'Final' cash concession on top-up fees

The Government today offered what it said was its final concession on university top-up fees in the drive to win over Labour rebels.

Students from the poorest backgrounds would be given £1,200 designed to off-set higher fees before they begin their studies, under the proposal from Education Secretary Charles Clarke.

They could then choose whether to spend the money on maintenance or pay off the fees at the end of their course.

The £1,200 would come on top of the £1,500 living grant announced in an earlier concession.

Mr Clarke detailed the proposal in a discussion paper. He said: "This will potentially give students from 2006 onwards more flexibility and choice over their own finances and is very much in line with recognising that students are independent at 18.

"I believe it is right that students should choose whether to use some or all of their money on living costs or offsetting graduation costs.

"Before reaching a final conclusion, we will be working through the technicalities to ensure that we get this right and students understand the implications of the new system. We will report progress on these issues to the standing committee."

The move would mean students from the poorest backgrounds would get an up-front grant of up to £2,700 a year.

Mr Clarke has previously said the Government would adopt the change if financial and practical issues surrounding it could be resolved.

Students on courses charging the maximum £3,000 would also get bursaries of at least £300 a year.

But in order to fund the move the loan offered to those undergraduates would be limited. Those receiving the maximum amount would get a maintenance loan reduced by £850. That would take it to £3,550.

There would also be a loan of up to £3,000 for fees, repayable on graduation according to income.

The move comes as Prime Minister Tony Blair prepared to address Labour MPs this evening ahead of next week's critical Commons vote on university tuition fees.

The Prime Minister was addressing a special meeting of the Parliamentary Labour Party at Westminster in an effort to persuade waverers to fall back into line.

He was also appearing on BBC2's Newsnight programme to debate the issue in front of a studio audience.

The concerted moves reflect the importance of the vote on Tuesday of next week which could still see the Government's flagship reform defeated.

Coming just the day before the publication of the Hutton Inquiry report into the death of the Government weapons expert Dr Kelly, it could have a critical bearing bearing on the future of Mr Blair's premiership.

There were signs the revolt was beginning to crumble with former Cabinet minister Chris Smith and MPs Peter Bradley and Alan Whitehead - who had drawn up alternative proposals - announcing over the weekend that they would support the Government.

However the rebels still claimed to have the support of around 100 MPs - more than enough to defeat the Government and Mr Smith predicted that the vote would be on a "knife edge".