PROSPECTS for a new graduate tax improved yesterday after Charles Clarke, the Education Secretary, said there were problems with plans for top-up fees.

Mr Clarke’s support for a new tax creates a powerful alliance with Gordon Brown, who has said a levy is the fairest way to fund higher education.

However, Mr Clarke acknowledged that the graduate tax was not without its difficulties. Colleges could face a considerable wait before a substantial funding stream was established, he said.

“It could be up to a 17 or 18 year period before the money comes back and that is a very long period of time to finance. That is a serious disadvantage of the graduate tax,” he said on BBC’s Breakfast with Frost.

Downing Street’s plans for top-up fees look increasingly likely to be dropped. Few Labour MPs support the top-up fees, and David Blunkett, a former Education Secretary, is also thought to be against the move. However, Mr Clarke said that he was more supportive of the proposal to give elite universities freedom to charge higher rates for their popular courses.

He said that world-class academic research was already being done by an elite and that it had to be funded properly. “The question is how do people get into that elite: is it only based on people with money being able to do it, or can people from every background, every society in Britain go to those universities?” he said.

Mr Brown said that such a move would lead to a two-tier system.

University funding is one of the most difficult issues facing Labour. Blairites are worried a graduate tax will alienate middle-class voters who believe they will be unfairly penalised. Other ministers say top-up fees would put off students from poorer households.

Mr Blair had a recent meeting with university vice-chancellors, in which it was agreed that if charges were allowed to rise, then all universities could charge more for expensive or popular courses.

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