The BBC reports:
A graduate tax is to be proposed by the Business Secretary Vince Cable, in a keynote speech on the future funding of higher education. This would mean students in England would repay the costs of going to university through taxation once t hey began working. A review of tuition fees and student finance is due to report in the autumn.
Mr Cable, who has pledged to oppose raising fees, will suggest a graduate tax as an alternative system. This would mean students’ fees being paid by the government to universities – and graduates would then pay a higher rate of taxation.
At present, the government lends students money to cover the cost of fees, with this loan paid back when students enter work, until the loan is paid off. Under a graduate tax, the amount paid would depend upon earnings – compared with the current system in which a fixed amount is paid back.
Such a change could draw the political sting from the tuition fee debate – with Liberal Democrat MPs having personally signed pledges to oppose an increase in fees.
Lib Dem Voice polled party members signed-up to our private members’ forum about the issue of tuition fees last year, following Nick Clegg’s announcement that the Lib Dems would not be able to afford to abolish fees in one go. The result then was overwhelmingly in favour of abolishing fees – but as I noted at the time:
I was struck reading the comments made in response to this question how firmly wedded is the Lib Dem membership to free education up to and including an undergraduate degree. Only a small minority – just one in 12 – favoured a reversal of the party’s policy of opposing tuition fees.
Of course a lot has changed since then, most signifcantly the party finding itself in coalition government, in which position all manner of previous promises have to be re-examined. A graduate tax has sometimes been spoken of with grudging approval by some Lib Dems – and has been enthusiastically endorsed by Labour leadership candidate Ed Miliband, who labelled it a “fair alternative to Lib Dem betrayal” (ironically enough).
But a graduate tax does mean an end to the party shibboleth that university education should be free as of right. Is that something up with which party members (and the party’s MPs) will be willing to put?
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60 Comments
Is there not a considerable risk that this proposed tax will encourage more graduates to move abroad, leaving the costs of education in Britain and the benefits of that education overseas?
As a graduate who paid tuition fees and emigrated to Canada with outstanding student loans, I make regular payments to the Student Loan Company, and will continue to do so until the loan is paid off in a few months’ time. Presumably, under the graduate tax proposal I would have escaped paying for my education. Who then picks up the tab for my share of the costs? Does the government subject graduates to a higher rate of tax, potentially persuading even more to emigrate, or are the costs passed to general taxation, with those who do not have degrees expected to pay instead?
Ultimately, yes. Further education should be subsidised: the whole country benefits from having a highly-skilled population with ample doctors, writers, scientists and innovators. But not all benefits from education are purely public. There is a personal benefit, in terms of future remuneration and enjoyment. The cost of further education should thus be shared, with appropriate returns to the taxpayer proportional to the degree to which someone has benefitted personally from further education, without disincentivising uptake of further education which benefits the whole population. A graduate tax, set at a low rate with an appropriately high threshold, seems the best way of achieving this.
@Dan Hassett
Surely there is some way of making your tax-paying debt convertible to some lump sum payment on exit? Otherwise, we lay ourselves open to the graduate tax equivalent of non-doms, with the less wealthy and mobile shouldering the bulk of the burden.
The argument for a graudate tax has always been based on the idea that certain families (characterised as “middle class” and therefore better off) benefit disproportionately from higher education. I feel assumptions like that become self fulfilling prophecies, and think we should maintain the idea that this is paid from general taxation.
An advantage of a graduate tax is that it could potentially be progressive so that those who go off into highly-paid jobs like investment banking and management consultancy pay more than those who go off to work in the voluntary sector or academia, where salaries are generally much lower. Those lower-paid careers may potentially be ones that people are seriously put off from embarking on because it would be tougher to pay off their student debt and their quality of life (to the extent that it is dictated by their salary minus tax and debt repayments) would be lower. People who come out of university highly-qualified but still choosing to do low-paid jobs will generally be doing them because those jobs seem quite socially worthwhile. To my mind, it is beneficial to the nation’s health that people are prevented from being disincentivised in quite an important way from doing those jobs. Of course, the degree to which this is a benefit of a graduate tax is something that needs research doing, and it would seem intuitive that one of the factors would be exactly how progressive the graduate tax is.
This proposal seems to assume that graduates are all well paid (unless the threshold for paying the tax is set very high, say for those already earning in excess of £30,000). University study is not merely vocational or for purpose of increasing one’s income. Scholarship is a good for society as a whole and cannot simply be quantified. ? All in all, I fear the whole proposal is retrograde.
Aren’t graduates supposed to earn more than non-graduates? If so, they pay more tax already.
Wil he entertain Malcolm Grant’s suggestion that the number of places at university be cut, even if it means that the weakest institutions close down?
