The Bill is now in the committee stage, and will then have to be passed by the House of Lords before it can become the Higher Education Act 2004. For more details on this process, see Act of Parliament.

Table of contents

1 Background and political importance 2 Details of the proposed changes to funding 3 Arguments in favour of the proposals 4 Arguments against the proposals 5 Other provisions in the Bill 6 External Links:

Background and political importance

In the years that followed, it became clear that the original fixed fees of around £1000 per year were still not providing enough funding, leading to proposals of what are often referred to as top-up fees. The idea was that universities would be able to "top up" the fees to a level that more accurately reflected the funding they needed. However, widespread protests led the Labour Party to make a manifesto pledge at the 2001 general election not to introduce such a system.

In 2003, a new set of proposals was drafted which were denounced by some as breaking that promise. Although the government tried to create a compromise that would raise the necessary funds in a fair way, the issue remained highly contentious. Despite vocal opposition within his own party, Tony Blair claimed that this proposal was the only way to secure the necessary funds, and the issue was seen as a key test of his leadership. The initial vote in the House of Commons, on January 27, 2004, came a day before the result of the Hutton Inquiry, and it was predicted that a bad result from one or both would lead to Blair's resignation as Prime Minister. The Bill was passed at the first vote, known as second reading, by 316 votes to 311, with 71 Labour MPs voting against.

The Bill faces further opposition as it progresses through Parliament. Their was some controversy when the Standing Committee which is considering the bill line-by-line was "packed with government loyalists", in the words of the Liberal Democrats. Of the 16 Labour MPs on the committee, only 1 voted against the government at second reading, and 1 abstained. The bill is therefore likely to emerge from the committee without major problems. It then returns to the floor of the Commons for the Report stage. The main opposition to the bill from Labour backbenchers is the "variable" or "top-up" fees. Therefore, an amendment tabled at Report stage to remove references to these variable fees would be very likely to succeed. In addition, some backbenchers were promished further concessions and changes to the Bill, and therefore voted Aye at second reading. If this does not turn out to be the case, the backbenchers may vote against the Bill at third reading.

Additionally, if the Bill is successfully passed at third reading, it would move to the House of Lords, where the Government does not have a majority, and where for this particular Bill, the Salisbury Convention, according to which legislation included in the manifesto of the ruling party should not be opposed, would not apply. This is because it was not included in the manifesto the Labour party fought the 2001 general election on, in fact a line in the manifesto read "We will not introduce top-up fees and have legislated to prevent them". Therefore, it is quite possible that the Lords will reject the bill outright, which would mean the government would have to table the Bill again in the next session of Parliament, and possibly have to use the Parliament Act in order to force it through Parliament, so it can gain Royal Assent. Alternatively, the Lords could pass a "wrecking amendment" which would need to be reversed by the House of Commons.

Details of the proposed changes to funding

• Up-front fees to be replaced by an income-linked deferred payment. Instead of having to pay each year while studying, students will be charged for fees once they start earning more than £15000 per year. The government will pay universities the fees, and then claim them back as a no-interest loan.
  • The payment rates will be entirely earnings based, so that as a graduate's salary fluctuates, so will their fee payments. If their salary falls below £15000, no payments will be taken.
  • Additionally, any amount of a student's fees still outstanding after 25 years will be cancelled.
• Fixed rate of £1125 to be replaced by variable fees between 0 and £3000. Since different courses cost different amounts of money to run, it is argued that students should pay different levels of fees. Under the new system, universities will be able to set the level of the fees for each course, within a given range.
  • Although the change does represent a significant increase in the level of fees, some universities had called for much higher rates - in some cases up to £12000 a year. Furthermore, the top rate cannot be increased without a motion being passed in both Houses of Parliament, and the government has promised not to propose such a motion before 2009, assuaging fears that it would rise dramatically soon after the legislation was passed.
  • In order to charge more than the basic amount (equivalent to the current fixed rate), a university will have to produce an appropriate "plan", which may have to include details of how students from poorer backgrounds will be encouraged to participate. These plans will be subject to approval and review by a new body called the Office for Fair Access (OFFA, see 'Other Provisions' below).
• Increased levels of financial aid. As part of the "package" of this reform, increased government grants, and bursaries set up by the universities themselves, will be put in place in such a way that the maximum allowance will equal the maximum fee - i.e. £3000 - for the poorest students. Presently, this will come from several sources, making it hard to understand, but plans to combine the various elements may still be introduced during the committee stage.

A key player on this side of the argument is the Russell Group of Universities, who have argued that they should be able to charge much increased fees in order to differentiate themselves from smaller universities. This attitude has proved unpopular, as a two-tier system of this kind is widely seen as unnecessary and damaging. The levels called far by this group far exceed the maximum rate currently proposed.

Further to this argument, it is argued that since studies show that most graduates earn more during their career than non-graduates, it is logical that they should be the ones to pay for this opportunity, not the public at large. Critics, however, have suggested that if this is the case, they will pay more income tax anyway, and that this would be a fairer source of the money. Some have also pointed out that the country as a whole benefits from an increased level of expertise, and therefore it is in everyone's interests to pay for higher education.

Arguments against the proposals

Although the Bill removes the need to pay fees up front - meaning that students may have more spending money while studying - it will still leave them with a greater debt at the start of their careers. In contrast to the government's aim of "widening participation", it is predicted that people from poorer backgrounds may be put off from enrolling for a degree. This view is reinforced by a general lack of understanding of the details of the proposals, so that prospective students may believe the fees to be more of a problem than they are.

A second line of criticism is that the introduction of variable fees represents a step towards the privatisation of education, and makes degrees into products quite unnecessarily. Although not the intention of the legislation, there is likely to be a perceived trade-off between price and quality when choosing a degree. The strict limits imposed on fee levels limit this in practice, but the concept of competition remains.

Other provisions in the Bill

• Creation of an Office for Fair Access (OFFA) to oversee the approval and review of universities' plans with regards fees.
• Transfer of additional powers to the Welsh Assembly, including a separate equivalent to OFFA and the right to organise both student support and tuition fees independently.
• A new body for dealing with student complaints which universities will be legally bound to deal with.
• An Arts and Humanities Research Council equivalent to existing Science and Technology Councils, as a replacement for the current Arts and Humanities Research Board.