Government plans to consider a graduate tax as part of a review of university funding and student support have been condemned by leading higher education figures.
Delegates at a conference on higher education funding, staged last week by the University of Nottingham and sponsored by The THES , were almost unanimously opposed to the tax.
But calls for the introduction of differential fees brought equal levels of opposition and support.
Lord Baker, the former Conservative education secretary, told the conference he thought the funding debate was now "in a serious state of confusion", since prime minister Tony Blair announced a review to secure greater social inclusion.
He said higher education was suffering from "massive and constant underfunding". Although the sector had a strong case for more state funding, he said, "it ain't going to happen, and you have to decide what you are going to do about it".
Lord Baker said universities needed to be able to charge differential fees, and the government should put spending power in the hands of students in the form of vouchers. To support students, the government should introduce tax credits, providing a full tax rebate to anyone who donated money to universities to create scholarships, he suggested.
"A bus driver could transfer, say, £500 of the tax he would otherwise pay to the government, sending it instead for scholarships at the university where his son or daughter is studying," he said.
Tim O'Shea, master of Birkbeck College, called differential fees "a dangerous distraction". He said: "There is no question you would increase student debt, and there is no question that student debt is an inhibitor. It would further divide the sector, and immediately alienate public support."
David Greenaway, professor of economics at Nottingham University and co-author of a controversial report supporting fees, said debt aversion "does not seem to be a problem for low-income families". He said he thought the sector had "a problem of a failure of collective leadership" in lobbying for better funding, since it was "extremely hard, if not impossible, for Universities UK to take a view on anything".
Sir Michael Bichard, rector of the London Institute and former education and employment permanent secretary, said the sector needed a "mixed" rescue package, including more state funding, income-contingent loans and investment in scholarships.
Nick Barr, reader of economics at the London School of Economics, said there were strong arguments in favour of differential fees. A graduate tax, however, would not only be unfair, but would also cut out the possibility of other options for the future.
Owain James, president of the National Union of Students, said higher education should work harder to claim its share of existing fees. "We need to see that money is invested in solving the funding problem rather than spent outside higher education."