Universities are threatening to withdraw their support for the forthcoming top-up fees bill as government attempts to broker a deal for poor students reach deadlock.
With less than three weeks to go until the Queen's speech, when top-up fee legislation is due to be announced, the government is desperate to reach agreement with universities over bursaries for the poor. It fears that a failure to do so would spark a rebellion by Labour backbenchers.
Ministers have been negotiating with universities for months to try to get them to agree to contribute more than £800 for each poor student faced with paying the full £3,000-a-year charge to be set out in the bill.
The state will pay maintenance grants and fee waivers covering about Pounds 2,150 of the cost.
A series of meetings has taken place between the Department for Education and Skills and vice-chancellors' body Universities UK, the latest on Thursday, to hammer out a deal on bursaries.
To date, UUK has offered qualified support for the top-up fee proposals as set out in January's white paper.
But Michael Sterling, chair of the Russell Group and vice-chancellor of Birmingham University, said: "This will have a big impact on Russell Group universities that are likely to charge the full £3,000 fee.
"It is a fine judgement whether to support this bill or not. It all depends on what we are being asked to do with the additional money."
Michael Driscoll, chair of the Coalition of Modern Universities and vice-chancellor of Middlesex University, has written to MPs warning them that the government's intention to see about one-third of the £3,000 fee income diverted to bursaries will leave universities seriously underfunded, specifically disadvantaging new universities.
Professor Driscoll said: "If each institution has to use its own fee income to fund poor-student bursaries, universities such as Middlesex that have a high proportion of poor students will be disadvantaged compared with universities with a low proportion of poor students."
The DFES is understood to have done simulations showing that all universities could meet the bursary requirements, but Professor Driscoll said that he was yet to be convinced. He said that wealthier students would avoid universities with high proportions of poorer students, creating an "unhealthy divide".
Professor Driscoll added: "Given that no student will pay fees upfront under the proposals, it is not equitable to allow a situation where debt repayments from working adults differ simply because of the category of family they belonged to when they were students."
He said that the move would not force new universities to charge lower fees as a way of avoiding paying money to poorer students.
"I think it will push new universities to the upper end of the fee spectrum so that they have as large a pot as possible to draw funds from," he said.
Professor Driscoll said that the bursary issue was being driven by the government's political concern over ensuring access by the poor to top universities.
"This is all about Oxbridge. The proposals are simply damaging to the rest of the sector," he said.
In fact, the proposals are largely irrelevant to Oxford and Cambridge universities. Students on full-fee remission at Cambridge receive annual bursaries of £1,000 for all three years and at Oxford they receive Pounds 1,000 in the first year and £500 after that. Students can also apply for college bursaries.
A Cambridge spokeswoman said: "It is unhelpful for the government to compel us to do something that we already do and take very seriously."
Ian Gibson, chair of the House of Commons science and technology committee, said that the government proposals were not winning over backbenchers.
"This is a red herring. If the government is worried about this £850 gap, it should simply increase the maintenance grant. (But education secretary) Charles Clarke is calling people in and the pressure being applied is even worse than over Iraq."
A DFES spokesman said that the government was "pretty close" to getting a deal on bursaries. "We are in continued discussions with key stakeholders," he said.
He could give no indication of when an announcement might be made.