People who object to their face appearing on google streetview

We have to start from the beginning - where did top-up fees come from and why? It all starts from the fact that universities need more money and they need to expand to meet the future of our society and to offer real opportunity to young people.

Despite rising student numbers, between 1989 and 1997 universities saw a 36 per cent cut in real terms to their funding per student. Since 1997 we have started to reverse this decline with funding per student to increase by 7 per cent between 2003 and 2006. But this isn't enough: the backlog in university infrastructure is estimated at around £8 billion and university salaries have increased by only 20 per cent since 1980, against 60 per cent for other employees.

This is where the Tories erect a big 'No Entry' sign. By abolishing fees altogether the Tories would immediately rob the sector of up to £430 million. In the long term without variable fees 250,000 potential students would be robbed of opportunity. This Labour Government believes aspiration and talent should not be written off because of an old elitist argument that says more means worse. We cannot compete internationally without a strong knowledge and skills base. Universities are the driver for this knowledge. So, how do we fund this? More taxpayers' money is one option. But as Secretary of State for Education and Skills, I have to ask myself the question is this really fair? We already spend an average of £5,300 per year on every university student, compared with £1,800 on every three-year-old or £3,200 on every primary school child. Universities get the largest share of the taxpayers' money spent on education. My proposals mean the taxpayer continues to foot the largest share of the university bill. But we ask the graduates who benefit the most to make a contribution, rather than asking those who have never been to university to bear the cost.

So how should students make a contribution in a fairer way? This is where some Labour colleagues have expressed concern.

I believe university should be free at the point of use. Under my proposals parents or students who now pay £1,125 as the entry price to study will no longer have to find this before or during their studies. The recent student income and expenditure survey showed many students had to find nearly £700 towards fees because their parents were not making their assessed contribution. Under my proposals that inequity will end. That's fairer.

Graduates should have to pay back only the cost of their own higher education without facing a life-long tax. Graduates should make a contribution to the costs only when they are earning over £15,000. That's fairer.

Graduates will not be charged a real rate of interest, The Government will pay the cost of borrowing for the individual, so no one is penalised for taking longer to pay back or career breaks. That's fairer.

Students from lower income backgrounds will get extra financial support. Money to cover all or some of the first £1,125 of the university fee will continue to be paid, and around one third of full-time students will benefit from a grant of up to £1,000. That's fairer.

Universities will have to make a wide range of bursaries available as a condition of charging a higher fee. Cambridge has confirmed that one in three of its students could be awarded up to £4,000 per year - in addition to Government money. Many people would never have believed such universities would be offering such incentives to the poorest students. That's fairer.

Finally, variability is a critical driver of fairness and quality. I know this is controversial and some Labour colleagues want a flat fee of £2,500. But I remain of the view that it is vital to vary fees from nothing to a maximum of £3,000, across different universities and between different courses.

To insist that every student on every course at every university should pay the same amount would be grossly unfair. This fee would be irrespective of the demand, nature or quality of the course and the potential rate of return for the student. How is that fairer?

Ironically, a flat rate of £2,500, which is the level suggested by many colleagues, distributes money from the poor to the affluent. How is that fairer?

These reforms are a package. Not a pick-and-mix solution. They are generous to students. They are fair to universities and the taxpayer.