Saturday 17 July 2010

Just an idea, Vince...

This morning, Vince Cable signposted his plans for a change in university funding, whereby graduates might find themselves repaying the cost of their degrees in the form of a tax based on earnings, as opposed to the current student loans system, which discriminates in favour of those who go on to more profitable careers. Cable said that he would ask former BP boss Lord Browne, who is leading an independent review into university fees and funding, to examine “the feasibility of variable graduate contributions."
This is a bold and progressive idea. But why not be a little more bold and a little more progressive, and apply the graduate tax to all graduates, not just current and prospective students? If tax can be applied retroactively, why not levy a fee from all working-age graduates, including those aged thirty and over who have used the benefits of free higher education to carve out high-paying careers for themselves?
Cable has a track record for sound ideas about higher education, including his observation that too many graduates are now going into jobs that were previously the province of non-graduates. This has implications for his cited figure of £100,000 as the average difference between the earnings of graduates and comparable non-graduates net of tax. The graduate earnings premium peaked in the 1980s; today, a university degree is a mandatory requirement for most lower- and middle-management jobs, rather than an optional educational extra to boost one's earnings.
Cable previously told the BBC that “if you're a school teacher or a youth worker you pay the same amount as if you were a surgeon or a highly-paid commercial lawyer…I think most people would think that's unfair.” Surely it’s rather less fair to expect those over thirty to pay nothing at all? Surely it's not beyond the pale to ask those who enjoyed British higher education at its most lucrative and inclusive to give something back?
If Britain is to remain a world leader in research, innovation and education, our higher education system needs more money, and fast. But why should the burden of financing the necessary cash injection be placed solely upon today’s young graduates, who have rather less chance of going on to high-paying careers than those who left university in the 1970s and 1980s? The money that could be raised by taxing graduates across the board might well be enough to reduce the cost of university for young people from disadvantaged backgrounds, as well as solving the problem of higher education funding more fairly.
If a variable graduate tax were truly based on earnings, there would be no reason for graduates of any age to pay more than they could reasonably manage.Parents of current students might even find themselves paying less overall, if their graduate tax liability offset the costs of contributing to higher tuition and maintenance fees for their children.
NUS president Aaron Porter has said that whilst the NUS welcomes the graduate tax proposal, any changes to funding should be genuinely fair and progressive to win students' support. The core injustice of tuition fees has always been the fact that they imposed a burden of debt on the young that radically rewrote the script for young adulthood in this country, and whilst there are indeed more young graduates now than there were twenty years ago, most are currently labouring under a double load of unavoidable personal debt and high unemployment.
Meanwhile, Vince Cable, George Osborne and David Willetts, along with nearly every policymaker currently responsible for higher education funding, were financed through their degrees by a generous grants system, left university in credit, and entered a booming job market. A universal graduate tax would be a fair way of sharing out the proceeds of that extraordinary generational luck once and for all.
If the deficit must be paid for, it is not unreasonable to expect it to be paid for on the basis of equal sacrifice. If the principle of retroactive taxing is being considered at the highest levels of government, it is not far-fetched to suggest that the rich be taxed as well as the poor, the old as well as the young, on the basis of the services that they have enjoyed from the state.
I’d stop short at suggesting that Cable back-date the graduate tax to 1970, of course – that would leave older people with degrees owing, ooh, tens of thousands, almost as much as an average humanities graduate in 2010. And nobody would stand for that.


  1. Here's an even madder suggestion. How about people with lots of money pay for education out of their normal taxes, instead of creating a new tax. And scrapping trident.

  2. Because I am only earning £208 a week and can't afford to pay extra tax?

  3. Couldn't we value teachers by err... paying them better?

    Anyhow, the reason this is insane is that it creates an income sharing mechanism between all graduates. It's a tax on science graduates to top-up the salaries of equally privileged liberal arts students.

    Double the existing loan scheme so students can live on it. If you aren't willing to pay for some of your degree on a 0% income contingent loan, don't go. It clearly doesn't matter enough to you.

    Anon of Not Searched

  4. Tumenescent Terrence17 July 2010 at 18:50

    Why should graduates have to be taxed to pay for the education of other graduates? Wouldn't it simply be better to pay for the educations of people lucky enough to go to university out of general taxation just as we used to? The poor already pay tax to help much richer people mortgage houses, start businesses and receive the state pension et al even if they don't really need it. Why not pay for higher education in the same way? The only reason it was altered in the first place was to hit the 50% target as far as undergraduate degrees was concerned. Some times the oldies are the besties!

  5. I like this idea Penny but I hate conceding political ground (even a little) on education. I want to keep alive the argument that education should be free and that tax should be linked to earnings, not whether you went to university or not, since some people who don't go still command large to massive salaries.

  6. I'm not sure this is a 'retrospective tax' or a demand for reparations to pay off the debts of existing students and recent graduates.


  7. Datapoint: this would encourage me to stay in Australia. Maybe that's a good thing for the UK, of course.

    Anon of not searched has it right. I'd return to the pre-200x loan system where the loan was indexed rather than indexed +, and then tax people who are rich on the basis that they're rich, rather than whether their richness was caused by getting a degree or not...

  8. Agreed. The sudden withdrawal of the grant amounted to generational theft. They were told it was free, so what? To quote Darth Vader "I am altering the deal."

  9. "Datapoint: this would encourage me to stay in Australia. Maybe that's a good thing for the UK, of course."

    But you already went to Australia. Would a graduate tax be the decisive factor in making you go in the first place? Clearly not as you left anyway. Will it be the decisive factor in stopping you coming home? Well maybe - if a 2% extra in income tax representing a fair contribution for the privileges you earlier recieved would be too much for you to stand.

    But in that case, as you imply, perhaps we don't want you back after all...

  10. It wouldn't bother me to pay retrospective graduate tax as a public servant about to be made redundant (and thinking of emigrating)...

  11. A tax on all graduates to pay for universities? How about a tax on cancer survivors to pay for proton therapy?

    Solving the higher education funding problem is easy - you just de-fund the increasing set of third-rate degrees at second-rate "universities". I would like to pay taxes to support the education of bright-but-poor people. I don't feel the need to support Jo Average whilst he or she attempts to drain the European lager lake for three years whilst writing an essay a week.

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