of future earnings.

But a book, The Mismanagement Of Talent, by leading political economists Phillip Brown of Cardiff University and Anthony Hesketh of Lancaster University, says 40 per cent of recent graduates are in jobs which do not require degreelevelskills three years after finishing their studies. The new evidence comes as Tony Blair and Education Secretary Charles Clarke redouble efforts today to win over Labour MPs.

The higher Education Bill scraped through by five votes in January and could be defeated if a handful of MPs who abstained vote against the Government this week.

The Tories have confirmed that they will back an amendment tabled by Labour rebel Dr Ian Gibson which would stop universities charging variable fees, wrecking the central principle of the bill.

Labour rebels are already being condemned for preparing to "sup with the Devil" by voting with the Tories to defeat their own government. Reports today suggest that Mr Clarke is preparing fresh concessions to pacify the rebels.