The fact is that higher education is about expanding human knowledge (by research) & meeting intellectual curiosity for students. Lo & behold, if that is got right then cash also starts to flow, but that shouldn’t be what universities are aimed at.
I am deeply concerned that nothing should be put in the path of people of modest origins who want to be educated & are capable of benefiting from it. It seems to me that improving secondary education & following Grant’s suggestion would help in this regard. Politically unpopular it may be but surely we can’t just grind on with a system geared towards lower middle class floating voters who feel entitled to a place.
as a current student I would be immensely pleased with a graduate tax. It isa far fairer concept and would actually provide better funding for the education system in the long run. That said, anything would be better than tuition fees.
I want to cry… I watch Channel 4 News and see a Tory (Ken Clarke) being excellent on Justice, while our own fallen saint Vince is selling out liberal values on education. I’d assumed that in this coalition the Tories would keep the popular populist stuff to themselves, but no! we are giving them the good liberal stuff as well while we do the unpopular stuff. A half-witted council group could do better than this.
Personally I like the idea. Effectively, it irons out some of the nastier and more regressive kinks in the whole tuition fees idea. It is definitely a step in the right direction. It doesn’t leave students lumbered with debt, merely with an additional obligation to contribute to the society that paid for their education. Over a lifetime of taxation, I can’t imagine that the “graduate premium” (or whatever it would be termed) would need to be an especially oppressive rate.
Tuition fees, apart from being an affront to those who believe the state should provide a university education for free, are regressive because you still have to pay back the same loan regardless of your income (so long as it’s more than £15,000 p.a.), and because many students from wealthier families simply get their fees paid by their parents, leaving them with lower debts, which is a luxury others don’t have available to them. Under a graduate tax, everyone faces the same system, your parents can’t help you, and it’s based on ability to pay.
If Vince gets this through, it will be a concrete Lib Dem victory. Any other government in power during this parliament would probably have just increased the tuition fees cap, any other course of action being too politically expensive. Yes, this compromises on education being free up to first degree level as a basic right, but I’m not convinced that all Lib Dem members necessarily subscribe to that concept (I don’t, particularly), and I certainly don’t think the Lib Dem student support base (of which I have very recently been a member) necessarily does.
@Jeremy Ive: Um… why does it assume graduates are well paid? Surely the point is that it would be levied according to ability to pay, on the basis that as a graduate you owe some of your earnings, however small, to your status as a graduate. You might disagree with that, but it’s nonetheless much fairer than tuition fees.
How long would a graduate be expected to pay this tax? Forever? Or until a set amount has been paid off? If the former, then you may as well just raise income tax and have done with it rather than adding more complexity to the system just to achieve the same end results, and if it’s the latter then how does it differ from loans in practice?
It sounds like politician’s word salad to me.
So why not out of general taxation – which is progressive, and doesn’t mean you have to design and administer a new system (all extra cost). If everyone is potentially entitled to funding – for first degree level anyway – why the worry about the individual paying back? And anyway, it must be a fairly unpredictable income stream, bearing in mind it may be progressive in some way.
@IainM
I think the only difference between this and raising income tax is that only graduates would be eligible to pay it. (Although I suppose most high-earners are graduates these days…)
With cuts of up to 40% in public services, the idea of free tuition, even phased in as we proposed at the general election is completely unrealistic. The graduate tax is a good solution. It does not penalise graduates who use their skills for wider community benefits while remaining on low pay. It does not act as a disincentive to university education as tuition fees do.
I welcome it, and wish we had proposed it earlier.
I wouldn’t mind paying a graduate tax, so long as it was ring-fenced for the benefit of students attending the University I graduated from. I’m concerned that there will be a lot of cross-subsidy with institutions which don’t enhance their students’ earning capability benefiting at the expense of those that do.
In an ideal world it would all be free, but with Labour’s 50% target pushing down the value of degrees, with apprenticeships and vocational education falling by the wayside etc, it’s just not realistic.
I disagree with the idea that one ought to be entitled to studying for the sheer pleasure of it at the expense of the tax payer, especially in this economic climate, but I do see the value in subsidising those who take courses that are beneficial and provide much needed skills – however I feel that the emphasis needs to be on education and skills in general more than *just* on university education.
@Andy Hinton: I question the assumption that there is a necessary connection between higher education and the enhancement of earning capacity. For those for whom it is not the case, even paying a small amount extra in tax would be a buden and, and a disincentive to those thinking about going to higher eduction. What the notion of a graduate tax ignore are the ‘positive externalities’ of eduction for society. Regardless of the enhancement of earnings, higher education is a social good.
If we are talking about singling out categories of people for extra taxation, we might instead think of those with ‘negative externalities’ such as convicted criminals and polluters.
