When is a graduate tax not a graduate tax?

Confusion about what Vince Cable has proposed and how that relates to the National Union of Students’s proposals has been widespread.

Last week Vince Cable announced that he had asked Lord Browne to consider a graduate tax as part of his review of higher education funding which is due to report in the autumn. Since then confusion about what skills secretary Vince Cable has proposed and how that relates to the National Union of Students’s proposals has been widespread.

Dr Cable said he was “interested in looking at the feasibility of changing the system of financing student tuition so that the repayment mechanism is variable graduate contributions tied to earnings”. This is the basis of a progressive graduate contribution that asks those graduates who gain the most financially from their education to contribute the most to the continuing of the system.

With this as our base line there are still many variables to decide upon – the threshold at which contribution begins, the level at which the contribution is set, etc – and I look forward to working with Dr Cable and Lord Browne to find the fairest way to set these.

However, over the last week it has become clear that many see Dr Cable’s exploration of a graduate tax as simply a rebranding exercise to mollify Liberal Democrat backbenchers, who fought the election on a promise of scrapping tuition fees, and students, who have campaigned for many years for a fairer higher education funding system.

The Russell Group of universities proposes keeping, and liberalising, the ‘sticker price’ market in higher education and whether you call the payback scheme a loan or a tax it will still be a ‘poll tax’ and not based on ability to pay. That graduate tax is not a graduate tax at all, but fees by another name.

Those sceptical of the idea of a graduate contribution, see only the rebranding exercise and argue that free higher education is the only progressive way to ensure that university education is available to all, and in an ideal world higher education would be paid for through existing taxation, but a graduate tax is a fair and progressive system. It adds a small amount of extra taxation onto those who gain financially from attending university.

The current system, and an expanded market in fees, ask a social worker, teacher or nurse to pay the same for their education as an investment banker, corporate lawyer or high-flying executive. No one could rightfully claim that the former group work less hard than those in the latter group, but they do earn less.

Over the coming months as Lord Browne continues his review, the debate will rage about the best way to fund universities and we must be clear about what we mean when we are discussing the various systems. A true graduate tax is a clear and progressive way of funding universities and removes any link to ‘sticker prices’ decided by institutions based on their self-aggrandising assessments of the future worth of their degrees.

Choosing a place and course of study is not like buying a car and we will ensure that any system that places students in a market place cannot call itself a progressive graduate tax.

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