Thursday, 15 July 2010

Dr Cable ends cold war over tuition fees

Vince Cable, Secretary of State for Business, Innovation and Skills, is making a keynote speech today about universities, in which hs is expected to announce the replacement of tuition fees with a graduate tax.

The devil of a graduate tax will be in the detail.  Nonetheless, there are some immediate observations to make.

First, making an announcement now pre-empts Lord Browne's Independent Review, which is due to report in the autumn.  Before the election, Labour and the Conservatives hid behind the review avoided making any statement of substance about tuition fees.  If the Browne Review was so important, why ignore it now?  According to industry sources, the review did not have a graduate tax (recommended by the NUS) high up its agenda; the focus will be on increasing tuition fees and reforming financial support.  A big consideration, however, is that this is a Liberal Democrat policy being announced by a Liberal Democrat Cabinet member.  Vince Cable's party did not use the Browne Review as a smokescreen.  Moreover, the Browne Review could still have plenty of input on the financial support side.

Secondly, this is a political masterstroke by Cable and the Lib-Dems.  A prominent, differentiating pledge made by the party has been to scrap tuition fees over the course of this Parliament.  The Coalition Agreement allowed Lib-Dem MPs to abstain on any vote to increase fees following the Browne Review but no more than that, which has caused grumbling in Lib-Dem ranks, most publicly by new deputy leader Simon Hughes.  What a graduate tax does is allow the Lib-Dems to fulil their pledge to scrap tuition fees whilst still addressing the serious funding crisis in higher education.

Thirdly, is this really an announcement of policy or merely floating ideas?  A graduate tax is a very controversial and radical alternative to the tuition fees system.  The Russell Group of research intensive universities, plus many more, oppose a tax.  It might clear students of upfront commitments and ensuing debt, and rid the Government of student loan liabilities (for fees if not maintenance), however it is very unclear as to how the tax would be graded and administered and how it would fund individual institutions.

Fourthly, here are some possible complications.  I went to Bristol for my first degree and I am attending King's College London for my second.  Where does my tax go?  Is it centrally pooled then divvied up between the two?  Who is working this out?  Does more go to one than the other?  Even if you pay for postgraduate degrees yourself 'outside the system', what about people taking ELQs (i.e. two bachelor degrees)?

Also, a graduate tax would involve an almighty upfront cost to the Government, running in to the billions, which will not help efforts to cut down the structural deficit.  A graduate tax would create a gigantic funding gap for institutions as they wait for the tax revenues to come onstream.  Let us presume that the £15,000 earning requirement prior to repayment stays.  Now accept that universities will profit most from revenue from their highest earning graduates (obviously).  Also accept that these will (tend to) be much older graduates.  So universities will have to wait many years before their graduates become remotely profitable to them.

Moreover, a lifetime graduate tax is unjust because the value of your degree becomes less relative to your work experience as you progress.

So much to consider.  I hope that Dr Cable is doing so.

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