@Jeremy Ive: “University study is not merely vocational or for purpose of increasing one’s income.”
That may be so, but only in a utopian fantasy could the state pay for all that without getting anything back. Labour’s magical money tree hasn’t materialised (yet?) and it would be tremendously unfair on the rest of society to expect tax payers who are struggling to support themselves, to subsidise people who are taking courses for fun (or in Labour’s case, to keep the unemployment statistics lower).
In terms of impact on the individual, the students won’t notice. The vast majority will have little experience of income tax beforehand, and will have a substantially higher post-tax income after graduation. It does seem cruel to make them wait so long before they feel the blessed relief of having paid off their debt, though. Not that my loans came anywhere near the sums I see these days.
Going back a while, a very small proportion of the population went to university. If we went back in that direction (5% to 15% of school leavers in the 60s and 70s) there would be an outcry – and rightly so. Politically it is probably suicide right now to suggest raising income tax. Tuition fees are a disincentive – and a regressive one that only really affects lower income families.
Out of all of those, turning the “political suicide” option into an income tax restricted to those who benefit from it, and it does start to look like a viable option to me. Has anyone produced any numbers including the tax amount (or range thereof), likely proportion of population affected, threshold before it kicks in, the rising cost burden of university education, etc?
Despite what I just said, I do wonder whether the education of our future workforce isn’t one area where believers in the small state shouldn’t just back off and heartily endorse public spending. I admit to be slightly put off by the idea of insisting that someone else should paid for which I enjoyed before fees came in. How much would the abolishment of fees cost (forgive my ignorance, I’m sure this has been costed)?
@Jeremy Ive – Would you agree if applied to all further/higher education and vocational training? E.g. things clearly aimed at getting people into (better) employment? If you feel all should be free for all, where would this money come from?
@Andrea Gill: I am not in favour of simply funding universities as some sort of recreation park. I would certainly be against subsidising higher education just for those who want to have ‘fun’, It would be better if people with that attitude did not go to university at all, and went off somewhere else. I agree that this would be a terrible way just to keep down unemployment statistics, and having the target of sending 50% of the population to university is not realistic and probably not desirable.
However, if we are talking about funding scholarship and ‘blue skies research’, this is not utopian fantasy, but essential for civilisation. To see education purely in utilitarian terms loses sight of this.
Why not pay for universities by raising VAT and cutting benefits? We are reassured these are progressive measures. It seems so unfair that people with qualifications who delay working for several years have to pay a little more tax.
Good to see you all still focusing on the real issues of fairness.
@Andre Gill (second comment — my last response was slightly out of sync): as far as vocational training goes, this will be recouped through higher income tax yields. Even here, I don’t think a graduate tax is applicable.
Where I agree with you is that we should not see all higher education as necessary university based. There is a place for recovering the apprenticeship model as well. We are going to face a real shortage of skilled workers and highly trained technicians. But this does not mean that we should scrap our universities, or turn them into technical colleges. There is a place for both,
If we are to stay in coalition we desperately need some sort of win. We have been pushed backwards and miles rightwards on tax, on benefits, on the health service, on junk food, on free schools. A graduate tax isn’t perfect but it’s a lot better than inculcating the debt habit into a generation of students, it’s a lot better than the unbridled marketisation of higher education. The devil is in the detail, but in principle – go for it Vince!
@Jeremy Ive – I wasn’t suggesting to scrap all (most) unis, but I do very much welcome the coalition’s endorsement of FE/vocational learning/apprenticeships, and the £0.5 billion commitment to this and social housing outlined by David Laws as a Lib Dem concession re-invested from the first packet of cuts.
@Jeremy Ive: “However, if we are talking about funding scholarship and ‘blue skies research’, this is not utopian fantasy, but essential for civilisation.”
Definitely agree there!
There are a number of other issues to consider.
First, as Dan said in comment one, those who emigrate get off free.
Second, European students also get off free – we have no right to tax the French, and under EU law, if we offer education with no upfront fee to Brits, we have to do so to all EU students. That is a big hit – we let in approx 120k EU students a year, so there are approx 360k in total, who currently each pay £3000 – so that is about £1bn a year that we will lose by moving to a grad tax. And once UK univs are free, more EU students will want to come here, and by law we cannot discriminate against them. So if the govt funds the same number of places, a grad tax means fewer places for UK students – that is surely bad news?
Third, there are issues for universities. I doubt that the tax will be ringfenced, which means that univs may well get less money. In recent years fees have allowed big investments in things that matter to students – we now pay (a lot of money) for copyright clearance for chapters of books to be scanned. We have installed technology so that most big lectures are recorded. All of that sort of thing is at risk if we go back to being at the Treasury’s mercy.
