Thursday, 15 July 2010

Graduate Tax is Bad Education

Considering the Lib-Dems’ spineless concession on top-up fees, asking Vince Cable to make any announcement on Higher Education is the political equivalent of rubbing a dog’s nose in its own excrement in an attempt to house train it.

The Coalition’s proposition of a variable graduate tax is flawed on a number of levels. Firstly, the whole premise is predicated on students paying a specific tax when they graduate. There are a number of obvious issues with this:
  • What happens if a graduate moves abroad when they finish university?
  • What happens if a student doesn’t complete their degree – either dropping out after two weeks or just before finals?
  • What happens if someone never works or spends their whole lives in academia?
  • What about mature students who, after a long career, decide to go to university having never had the opportunity when they were younger?
The second problem is that Cable has already asked Lord Browne to “consider varying the contribution that graduates pay according to how much they earn, and possibly which university they attend”. Therefore, because taxes will go directly to universities, this policy would further increase the divide between the best and the worst universities. For instance, red brick universities like Oxford and Cambridge would only deliver lucrative courses – such as accountancy or law – whilst the Bolton Institute will be left with basket weaving and David Beckham studies.

Finally, the idea that money can be saved by reducing undergraduate degrees to two years would further devalue Higher Education in Britain.

I am disappointed that there is unlikely to be significant opposition to the graduate tax with a number of the Labour leadership candidates already embracing the policy. Furthermore, it should be remembered that it was New Labour who introduced top-up fees in the first place - so we can't expect them to lead the fight for a fair Higher Education system.

The idea underpinning the graduate tax – that tax contributions should be based on how much someone earns and students shouldn’t be saddled with debt – is fundamentally sound, but it shouldn’t just be restricted to graduates. All high earners have benefitted in some way from living in Britain – be that graduates from Higher Education, businessmen from economic freedoms or plumbers from vocational training – and all of these should pay equally for this privilege (depending on their actual incomes). The best way to protect the quality of our universities and ensure equality of access is to abolish top-up fees, dismiss the idea of the graduate tax and re-introduce bursaries. Higher Education itself should be funded by a more robust and progressive income tax system which targets all high earners. A good place to start would be the Robin Hood Tax.

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