15 Jul 2010

Vince Cable on university funding

At Vince Cable lecture to vice-chancellors at London South Bank University. He has spelt out a grim economic background – “the worst in living memory” – and said “I just wonder how many people” in the room “are prepared for the economic … contraction”.

“We are now 6 to 10 per cent poorer as a country.” You can see where this is heading. Nobody does gloom quite like Vince. Some civil servants wondered when he arrived at BIS whether he was “alright?”  That, as they’ll come to see, is just Vince. Low-key, understated, not given to eruptions of body-shaking laughter though prone to flashes of black humour.

The HE sector, he’s saying, can’t support itself on the current model at its current size. One or both will have to change drastically. More and more graduates, he says, could be affected by the “law of diminishing returns.”

He says Labour’s 50 per cent target rate for youngsters going into university is neither sensible nor affordable.

On tax, he just said “it surely can’t be right that a teacher or a social care worker pays the same as a graduate who is a city analyst”. So he is investigating a graduate tax. He confirmed that he has spoken to Lord Browne, tipping him the wink that he could profitably refocus extra attention on the graduate tax.

We should get a government plan soon after Lord Browne reports in October.

Vince promised a speech of “Castroesque proportions” as he started, so although he hasn’t finished I’ll send this now in case I’m still listening at 7pm.

Update: He just finished, so no need to cancel the rest of the day. Near the end he mentioned wanting quotas or “reserved places” in universities for children from less-privileged areas or schools.

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12 reader comments

  1. Tim D says:

    That social care worker could well be a graduate too. The operative concern here is surely teacher vs city analyst, not graduate vs non-graduate.

    Oh, but wait, that might involve actually asking the wealthy to pay some of their earnings into society, and we can’t have _that_, right? I’d call this whole thing cretinous, if it wasn’t so utterly terrifying.

    1. Tom Wright says:

      I totally disagree. The graduate tax should apply only to those who have degrees. What’s it got to do with plumbers, electricians, carpenters, driving instructors, policemen, ambulance drivers and any number of other non-degree professions?

      Should successful people who do not have degrees be forced to fund those who do? I think not! That would be robbing people who have been successful DESPITE the system n favour of people who are milking it.

  2. Saltaire Sam says:

    I’m confused. One moment the government is telling us that growth will come from innovation, new green industries etc etc, the next it is telling us we cannot afford the university education that will help bring this about.

    I agree that 50 per cent of people going to university is unrealistic – but having ‘sold’ the public the idea how vital a degree is, it’s going to take some time before they change their mind.

    As ever the elephant in the room is tax. No one has the guts to tell people who earn massive amounts of money – far more than they can ever spend in a lifetime in some cases – that it is their duty to contribute a larger slice of it to the common wealth.

    Instead of making their ‘incentive’ the gathering of as much cash as ever, why not persuade the population that contribution to society is also a good reason to work. We expect it and praise it in our military, why not business?

    We’ve managed to make drink driving socially unacceptable. Let’s do the same with tax avoidance.

    1. Tom Wright says:

      I’m curious Saltaire – what exactly is a ‘massive amount of money’, and how many people do you think earn ‘more than they could spend in their lifetime’? Not me that’s for sure!

      I suspect that number is much lower than you think. And that you also think that a pound in the North goes as far as a pound in London – the cost of living is never figured in these pay comparison analyses.

      As for persuading people that a contribution to society is a reason to work, I think you misunderstand ordinary working folk: we work to support our families, for nice holidays, to plan for our retirement and to manage a decent lifestyle – to buy little luxuries that make life worthwhile. We tend to think of people who don’t bother as lazy and undeserving. You could in theory turn this around with the use of massive propoganda coupled with indoctrination in the school system. But that would be a bit draconian wouldn’t it?

  3. Tom Wright says:

    Cable looked pretty sensible to me. Out of recession does not mean back to normal – we’ll be years playing catch-up – we are still knocking on 10% down.

    The 50% target for university was always unaffordable – and counterproductive. THe point of going to university is supposed to be career advantage. Now that degrees are two a penny there isn’t any – just a great big pile of tax.

    The student tax also looks pretty sensible. I would worry though that the truly wealthy will look at the maths and pay for uni upfront – making the burden higher for others. With tax, you can be too progressive and kill the golden goose.

    1. Fred T says:

      Quite right. Trouble is, it’s got so that you can’t get a decent job WITHOUT a degree. So you’re paying fees and taxes and ebt just to get the kind of start you could have had with just A levels or even O levels back int he 1970s when I was a lad. And getting those cost you nothing.

  4. mark vass says:

    I think the whole situation is disgusting. Why is it that the banks receive huge payouts to keep them going while it’s the ordinary taxpayer that has to foot the bill? The way the banks have performed of recent verges on ‘gross negligence’ and in many industries such a performance would result in a jail sentence. The idea that graduates should be penalised even more than they already do is ridiculous. I graduated 12 years ago and I’m still paying off my debts. The high-end earners are paying more in tax anyway simply because they earn more. Encouraging young people into HE sets them up for higher paid jobs and in turn means they will pay more tax. These proposals don’t help promote young people into pursuing a HE career and equally those who do, once studies are complete, will be encouraged to move abroad away from an already overly taxed country. As for limiting students to local universities; that doesn’t help students who are high achievers to go to the best universities and make the most of their talents.

  5. Simon Thompson says:

    There are obvious benefits to the revised University system that Cable plans to introduce. He has however omitted several vital areas of concern.

    If HE students are all to live at home during their studies, what will happen to the Uni communities their former students occupied? Further still, what will happen to the property market, which is still struggling to recover from the recession. Thousands of buy to let properties will be left vacant, leaving the local amenities with no one to use them, leading to further business closures.

    Also, Cable talks of choice, but how on earth is their choice in having to go to your local University? As he himself said, Uni’s flourish in different ways and in different subjects, so why deny people the chance to learn from the best there is?

    Simon Thompson, MD at accommodationforstudent.com

  6. Roger Bater says:

    As already stated, the target of 50% of people attending university was never going to be affordable. But it was ill conceived in a more fundamental way. By definition, the mean IQ of the population is 100. Assuming that the most intelligent half of the young population are to make it to university it would mean that many of them would have an IQ of 100 to say 110. That is not sufficiently high to take a conventional academic degree. This why we have seen an increasing number of degrees in subjects that do not make many demands on the intellect. Now we have a major funding problem.

  7. Paul Begley says:

    Pay for graduates by taxes on those who benefit? Sounds like a good idea. There are two perfectly good taxes already available for this purpose – Income Tax and National Insurance (aka “ICantBelieveItsNotIncomeTax”). Can anyone live in this country without benefitting from services provided by graduates (teachers, nurses, GP’s)?

    1. Saltaire Sam says:

      Exactly, Paul. The fairest tax and yet the one most hated by the wealthy and feared by politicians, who are much happier sticking an extra tax on fuel or hiking VAT which hit the pooreest harder.

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