Fourth, it is not clear when univs will get the money – do we have to educate this year’s students and get the money back in years to come? Or does govt fund us now – in which case there is a potential short term hit to govt finances?
It is not clear how this works for people who drop out – does anyone who enrolls have to pay? Only those who get degrees? What about people who studied for one of the new two-year degrees that Vince is talking about? Will OU students be exempt? What about people who study abroad for a year as part of their degree, and had to pay fees to that institution – will they pay less UK grad tax, or do they have to pay twice?
Do univs get their own students grad tax? Or some average? Or an arbitrary amount decided by govt?
What rate will the tax be at? And at what point will it start? Will it continue until you die? (The current system wipes out the debt at a certain point). It could easily be more regressive than the current system if it starts at the point at which income tax is payable, or if it goes on for life.
Finally, I think it risks the most prestigious univs pulling out – we lose money hand over fist on EU undergrads, and if the amount we get from govt goes down then there comes a point at which we cannot remain top class univs. A good friend of mine has taken a job in the US, and another has taken one in Switzerland. Both received huge pay rises. That sort of brain drain could accelerate. We need to think through whether we would be happy with the brightest and best students being taught by faculty who are not the brightest and the best.
Tim,
OK, there are pitfalls. Can you offer constructive ways to work with the idea of a graduate tax, so as to avoid them?
How would such a proposal affect us part-time, mature Open University students who are paying our fees for our OU courses as we take them and have been paying taxes for many years already? If it means I pay additional taxes purely for having a second qualification, then that would be unacceptable. I’d want to see the detail of this policy – anything that deters people from retraining later on in life at their own expense should be firmly opposed.
I read on one website that 52% of Vince Cable’s constituency are graduates. Guess whos not going to win that seat at the next election.
I agree entirely with those who say non doms and any one who can will go abroard rather than pay this tax. Graduates contribute the most to society already not just through tax but through skills and knowledge. If this tax is too high a graduate may earn more money on the dole.
The best way to fund uni is by the government giving back some of the income tax they collect from graduates, reasonable fees to reflect the individual gain of a degree and industry paying a graduate vacancy tax. After all, one of the biggest beneficiaries of degrees are privcate companies like banks or MPs who employ researchers ect.
We could also adjust goverment subsidy according to society’s needs, so medical students get free education p, Artist bear the full cost of thier education themselves, and engineers and the likes get partial subsidy. This could be reviewed by a dedicated quango every year to reflect predicted industry labour shortages and surpluses.
What would the outcome be for dropouts?
Will they be forced to pay a fraction of the tax? For how long? Surely forcing someone to pay out 1% of their income for a decade for the sake of a University degree they didn’t finish is a tad excessive.
This is a dire idea. If graduates earn more, they’ll pay more tax anyway.
Asquith
Will he entertain Malcolm Grant’s suggestion that the number of places at university be cut, even if it means that the weakest institutions close down?
Malcolm Grant usefully reminded us that for the most prestigious universities, undergraduate students are a minor irritation that gets in the way of the real job of churning out research papers. Hardly anyone in this country outside those who actually work in the sector seem to realise this. As a university lecturer, I find almost everyone I know assumes I spend most of my time lecturing to students, and when they are away during summer and the Christmas and Easter breaks, so am I. Actually, though I shall take a couple of weeks holiday, for the rest of summer I will be working on my research. That is why “two year degrees” as has been suggested won’t work. At least they won’t so long as – which is the case – failure to produce research papers not only means no promotion as a university lecturer, it means the threat of being sacked no matter how good you are at teaching. No-one, however, gets sacked for being lousy at teaching so long as they are churning out the research.
The reason people like Malcolm Grant are demanding more money for universities is to fund more research. They wouldn’t need so much money of all they did was teach students. To some extent, students are a cash cow used to bring in the money to fund the research.
If we are happy with this, fine, but we ought at least to be aware of it in order to debate this issue properly.
Well, I will not campaign for an un-hypothecateable funding model. In fact, if I stand again I will not support it, and I will vote against it.
Vince was always the one moving against our tuition fees stance and policy committee has voted him down a number of times with only Clegg, Alexander and one other voting with him.
He is using the coalition as a mask to pursue what has long been his own agenda, and whilst I respect him on economic issues, I never have done on other issue.
@JamesMcGrath ‘Artist bear the full cost of thier education themselves’. Actually, the creative sector, the onlyl part of the economy to grow in the recession, is quite an important bedrock of our economy (10% GDP) and we need 100,000 skilled creative graduates to fill jobs over the next few years, so I strongly counsel against picking which type of graduate you, or I, deam to be mroe crucial to eg short term, or long term objectives.
