Bid to create a German Ivy League receives a £1.3bn shot in the arm

Germany is to embark on a billion-euro spending spree to give its stagnating university system a shot in the arm through the creation of elite universities to rival Oxbridge.

Faced with overcrowded lecture halls, outdated teaching materials and unmotivated professors, students in Germany often take years to finish courses.

But it is hoped that will change over the next six years now that Gerhard Schroeder, the Chancellor, and the 16 regional prime ministers have signed a €1.9 billion (£1.28 billion) agreement for the Excellence Initiative - a proposal that has been a thorn in the side of the Social Democrat-led Education Ministry for more than a year.

The initiative will provide additional financial support for institutions competing to be upgraded to form a German Ivy League of about ten elite universities. It will also finance the establishment of 30 research clusters and 40 graduate schools between 2006 and 2011.

Three quarters of the funding will be met by the federal Government and a quarter by individual states.

Edelgard Bulmahn, the Education Minister, who has been trying to get the scheme through parliament for more than a year, welcomed the deal, saying:

"Science has secure prospects for the decade ahead now."

She added that the initiative, in particular the creation of elite universities, would increase Germany's attractiveness to ensure that the best academics and researchers remained in the country.She said it would also lure fee-paying foreign students.

Initial proposals to inject money into a small number of universities to create an elite league had met with disapproval from many of the regional states, which felt their institutes would suffer.

Juergen Schreier, Science Minister for the smallest state of Saarland, insisted that the Excellence Initiative would instead see institutions across the country benefit from the deal.

"It took much toing and froing to dissuade the Government from selecting only a handful of elite universities, which would have left universities in Saarland with no chance for the future," he said.

In academic circles, there was audible relief that a compromise had been reached between the development of elite institutions and the furtherance of existing research facilities.

Karl Max Einhaeupl, chairman of the Science Council, which will help manage the programme together with the German Research Society, said on the day of the signing: "It is an extremely good day for science, the best in more than a year."

Professor Einhaeupl added: "We have taken precautions to ensure that decisions are made on a purely scientific basis and not a political one.

There will be no regional quotas."