How do you solve a problem like student fees?

Some time later this year, the Browne Review about higher education funding will report, and is expected to recommend that universities be allowed to increase the fees that they charge students.

I would be interested to know what the candidates for the Labour leadership think about this, as it presents a problem and an opportunity.

Until April 2010, it was reasonably clear what most politicians thought about this issue. Labour Party Lefties and Lib Dems opposed any rise in student fees, and indeed wanted to see them scrapped. Labour Party "Moderates" and Tories supported student fees, and were clear that any extra money for universities would have to come from increases in fees, rather than extra government money.

But now in the New Politics, the Lib Dems have discovered that it is all very difficult and are planning to abstain on whether or not student fees should be raised, and some Labour Party Moderates such as Ed Balls have identified public anger over student fees as one of the reasons that Labour lost the election, and hence something that Labour needs to reconsider.

What Ed Balls and others discovered, when they went canvassing for the first time in several years, is that tuition fees are a massive stealth tax on aspiration. New Labour had thought that the only people who cared about fees were middle class lefties and students (two groups which it always felt were worth annoying in pursuit of the "political centre ground"). Yet in fact, fees hit New Labour's "hard working families" hardest of all, as people on modest and middle incomes spend their savings on enabling their children to go to university in the hope that this would help them get a decent job in the future.

There will be people inside the Labour Party leadership, and lobby groups such as Universities UK, who will urge Labour to back an increase in student fees. They will argue that it would be irresponsible to deny universities the funding that they need, and it would show a lack of seriousness about the nation's finances to turn down the opportunity for universities to reduce their dependence on state funding.

But burdening aspirational middle income voters with unaffordable fees is wrong in principle and unsustainable in practice as a way of funding public services, and would also show how out of touch Labour still is with its supporters. It would also squander a chance to win over former Lib Dem supporters.

Instead, Labour's next leader should pledge to vote against any rise in student fees, and should develop an alternative way of funding post 18 education on a more sustainable and fairer basis. That would not only show that they've got the political judgement to deal with this difficult issue, but also show how they would cope with difficult policy challenges which go right to the heart of big political debates which we will be faced with over the next few years, such as how to improve public services while reducing the deficit, and how to make sure that the UK is a good place for people to study and invest in.

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One other objection to subsidising the cost of higher education is that most of the benefit goes to people on higher incomes. One possible way to avoid this problem would be to give everyone an individual education budget, which they could use for any kind of education or training after the age of 18.

Whether that's covering the costs of an accredited course so someone who is out of work can get a job as a security guard; helping a student get a degree in Golf Course Management so they can find work in one of the UK's fastest growing industries; or allowing someone who has worked hard all their life to study Ancient Greek for the sheer love of Herodotos - the principle should be that everyone deserves an equal chance to learn.