Andrea Gill
“In an ideal world it would all be free, but with Labour’s 50% target pushing down the value of degrees”
You, of course, have good evidence proving that the participation target (which was never met) pushed down the value of degrees, don’t you?
Just as a pointer – no, you don’t, because what evidence exists – Anna Vignoles is a good reference for this work – is extremely weak. Certainly, before the recession, employment for graduates was holding up extremely well, and graduate premiums – where they were measurable – seemed to be holding (the difficulty being the sheer lack of long term research into graduate cohorts at any point – they are extremely costly to run and there’s no prospect of any news ones any time soon).
The reason Labour continued Major’s participation targets (the 50% target was merely an expansion of the previous Tory target, although the way it was devised was, shall we say, not the most rigorous method) was because changes to the economy – particularly as a result of globalisation and technological advancement, meant that the UK labour market was, and is, in the throes of a long-term transformation. I would recomment reading the Leitch Review (well, by ‘recommend’, I mean ‘not recommend’ because it’s long and dreary, but it does explain a lot of this in great detail), but also read the speeches and work of Richard Lambert when he’s not speaking solely as the head of the CBI in order to understand the drivers.
Knee-jerk repetition of obfuscatory tribalist anti-Labour talking points are exceedingly unhelpful in understanding how and why we need the number of people we do to go to university.
At present, we stand in peril of being the only major economy to conclude that what our country really needs is fewer young people being educated.
Currently, we have a target, thanks to Leitch, of 40% of the population to be educated to NVQ4+ by 2020. We never have had, and probably never will have, a target of “50% of the population to have degrees” as some people are saying.
Back to lurking now.
Better solutions – we need to decide what we want from univs. If we want a mass participation for 18 year olds and no-one else Euro-style univ system, in which people go predominently to their local univ, they get huge lectures and virtually never see any faculty, and in which virtually no univ is top notch by international standards in research, then a general tax or grad tax system works well.
If we want a system that includes either (a) top notch research univs – along the lines of MIT, or top notch teaching univs (along the lines of US liberal arts colleges), then we will need fees, because the costs of providing this are immense – £10k per student per year as a minimum. (It would be odd to be able to teach univ students more cheaply than secondary school pupils, after all).
Further, if we want to introduce US-style community colleges – which have a much better access record than anything we have here – then we need course modularity, and again it should be (low and deferable) fee based, by course, because that is what delivers access successfully in the US. A grad tax is certainly not compatible with modular degrees, 2 year part-degrees, and the like – when do you pay? When you have done 1 module? When you have passed 12 and graduated?
We know that fees have not altered the social make up of univs for the worse. So long as access is needs blind, I am happy with univs choosing their own approaches. But I am concerned about giving £1bn+ a year to EU students, and I am concerned that a non-hypothecated tax will reduce the quality and variety of UK univ education.
Finally, the evidence from Anna Vignoles and co-authors, and from Goldin and Katz for the US is that since technology is skill-biased, if we don’t increase the numbers staying on, the grad premium will rise, and inequality will worsen. A progressive govt should want the grad premium to fall, since that reduces inequality. That suggests that 50% to univ is socially too low. As Chris Riley says, “At present, we stand in peril of being the only major economy to conclude that what our country really needs is fewer young people being educated.” and bizarrely our party, that believed none shall be enslaved by poverty, conformity and ignorance seems in danger of supporting a plan that will increase inequality, increase conformity, and increase ignorance!
“We could run a perfectly decent university here if it wasn’t for all these damn students gettin’ underfoot the whole time.” Mustrum Ridcully, can’t remember which book.
On the point about overseas students, I would assume they would continue to pay upfront fees, as now. They’re already treated a bit differently, and the admin systems within the universities are already in place to deal with them, so why mess with that bit? (Unless there’s an EU-related problem with different treatment).
Andrew Sparrow’s politics blog, by the way, has this quote from Vince, which suggests he is interested in looking at graduated options within the putative tax:
“At the moment what happens is you’ve inherited a probably a £3,000-a-year tuition fee as it is called. And this is paid back at 9p in the pound and you have paid it off. The system has no relations to your earnings later in life. So a teacher or a youth worker pays the same amount as a surgeon or a top commercial lawyer. There is I think a widespread sense that this isn’t fair.”
“… if we don’t increase the numbers staying on, the grad premium will rise, and inequality will worsen. A progressive govt should want the grad premium to fall, since that reduces inequality. That suggests that 50% to univ is socially too low.”
I’ve never read such drivel in my life.
Tim, I suspect you’re talking over most of our heads there.
First, why is a graduate tax incompatible with modularity? The kind of questions you raise there sound finite and quantifiable, rather than fuzzy and qualitative. Is there any reason why an evidence-based line shouldn’t be drawn somewhere, with appropriate powers of discretion to vary it?
