12 Jul 2010

Could students pay their way through university with a graduate tax?

I hear that, behind the scenes, the Coalition is giving serious thought to going for a graduate tax rather than going ahead with raising tuition fees. Lord Browne reports on university funding this autumn and has been widely reported to be thinking of calling for the £3,225 per year tuition fees cap to be raised.
Lib Dem leaders had enough trouble getting their party to swallow a postponement of the abolition of tuition fees in the manifesto (it ended up put off to what some thought was a fairly meaningless distant horizon). The last thing they want to do is find themselves defending a giant hike in tuition fees.

The coalition agreement gave Lib Dem MPs an opt-out allowing them to abstain if they can’t accept the government response to Lord Browne.
So in the interests of both coalition parties, but particularly the Lib Dems, the government is looking seriously at switching to a graduate tax. Four out of the five Labour leadership candidates are talking about a similar shift, so there would be political cover of some kind. Even the National Union of Students has been sniffing round its own preferred version of a graduate tax.

The universities will worry that the proceeds won’t be ring-fenced and could end up being siphoned off for other Whitehall projects. To that end, government is looking at the possibility that a body along the lines of the existing Student Loans Company would be allowed to levy the tax. That way, the proceeds could be funnelled to the hard-pressed HE sector. 
The Treasury will worry about where the money comes from while HE funding bridges from one system to another, though I’m told by a Whitehall figure that the Treasury doesn’t regard this as an “insuperable problem.”
One other point. Lord Browne himself may not necessarily go down the route of asking for a lifting of the cap. His remit was much wider than that. He’s met ministers for bi-laterals. He won’t be unaware of the new tilt in government thinking towards a graduate tax.  

It’s not a giant philosophical leap between the two concepts, more, as one former education minister put it, “a question of branding.”

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