Canadian deal could lead to a cut in fees

University and college students could get a substantial reduction in tuition fees as a result of a backroom deal aimed at keeping Canada's minority Liberal Party in power.

Under the agreement with the New Democratic Party, Prime Minister Paul Martin's Government is to scrap a 10 per cent corporate tax cut, announced in February, and instead spend an extra C$4.6 billion (£1.97 billion) over the next two years.

This includes up to C$750 million each year "to reduce the costs of post-secondary education for students". In exchange, the leftwing NDP pledged to support the budget when it came to a vote, expected on Thursday night.

If distributed evenly to all of Canada's university and college students, the new money would reduce average tuition fees by about C$680, or 18 per cent.

But, even with the NDP's 19 votes, the centrist Liberals, who hold 133 seats in the 308-seat House of Commons, looked on the verge of falling if they failed to secure the support of two independent MPs. A general election could then take place at the end of June. Ian Boyko of the Canadian Federation of Students acknowledged: "It's very tenuous. Things are evolving by the hour."

Nevertheless, universities and students welcomed the pact. "It's an eminently reasonable and affordable proposal," Mr Boyko said.

But the right-wing Conservatives, who form the official Opposition, called the deal "indefensible" and vowed to topple the Government. Monte Solberg, Shadow Finance Minister, said: "The decision to drop the tax breaks for businesses will hurt workers, business people, pensioners and investors.

This really is the ugly side of the Liberal Party."

Crucial details on the agreement, such as how exactly students would benefit from the money, have yet to be worked out. Since provincial governments have authority over education in Canada, Ottawa would have to negotiate with the ten provinces over how to dole out the cash.

Claire Morris, head of the Association of Universities and Colleges of Canada, which applauded the deal, suggested the increased funding could be used to provide more student loans.