Second, what do you mean by giving £1bn+ to EU students? Would it be impossible to continue to charge them fees even while a graduate tax was introduced for home students?
“Finally, the evidence from Anna Vignoles and co-authors, and from Goldin and Katz for the US is that since technology is skill-biased, if we don’t increase the numbers staying on, the grad premium will rise, and inequality will worsen. A progressive govt should want the grad premium to fall, since that reduces inequality. That suggests that 50% to univ is socially too low.”
I’m just not informed enough to follow this series of steps at all. Don’t suppose you could write a post about it?
Alix: “I’m just not informed enough to follow this series of steps at all. Don’t suppose you could write a post about it?”
Anthony Aloysius St: “I’ve never read such drivel in my life.”
I have often suspected that you are my evil twin…
Alix
I’m just not quite so shy and diffident as you are.
Let me interrupt this love-in with an attempt to translate Tim’s contentious paragraph for you both.
Advanced technology rules. Anyone who can’t cope with it will go to the wall. This would increase inequality. The solution is university degrees for all, advanced technological expertise for everyone. Then we are all equal, so that’s OK. We do of course need a funding model that will pay for it. Graduate tax won’t do, it isn’t a sufficiently large crock of gold to do everything the universities have ever dreamed of.
Would potentially blocking the emigration of individuals until they’ve paid a five figure lump sum not be illiberal?
The tax system should not be there to allow Jemima and Rupert to study Classics, and then go to a high-paid job they were destined for anyway. If students wish to study for a degree which will land them higher paid jobs, there already is a system of loans which will eat less into their salaries than those who didn’t go to university (and are assumed to be on lower pay).
If they wish to study for the love of learning, regardless of their employment prospects, a loan on top of a lower salary should be considered reasonable debt.
@Tim Leunig – Some absolutely excellent points, but rather verbose. Why not just say learn the lessons of the US system of top notch institutions and community colleges, using fees and modular courses? That any tax must be ring-fenced?
We could then address the details. For instance: the top notch institutions in the US could be compared to the top notch institutions across Europe i.e. we may not have as many in the UK as your post would imply. Would top notch, internet connected students pay as much for a degree lacking the same level of international recognition? The US system has a tier you’ve neglected, the state universities. Are you saying that in the middle of the two systems you admire, these schools in the US (attended by 18 year olds) must have Euro-style teaching? And should the UK adopt a grad tax for such schools? We still seem to have failed to address much of the problem.
Fees in the UK are currently rather less than you propose, and introduced at a time of false economic growth when economy-damaging levels of debt were considered acceptable. It’s facile to imply that hiking up the cost wouldn’t have an impact on the social make up attending university, especially when the goal is to expand access to tertiary education further.
Would a graduate tax be paid before graduation? Ridiculous objection. Does a grad tax increase conformity? Baseless speculation. Your very valid points risk getting lost in your own noise – which runs the risk of increasing ignorance, does it not?
Ah, thank you for that. I see. But then, in that case, isn’t the European model, for which Tim L says a graduate tax is fine, actually the better one? If ability to use technology is a key faultline in inequality, and if the universities are best-placed to address it, it ought to be a better idea to give a generally flatter level of tertiary education to more people, which gets them over the skills faultline and no further. Presumably this is what Labour’s targets were all about. But Tim seems to be suggesting in the second & final paras that the kind of time-intensive tuition that leads to high fees is more valuable for tackling inequality, even though (I presume) it necessarily leads to a spikier model of tertiary education quality with winners and losers.
“The solution is university degrees for all, advanced technological expertise for everyone.”
Obviously those are two quite different things, though.
I am not sure how it would work.
The Universities will need to spend the money now, but it won’t be repaid for decades. Does the government give the money to the Universities and reclaim it back over the decades? If so government borrowing will need to go up to pay for it all.
Or is there some sort of PFI-style wheeze where the Student still borrows the money but pays it back through PAYE? If so, is this really any different from the current situation?
Alix, I’ve no direct experience of the European model but have heard it can be a bit of a sausage factory approach. Pile ’em in, let a chunk drop out from disillusionment, and see who passes. Time with teacher not required. An exaggeration I would hope, but I can see the risks of that happening.
Tim mentions the US community colleges – easy to access, modular, far more amenable to part time working. Could probably be aligned or mixed with apprenticeships. Pay fees as you go rather than be taxed later – maybe even having the option. I did ok at school, but I was sick to the back teeth of full time academia and my first degree was largely wasted – it was post-grad in my mid-twenties that kicked off my career. So it might be a better personality fit for some people, too.
