BRITISH taxpayers are to meet the £2 billion cost of reintroducing free university education in Scotland – but students from England and Wales will still have to pay the full fees.

Under plans to be announced by the Scottish executive on Wednesday, Scottish students who now pay £2,000 on graduation will be charged nothing from 2009. From 2011 at the latest they will also see loans wiped out and maintenance grants reintroduced.

The move by the minority SNP administration is likely to reignite the debate about the Union and fuel anger at the emergence of a two-tier system whereby a more generous level of public services in Scotland is largely funded by English taxpayers.

In the decade since devolution, Scotland has made use of its grant from Westminster to subsidise care homes for the elderly and to authorise the use of a wide range of cancer drugs denied to patients south of the border. It receives approximately £1,500 more per head than England.

But the latest plan is the most divisive yet. All tuition fees in Scotland will be scrapped from 2009 for Scottish students.

Students from the European Union will also receive free education from 2009 unless they come from England, Wales or Northern Ireland. At present there are about 15,000 English undergraduates at Scottish universities paying £1,700 a year for a four-year degree. On top of an average loan of £11,000, it means they leave with an average debt of £17,800.

Students in England are charged top-up fees of up to £3,000 per year, and universities are expected to be allowed to raise their charges from 2010. There are plans to make the Scottish system even more generous by 2011, with the replacement of student loans by means-tested grants for all Scottish students. In addition, up to £2 billion of existing student debt will be written off, paid for out of Scotland’s block grant.

The move provides an ironic twist to the introduction of tuition fees as Tony Blair had to rely on the votes of Scottish MPs to push through the introduction of £3,000-a-year fees at English universities. Scottish students attending English universities would still be charged fees.

David Willetts, Tory education spokesman, believes the latest Scottish decision has created a problem for Gordon Brown. “Brown is trapped. He can hardly extol the virtues of university fees in England when his own constituents in Scotland will not be paying them,” he said.

The SNP plans are expected to pass through the Scottish parliament with the support of the Greens and Liberal Democrats.

Last year the SNP pledged that any move to scrap tuition fees would also cover English students studying there. However, Fiona Hyslop, the new Scottish education secretary, is expected to announce she has abandoned that commitment because of fears it would create a rush of English students north of the border.

Jack Rabinowicz, a partner in the London-based law firm Teacher Stern Selby, said the SNP plan could prompt a legal challenge from aggrieved students elsewhere in Britain. “It further highlights the imbalance between the system in disparate parts of the UK. It’s a discriminatory regime,” he said.

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