£2.3bn fails to buy off critics

The government paved the way for a multibillion pound investment in higher education yesterday in return for unprecedented and potentially fraught restructuring.

Top-up fees of up to £3,000 repaid by graduates according to their earnings were given the go-ahead in the government's white paper. Experts estimate that this will raise up to £1.5 billion a year  after their introduction in 2006.

This will be on top of an increased government commitment to higher education, which sees spending rise by £2.3 billion (6 per cent a year in real terms) over the next three years, from £7.6 billion this year to £9.9 billion in 2005-06. The white paper says the government will "stand by" students and universities in future spending reviews.

The paper, launched by education secretary Charles Clarke on Wednesday, appears to have pulled off a perilous balancing act given the intensely political debate about top-up fees and the uncompromising nature of many of its recommendations for restructuring the sector.

But Labour and opposition MPs are squaring up for a fight over top-up fees. Labour MP Paul Farrelly, whose early-day motion has attracted about 160 signatories, most of whom are Labour backbenchers, vowed to oppose government plans to introduce top-up fee legislation in this parliament.

One of the most controversial areas is the move to restratify higher education and further concentrate research funding, introducing a new 6* rating for departments with world-class research. Mr Clarke said it could mean lecturers being forced out of research to concentrate on teaching.

The white paper envisages a handful of elite research institutions, a group of leading research universities, a group of leading regional universities doing research and teaching, a number of institutions concentrating mainly on teaching and a cohort of former higher education colleges gaining university status, but only for undergraduate teaching.

All academic staff face the introduction of local pay bargaining and performance-related pay.

Students will also be given a say in assessing teaching quality with backing from a new statutory ombudsman.

Despite this, the paper has won cautious praise from many universities, a mixed review from lecturing unions and even a smattering of applause from student bodies whose members will pay the top-up fees.

Universities UK welcomed the white paper. UUK chief executive Baroness Warwick said: "The white paper makes a generous acknowledgement of the successful contribution universities have made. It also contains many detailed proposals that we will now be looking at very carefully."

Sir Colin Lucas, vice-chancellor of the University of Oxford and chairman of the Russell Group of universities, which represents top research institutions, said: "We are glad to hear the secretary of state's recognition of the diversity of missions in the university sector and the financial support offered to both world-class research and teaching."

Colin Matheson, chief executive of the Coalition of Modern Universities, whose members are least likely to benefit from the concentration of research, said: "The recognition of a diverse and multi-tiered higher education sector should not in any sense be interpreted as a reintroduction of the binary line."

Sally Hunt, general secretary of the Association of University Teachers, said: "The additional funding is excellent but the proposed top-up fees are a thumbs-down."

But she said the jury was out on the risk of splitting research and teaching.

Paul Mackney, general secretary of lecturers' union Natfhe, said: "Despite some very positive elements such as the restoration of grants, Natfhe is vehemently opposed to the introduction of variable tuition fees."

Mandy Telford, president of the National Union of Students, said: "The removal of upfront fees is another step in the right direction, which we applaud. However, the differential level of tuition fees will lead to students choosing their course on cost rather than aptitude."