His broad point of reviewing the UK approach to delivering as well as funding education is important, I think.
I massively applaud this policy development even though for the moment it is still a kite being flown and nothing is being promised. I also expect the ‘post new labour’ leadership to come out in favour of something similar (though with a more egalitarian slant) in the winter.
On the other hand though this was low politics that would have made even Brown blush. Why? Because Nicky has a difficult day coming up with the grass roots and this is a blatant attempt to throw them a bone and dilute their (very justifiable) worries/ anger 🙂
The latest YG poll last night gave the Tories their highest number of 2010 whilst LD’s continue to flat line in the mid teens- and YG have consistently over estimated LD support so that number is likely lower.
Reporting the poll on Twitter last night the Sun’s politics team chose to run with the line: “what chance a snap election now to dump the Libs?” !!!
@Tim L “Better solutions – we need to decide what we want from univs. If we want a mass participation for 18 year olds and no-one else Euro-style univ system, in which people go predominantly to their local univ, they get huge lectures and virtually never see any faculty, and in which virtually no univ is top notch by international standards in research, then a general tax or grad tax system works well.”
I am sorry but this is very elitist and totally out of touch Tim: you may work for a Russell HEI but here in the post 1992 sector in a HEI that has been operating for decades and was a pre 1992 successful Polytechnic the high student-staff ratio/ predominantly local intake has been the reality for years.
What I see day in day out is a massive division between those students (about 30%) fortunate enough to have parents with the money to support them/ an inheritance etc that allows them to experience University in the way I did in the mid 1980’s (learning at leisure and indulging in leisure); contrasted against those (about 70%) who have to work 30 plus hours a week and are leaving with a starting gate debt of 25k.
Every system has its flaws but the GT is the most egalitarian (once you have ruled out what myself and yourself benefited from- namely no fees, a student grant and no GT- as unaffordable).
Economic liberals will support fees and loans; social liberals will support a progressive Graduate tax.
It really is that simple 😉
@Jon
Oh yes, I’d have *hated* the European model and been totally shafted by it. I wasn’t recommending it particularly, just trying to understand where Tim was coming from.
(This may be a semi duplicate post – computer connection issues)
Apologies for earlier lack of clarity – writing on a train (as now)
– Connection to inequality: well explained by earlier poster, thanks
– Modular degrees in the US often take years, and not everyone finishes. Ditto EU degrees. Will people who do half a degree have to pay?
– My understanding is that EU law does mean we can’t treat EU students differently to ours, so they will get a free education – at a cost of £1bn to UK taxpayers compared with the current system.
– Interesting to see Vince raise notion that individual institutions will be able to set their own tax rate. Really? Will institutions get their own grads’ taxes? If so LSE will do very well…
– Still not clear how the money gets from govt to univs – will institutions suddenly get bonus money 20-30 years later? Or so we get some upfront, and then have to pay it back? That matters for our ability to deliver good teaching now
– We do need, as a society, to decide what we want from our univs, if we are to devise policies that deliver what we want.
There is already a graduate tax, its called income tax. People who go to university mainly do in order to increase their earning potential and hence the amount of income tax they pay. For example its said that going to university means people earn up to £100,000 more over there life time if they pay tax on this at even the basic rate of 20% this will cover their tuition fees twice over and its more than likely they will pay this at 40 or 50 percent (since its additional income we must take it as their highest earnings).
The problem is there are too many universities offering too many soft courses that are of no public use, and of no use the to people gaining them, and hence these aren’t paid for by income tax because the people who do them don’t increase their earning potential. These people would be better suited to different vocational courses. By introducing this tax you are making people who work hard to get on pay for other people to waste three years of their life when they could be contributing to society.
“The problem is there are too many universities offering too many soft courses that are of no public use, and of no use to the people gaining them, and hence these aren’t paid for by income tax because the people who do them don’t increase their earning potential. These people would be better suited to different vocational courses. By introducing this tax you are making people who work hard to get on pay for other people to waste three years of their life when they could be contributing to society.”
Firstly- on tax you have missed the point: the rest of your post clearly illustrates that you are not saying we should go back to grants and not have fees or loans thereby paying for HE out of general taxation. So the issue is do we pay for HE by levying on the student both fees and loans or do we have an additional graduate tax that is progressive because (for example) those that earn 100k- 500k and more in the finance and property development sectors for example will pay more than those who earn 20k-30k in a more socially useful job like say charity work/ social enterprise or local government management.
Secondly- most of the courses at post 92 ex-Polytechnics (as a distinct class from the IHE that became Uni’s in the last 13 years) *are* vocational ! Furthermore: outside of these professions-and-skilled-employment specific qualifications (that the ex-poly’s provide) a “degree” is becoming a low-bar entry tariff for jobs that 25 years ago required A levels. Indeed there is anecdotal evidence now that in some geographical areas this minimum ‘sign of an education’ has moved to a Masters Degree.
