Monday, 19 July 2010

No graduation without taxation?

I first came across the idea of a graduate tax during a short "updating course" for teachers of economics held at the University of Bath in the late 60s. Note that this was a "course": the term "in-serice training" had not yet been invented, still less the ugly diminutive INSET. Furthermore the course was content based and therefore valuable. No one presumed to tell us how to teach: we were assumed to know that.

The idea of a graduate tax was floated by a Professor Sandford and interested me so much that I made a little speech about it at a meeting of the then Liberal Party Council. (In those days there was at least the illusion that the views of activists were of interest to the great and good in the party.) Now, thanks to the urging of Vince Cable, some forty years later the concept is to be given serious consideration by the government.

The great advantage of the graduate tax is that it does not burden the student with the burden of a great debt hanging round his or her neck. If the student earns little or no pecuniary reward as a result of higher education, by devoting his or her life to being a super parent, building a home and looking after children, or becoming a missionary priest, social worker or other low paid occupation, then little or nothing is paid. If however, the graduate does gain a pecuniary profit from higher education (and on average we do, to the tune of £100 000 in a lifetime, at today's values) then something is paid to finance future higher education.

The concept of a graduate tax does, however, raise several question,to none of which does there seem to be an obvious answer. Here is my selection:-

1. Should the tax relate to the cost of the education as well as the future earnings? Three year history degrees are relatively cheap as they don't require any equipment other than books. Three year physics degrees are more expensive because they require lots of fancy equipment. Five year courses for medical students are very expensive indeed. And what do we do about post graduate certificates and diplomas, masters' degrees and doctorates?

2. Do we draw a line between Higher and Further Education qualifications which also cost money and lead to higher future earnings.

3. Graduate taxes will produce a stream of income in the future, but the Universities (and HE Colleges?) need money now. The NUS, who support the idea, suggests that bonds should be sold now, backed by the stream of income from the tax in the future.

5. How do we ensure that the stream of income in the future actually goes to the universities (and colleges?) and not just into the Treasury pot?

6. How do we cater for EU students, who I believe have equivalent rights of access to British universities as British students?

7. How do we cope with high fliers who may evade the tax by going to lucrative employment abroad?

I'd be grateful if readers with any views on the above would air them in the comments, and also pose any other problems that occur to them.

The situation is so complex that I can't help wondering if the good old system of free tuition and means tested maintenance grants isn't the best. I know that three or four times as many students go to university today as when Vince Cable did, but then the country is now three or four times richer. If we could afford it then, why not now?

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