The most sweeping proposals to affect higher education for a generation - in which students will be charged up to #163;1000 a year in tuition fees - were recommended by the Dearing inquiry and its Garrick committee which reported on higher education in Scotland. However, there was a squall of protest over the Government’s decision to scrap student maintenance grants in favour of a system totally based on loans, an idea that Dearing rejected.

University principals gave the report a broad welcome although Professor John Arbuthnott, principal of Strathclyde University and a member of the Dearing committee, criticised the ending of student grants as “socially regressive”.

Student leaders, who were persuaded to support maintenance loans, remained adamantly opposed to tuition fees. Brian Wilson, the Scottish Education Minister, said a new loans system covering maintenance and tuition would be repaid according to income rather than by mortgage-style repayments as at present. “They should not therefore be a disincentive to those either coming from less well-off families or planning to enter a less well paid profession. Graduates will pay according to their income, not the amount they borrow”

But Finbar Moynihan, headteacher of Holyrood secondary, Glasgow and was a member of the Garrick committee, warned that the abolition of maintenance grants could hit middle-income families.

The Government has tried to sweeten the pill with an extra “hardship” loan of #163;250 and by rejecting the Dearing proposal that graduates should begin repaying loans when their income reached #163;5000 a year. “We think this is too low and that the average repayments are too short,” said Mr Wilson.

Weathering the protests over charges, the Minister said the existence of free higher education “had always been more of a myth than a reality and the Rubicon was crossed a long time ago when student loans were introduced”. He pointed out that the 44 per cent uptake of higher education in Scotland, 10 per cent more than the UK average, had been achieved in spite of the movement towards loans.

Student numbers from poorer families also rose sharply in Scotland in the Eighties and Nineties, according to the report. There has been an 11 per cent rise in Scotland but only 5 per cent in England.

The new means-testing system means that around 40 per cent of students will pay nothing towards their tuition costs, according to the Scottish Office. Only 22 per cent would pay the full #163;1000, a quarter of the average cost of a course.

The Government is to buy time before reaching a decision on the implications the funding regime will have for the Scottish four-year honours degree. This will now cost students #163;1000 more than the traditional three-year degree route typical in England, unless the Secretary of State agrees with the Garrick report that tuition fees should be waived for the extra year.

“The question of whether the Scottish four-year honours degree has become devalued by overuse is not a financial but an educational issue, which it is in everybody’s interests to address honestly,” Mr Wilson said. He said he was “mindful” of the Garrick committee’s injunction to ensure equitable treatment for Scottish students.

The Government will also come under pressure from further education, which is seen as playing a vital role in expanding higher education, particularly for mature and disadvantaged students. Tom Kelly, chief officer for the Association of Scottish Colleges, says #163;1000 a year in tuition fees represents 40 per cent of the cost of a Higher National Diploma course.

Mr Wilson said the Government’s initial response represented its “preferred approach” to HE funding and a fuller policy statement would follow the consultation exercise in the autumn. But the revamped student loan system would be introduced, for new HE entrants only, in October 1998.

The Dearing inquiry’s report says that charging is necessary to tackle a funding shortfall of #163;915 million in HE over the next three years. The number of students had doubled over the past 20 years while funding per student had fallen by 40 per cent, a trend which could not continue without jeopardising quality and standards.