Dissent grows in Cabinet over top-up fees plan, as think-tank questions 'high-risk, low return' gamble

The pressure on Tony Blair over university top-up fees intensified yesterday. Some cabinet ministers questioned his approach and he was warned that ministerial aides may resign over the issue.

After the cabinet discussed top-up fees for more than an hour, Mr Blair's official spokesman said there was "general support" for the policy. But as rumours of cabinet doubts swept Westminster, the spokesman insisted later that the meeting had unanimously backed top-up fees. "There wasn't a word of dissent from any member of the Cabinet as far as I could make out," he said.

However, some ministers are privately questioning Mr Blair's insistence on allowing variable tuition fees to be charged at different universities and for different courses. In a sign that ministers may be distancing themselves in case the Government loses the crunch vote, one ministerial source said yesterday: "Variable fees are very much Tony's baby. We haven't explained it well, or why we didn't go for a flat-rate fee."

Some ministers have also expressed surprise at Mr Blair's high-risk strategy of turning next month's Commons vote on top-up fees into a vote of confidence in his leadership. The Cabinet was told that about half the 150 Labour rebels could be won round by concessions, but that would still leave the vote on a knife-edge.

Colin Pickthall, Parliamentary Private Secretary to the Foreign Secretary Jack Straw, told the Commons that he could not support top-up fees and viewed next month's Commons vote "with trepidation". He said the Government was "making a mess" of top-up fees, which were "neither desirable nor necessary" and could discourage working-class children from going to university.

Mr Pickthall warned: "In party political terms, we will experience in our constituencies all the pain, opposition and aggro that will result from the proposal before the general election. The benefits of the cash that will come from top-up fees will not be felt until after 2006."

Lord Puttnam, the film producer and former government adviser, attacked top-up fees in the Lords yesterday. He said the plan "could quickly prove as damaging and divisive as it is hopelessly inappropriate to the scale and nature of the challenge" and would be introduced "at the cost of undermining and possibly crippling the aspirations of the great majority of students and higher education institutions in this country".

Mr Blair's problems were compounded when the respected Institute for Fiscal Studies think-tank doubted whether the scheme would solve the cash crisis facing universities, or raise student numbers as the Government intends. It said the Prime Minister was taking "a big gamble for a relatively small return": half the amount raised could be swallowed up by subsiding student loans, so the scheme might raise only £500 million a year. This was "pretty small" against a higher education budget of £9 billion a year.

Charles Clarke, the Secretary of State for Education, said the IFS report was based on "tendentious" assumptions. "We are talking about extra money to universities from these fees, rather than money that would replace money from the taxpayer," he insisted.

Tim Yeo, the shadow Education and Health Secretary, challenged the Government to say in the light of the IFS study whether fees would have to rise to £4,000 or £5,000, instead of the planned maximum of £3,000.