The Teaching and ÖйúAƬ Bill received its second reading in the House of Lords last Thursday. Many wanted to speak, and many of those who did criticised the sweeping powers the bill gives the secretary of state.

Three aspects particularly attracted this criticism: the bill gives wide scope for government by regulation: the General Teaching Council will be a government-appointed advisory body not a free-standing professional body: and clause 18 allows political interference in individual colleges and universities. This is the third time in a decade that ministers have run into the charge of seeking unacceptable powers over education institutions.

There were some signs of ministerial flexibility in Thursday's debate. The clause that allows the secretary of state to decide what rate of interest should be paid on student loans may be amended to keep a zero real rate of interest.

This change - the result of bad drafting or student pressure? - will disappoint those who want the loans system privatised to release savings that can be ploughed back into institutions. The private sector will not lend at zero interest. Interest subsidies would reduce any savings.

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The contentious clause 18, which as drafted would allow the secretary of state to intervene over the charges made to any student on any course, may be amended to limit its scope. Baroness Blackstone made it clear that "this legislation is intended only to limit the fees that institutions charge home and European Union full-time undergraduates and postgraduate certificate of education students."

Such limitation will reduce opposition. The concessions do not, however, touch the most contentious aspects of the bill on which the committee of vice chancellors wants changes.

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These are that charges for such things as field trips, materials, foreign study and photocopying should be excluded from the Pounds 1,000 total; that money raised through fees must be ringfenced for ÖйúAƬ; that the reserve power to intervene to set fees course by course and institution by institution be removed.

On the first, the most the government is likely to concede is that board and lodging should be excluded. On the second, Lord Whitty made it clear that the government intends to share any savings with further education. Baroness Blatch promised Conservative amendments to keep the money in ÖйúAƬ but drafting them will be difficult.

On the third, both Baroness Blackstone, introducing the bill, and Lord Whitty, summing up, were adamant. "We hope we never have to use this power. But it is necessary for us to have it in reserve . . ." (Blackstone). "The government needs to be able, if necessary, to control the top-up fees that universities may consider charging"(Whitty).

Excising this power will be resisted fiercely and many who dislike the idea of top-up fees will back that resistance, particularly if the bill is amended to confine the minister's power to fees charged to full-time home and EU students.

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Nonetheless, the powers should be removed. This is not because universities are eagerly queueing up to charge extra. They are not. It is because curtailing their ability to do so sharply shifts the balance of power. The threat to charge has in the past won universities and the education department extra Treasury money. As Earl Russell said: "If that goes the Treasury controls both the buyer's and the seller's side of the question."

Mr Blunkett needs to worry about this just as much as the Committee of Vice Chancellors and Principals does.