The Chancellor holds the future of the Prime Minister in his hands. It is a desperate situation for both. Labour MPs, with or without an agenda, are openly speculating that by the end of January Tony Blair could be out. They believe that, once again, one man can help save him: Gordon Brown.
Blair's handling of the "student finance" issue, to give it its bland official title, has perplexed even his closest supporters. For months he and his people failed to explain the arguments for top-up fees. When he finally did start, he made the wrong case to the Labour Party. "I kept on saying to him: don't talk about the universities' financial problems, talk about the need to expand access," says one former minister and friend. He wanted Blair to talk more about equity, the closest thing to equality this government can get, but Blair was more swayed by the predicament of Britain's once grand institutions. One serving cabinet minister describes the Higher Education Bill as "profoundly socialist", but says: "Somewhere along the road it has been misunderstood and misrepresented."
The motivations of the 150 or so potential Labour rebels are various. Some are still angry with Blair over the war and won't believe whatever he promises on any future subject. The publication of the Hutton report on 12 January will stoke their fury. Some are angry over his conduct of the government and party, and want to warn him to change his ways. Some say that, on principle, he should not break manifesto promises.
Some - a large but not overwhelming number - are concerned about the specific policy of tuition fees. It is the issue of "variability" that exercises most. They want Blair to strike out the provisions that allow different universities to levy different charges - something he has refused to do. The complaints about fees of £3,000 per year serving as disincentives for poorer students are more manageable, and could be offset by further compromises. But Blair sees the two principles as rolled into one. He regards it as more socially just for those who benefit from higher education to help pay for it themselves. On that, many in his party would agree. At the same time, he sees variable fees as part of his agenda for choice, diversity and deregulation. He sees the two as complementary. His critics see them as contradictory.
Party managers believe that as many as 80 signatories of the early-day motion expressing "concern about the effects variable tuition fees and the perception of debt may have on access to universities" will not change their minds, no matter what sweet talking they are subjected to by Charles Clarke, the Education Secretary, by Blair and, possibly, by Brown. Brown's position is, for different reasons, as difficult as Blair's. During cabinet committee discussions a year ago, the Chancellor voiced his concerns, not about the need to raise money for higher education, but about the means. He did not, according to some who were present, offer a detailed alternative, and did agree on collective responsibility once it had been approved.
There is no doubt, friends of Brown say, that he supports the current policy. They are riled by suggestions - fed, they believe, by their enemies in the Blair camp - that he is acting disingenuously and treacherously. He will, they say, do whatever he can to urge all members of the Parliamentary Labour Party to vote through the government lobbies, just as he did on the eve of the Iraq vote in March and the foundation hospitals vote last month.
Brown's intervention on the eve of war, badgering friendly MPs to give the Prime Minister the benefit of the doubt, helped save Blair's premiership. They both know it. On that occasion, the revolt was led by the likes of Chris Smith and Robin Cook - hardly Brownites. This time, it is different. Even though the rebels' ringleader, Nick Brown, is a close friend, the Chancellor's people say his powers of persuasion are strictly limited. "Gordon cannot magic people to support the government," says one colleague. "It's gone beyond that." The Blairites scoff at this. "Gordon could get Nick to call off the dogs tomorrow if he wanted to," says one Downing Street official. Certainly, parts of the parliamentary party are now in open revolt. Hostility to Blair among some MPs exceeds any desire to minimise embarrassment for Brown. Many opposed to tuition fees do not belong to the Chancellor's camp anyway.
Since their bitter row over Blair's refusal to put Brown on the Labour Party's National Executive Committee, both men have drawn back from the brink. But their relationship will not sustain more ruptures. That is why Brown's role on the Higher Education Bill is seen as so crucial, and that is one of the reasons why Blair has deliberately raised the stakes. There was no need for him to say, at his press conference on 2 December, that his authority was on the line. Nor was there any reason for him to suggest that this was "a very major flagship reform of the government".
Blair's advisers admit that their plans for nursery, primary and secondary schools are more important to the broadening of access to education and for improving opportunities for the less privileged. Some in Downing Street do not understand why he has raised university finance as a talismanic issue. (Similarly, foundation hospitals are not nearly as crucial to the health agenda as other changes that are being introduced.) Given that almost everyone agrees on the need to increase funding for universities in some way, some around Blair wonder why the various options - such as a straightforward graduate tax - have been so peremptorily dismissed, and why an essentially technical argument has been refashioned as a matter of principle.
So has he, as one member of his entourage fears, "lost his grip"? During Prime Minister's Questions he asserted that the Lib Dem policy of funding universities by raising the top rate of tax for the super-rich was "fundamentally unfair". Of all the adjectives designed to enrage his party, he alighted on this one.
And yet, as with Iraq, Blair remains utterly convinced of his powers of persuasion. He has perhaps erased from his memory bank his failure to persuade the French, the Germans, the Russians, the floating African and Latin American countries and swathes of the British people and the Labour Party towards his position on the eve of war. Still, the Iraq experience has hardened him. According to his allies, Blair now feels "liberated" from the need to look over his shoulder at Brown or at others. He will do what he has to do. That is part posturing, part genuine. He is desperate to be seen to be making a difference; and while his reform agenda as a whole lacks coherence, he will battle for the individual parts. On the way to the vote at the end of January, he will make more concessions, but will only go so far.
Which brings me back to Brown. On 2 December, after urgent discussions between the camps, the Chancellor inserted a passage into a speech at an awards ceremony. It was spun as "throwing his weight" behind Blair's policy. In one sense it did, describing it as "essential" that the reforms proceed in order to get more money into ensuring excellence in universities and extending opportunities. It was right, he said, that once students graduate they make a greater contribution. The support that evening was limited to the generalities, however, not the specifics.
Blair has put his leadership on the line. He is convinced that Brown has no choice but to help swing the vote for him. The Chancellor will have to prevail over sympathetic MPs. In so doing, he will provide Blair with another lifeline and prolong his rule. That is his paradox.