The power of the new qualifications regulator to force exam boards to limit the fees paid by schools has been restricted amid fears it could stifle innovation.
Ofqual will now only be able to cap the fee for a particular exam if it is satisfied that the limit is necessary to "secure value for money".
With school budgets likely to be squeezed after 2011 and exam fees now amounting to a huge proportion of overheads, the pressure on Ofqual to act could increase in the coming years.
The original version of the legislation setting up Ofqual said that the regulator would have to set out its reasons for fee capping, but did not limit what those reasons could be.
Baroness Morgan, children's minister, told the House of Lords that the regulator now had to pass a "stiff test" before it could introduce any capping. She said Ofqual would have to make sure it did not limit exam innovation and prevent smaller boards from thriving, but that the ability to cap fees was a "key power".
"Hundreds of millions of pounds of public money are spent on qualifications each year, and the taxpayer would rightly expect us to make sure that expenditure provides good value," the minister said.
John Dunford, general secretary of the Association of School and College Leaders (ASCL), said: "Exam fees are far too high. They are the second largest item on most schools' budgets after staffing, and it is time that the Government bit the bullet and got the boards to reduce them."
The past decade has seen growing concern over the money schools spend on exam fees, which by 2007 had overtaken the total used to purchase books. Fees rose by up to 72 per cent between 2003 and 2006 and by up to 11 per cent in 2007. But the rate of increase did fall when the Qualifications and Curriculum Authority, Ofqual's predecessor, said it was considering capping them.
It was Edexcel, the only one of the big three English exam boards owned by a private company, that raised concerns that the latest capping proposals could stifle innovation. This week a spokesperson said the board welcomed the fact that any reviews of fee-capping decisions will have to be carried out by people independent of Ofqual. But she said the restriction on the power to cap should be tighter.
"Fee-capping should only be an option in the case of proven market failure, as is the case for other regulators," she said.
Baroness Walmsley, Liberal Democrat schools spokesperson, also said she was concerned about capping restricting innovative qualifications, even after the changes made to the Apprenticeships, Skills, Children and Learning Bill last week.
"I can envisage a situation where a new qualification is introduced and, without the economies of scale that might come later if it becomes popular, the body may have to charge quite a high fee at first," she told the House of Lords. "I would not want innovation of that sort stifled."
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