It is partly a failure of our 11-18 education system (and the belief that GCSE and A levels aren’t worth the paper they are written on) combined with the fact we have outsourced and offshored those unskilled, semi skilled and mass-manufacturing jobs that scooped up most 16-18 years olds prior to the election of Mrs Thatcher on the one hand and due to late 20th century globalisation on the other. Furthermore some jobs in financial services, property management and the like which recruited at A level 25 years ago now require a degree.
So a degree has become a *necessity* for the vast majority of 18 year olds who in any way have ambitions higher than ducking and diving whilst signing on. Whether ‘soft’ or not. Unless you want your little Jake or Elsie flipping burgers, packing boxes or driving white vans. But shortly those on welfare will be forced into doing these jobs under the IDS reforms.
Your post is both ignorant/ ill-informed and extremely distasteful in that old-Tory prejudiced unintelligent kind of way. So clearly a Tory or an economic liberal Orangeman 😉
What about a graduate tax on all graduates who haven’t been involved in repaying student loans? Including Vince, Tony Blair and me, and excluding part-timers like OU students, who paid fees and carried on earning.
That would bump up the initial payments quite considerably, so we wouldn’t have to wait an age for the graduate tax to kick in. And it would reduce the amount per capita needed.
“What about a graduate tax on all graduates who haven’t been involved in repaying student loans?”
For me that would be utter common sense as well as highly egalitarian (let alone liberal).
One of the leabour leadership candidates has apparently toyed with this idea but decided it was a political step too far: based on the kinds of populist taxpayer alliance nonsense we see in some posts in this thread. Sadly.
Great idea, well done Vince – keep it up!
“So a degree has become a *necessity* for the vast majority of 18 year olds who in any way have ambitions higher than ducking and diving whilst signing on.”
That’s the insanity. Because most of the jobs they go on to don’t require three years’ full-time study – especially not three years’ study in a completely unrelated discipline.
But of course it’s a vicious circle. Because nearly 50% of people have degrees, degrees are required for narly 50% of jobs, and so the state wastes a colossal amount of money on higher education, and individuals are forced to run up huge debts before they can even start work in nearly 50% of occupations.
And despite all this, basic standards of literacy and numeracy are plummeting. And if mentioning that doesn’t get me condemned as an elitist, nothing will …
“But of course it’s a vicious circle. Because nearly 50% of people have degrees, degrees are required for nearly 50% of jobs, and so the state wastes a colossal amount of money on higher education, and individuals are forced to run up huge debts before they can even start work in nearly 50% of occupations.”
With a GT there won’t be front-ended debt. End of debate on that matter.
A ‘degree’ is required for whole lists of jobs that did not require them 20 years ago- partly because literacy and numeracy levels in our schools are so appalling (meaning that most Uni’s now run remedial maths and English in the first year) that employers don’t trust someone with three 100% coursework A levels. But there’s the rub: its for this reason that 40% of 18 year olds want to go to University. It is also why their parents want them to go as well- parents part of the expanded middle class of the last 40 years.
We are not a blue collar nation anymore Thatcher, Blair and globalisation did for that: we are a white collar, services, retail, finance, property and high end innovation/ design economy. One that is serviced by a lot of insecure low paying unskilled jobs like white van driving/ box packing/ food processing/ burger flipping/ cleaning. Those are the only kinds of alternatives at 18 to “getting a degree” that are available. The mystical/ mythical ‘plumber’ well where are the long timers to serve as indentured masters for potential apprentices (notwithstanding the free movement of labour within the EU that has met all the demand for such workers in the last decade). ? In any case plumbing apprenticeships cannot cover the hundreds of thousands of university UG places that people with your views would like to see culled!! Building and construction and vocational courses are run at HE level especially at the old Polys. If anyone is going to get shafted in the next few years it will be the ‘old Uni’s’ outside of Oxbridge/ LSE.
A “degree” gets you passed the low-bar educational attainment requirement that is out there now. Something anyone who is over 35 and who does not work in HE will simply not be able to grasp. Times have changed; the economy has changed. Indeed as I said in some places you now need a MA/ MSc where 25 years ago you needed A levels. Higher Education is the silver bullet for the deindustrialised advanced western capitalist countries: both in terms of the ‘rebalancing’ towards the innovation the KBE but also to avoid 18 years old being put on the scrap heap….joining their neighbours and former classmates who left at 15/ 16.
It’s something our competitors in the Eurozone know only too well. They are expanding HE even at as they adopt Merkels wider fiscal retrenchment. They have got the right idea.