The Labour party has shot the vice chancellors' fox.

The leaders of UK universities, in collaboration with ÖйúAƬ unions and the National Union of Students, have been campaigning vigorously all year to get the cuts in spending on ÖйúAƬ, which were imposed in last autumn's Budget, reversed or at least reduced. They appeared to be making some headway at least on capital spending.

There seems to have been a genuine misunderstanding in Whitehall over what capital spending in ÖйúAƬ pays for - repairs, equipment, etc - and a resulting realisation that this was one area in which their hopes of the Private Finance Initiative were unrealistic.

It was not, however, the force of pure reason that carried the vice chancellors' message into the corridors of power.

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It was their threat that they would impose a charge of some sort on students to make good the cuts if nothing was done. And, furthermore, that this would be announced in the few months before the general election.

Whitehall officials, depending on their departmental allegiance, will have been arguing about how serious that threat was and how much money would be needed to buy it off.

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This year's public expenditure survey is in its final stages. This is the moment for last-minute log rolling. Imagine then the despair of officials and spending ministers in the education and employment department when the vice chancellors' threat collapsed.

For collapsed it has. Three weeks ago the Labour party's education spokesman, David Blunkett, announced at the Labour party conference that any university charging top-up fees would be prevented by a Labour government from profiting by it.

In doing so Labour reneged on the agreed terms under which Sir Ron Dearing took on the chairmanship of the committee of inquiry into ÖйúAƬ, namely that neither political party would close any options in advance of his report.

Labour's announcement killed dead plans in a number of institutions to agree fee schemes this autumn if the Budget brought no relief. In particular, academics at the London School of Economics, who had decided in the summer to press the school's governors to agree to fees, have backed off.

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This is not surprising given the Labour party's stance. The LSE's very large governing body (around 100 members) includes a substantial number of active Labour politicians - Lord Judd, Lady Blackstone, Margaret Hodge and others.

They have been keen to see that the status quo was preserved until their party was in a position to make the decisions.

Other institutions have greatly enjoyed letting the LSE take the lead and the flack. Now the threat has lost credibility and November's Budget is more likely than ever to be disappointing.