The Government’s promotion of its reforms suffered the first major setback when David Blunkett and his team were forced to defuse the row over tuition fees and student loans.

After months of drafting plans to raise school standards for this autumn’s Bill, the Education Secretary ran into choppy water over an issue which the party believed had been delivered into Sir Ron Dearing’s safe hands well before the election.

The Prime Minister insisted that tough decisions on fees and student maintenance grants had to be taken to achieve a new target of an extra 500,000 students in universities by the year 2001.

In turn, Mr Blunkett emphasised the need for equity, citing the fact that two million students in further education and 500,000 part-timers already paid tuition fees. The Government, he said, would oppose any attempt by universities to increase tuition contributions above Pounds 1,000. An extra Pounds 165m has been found for universities next year by rescheduling loan payments.

By the time Mr Blunkett was due to put his case to the conference on Wednesday afternoon, it was clear that delegates would not vote directly on tuition fees: the specific motion opposing the Government’s higher education funding plan was withdrawn before the debate.

His speech concentrated on winning support for the changes, rather than making the Government’s crusade on literacy the central focus.

However, Mr Blunkett announced the priorities for the training programmes it centrally funds, known as Grants for Education Support and Training. In future, the money is to be renamed the Standards Fund and local authorities will have to increase their share of the cost from 40 per cent to 50 per cent. Next year Pounds 50m from the fund is to be allocated to literacy projects. An initial Pounds 21m will be available to train 190,000 primary teachers in reading methods; Pounds 19m for extra books and Pounds 10m for existing literacy and numeracy projects.

The national year of reading is part of plans to raise standards to meet the Government’s target of 8 per cent of 11-year-olds reaching the appropriate reading level.

Tony Blair, in his speech, held out the prospect of all schools being linked to the Internet for as little as Pounds 1 per pupil in extra telephone bills. There was also a commitment to provide Pounds 115m to spend on school repairs this year.

At an earlier fringe meeting, school standards minister Stephen Byers had pointed out that the Department for Education and Employment now has enhanced status in Whitehall because of the priority being given to improving schools. Ministers intend to ensure that teachers are rewarded for their skills and work is under way to revise the allocation of school budgets in order that the more highly-paid teachers are not priced out.

Even the laborious process of revising the way central grants are calculated to find a more equitable means of distribution between local education authorities has begun. David Blunkett is quickly putting in place the policies promised in the manifesto.

The problem for Labour now is that the convenient agreement between all political parties that the electorate should not be troubled with the question of ways of paying for education has led to resentment at the lack of consultation.

Funding rethink, TES2 page 22