Graduate tax? No thanks
One of the things which the Blair government got right was establishing the principle of student fees in higher education. It is depressing to see our hyperactive coalition government, in the person of Vince Cable, trashing this principle and trying to sell us a graduate tax instead.
There are so many things wrong with this idea that it is difficult to know where to start. One is the anarchy which seems to prevail in the government. We currently have an excellent universities minister in David Willetts plus a commission under Lord Browne considering student finance. Why is the Business Secretary butting in? Has he nothing better to do? More importantly, the proposal fails the test of credibility when he claims the revenue raised will be ring-fenced. Hypothecated taxes of this kind have a long history of being raided. And of course it is perfectly compatible with graduate tax hypothecation for other university funding provided by HEFCE and the Research Councils to be slashed. Universities should not trust a here-today-gone-tomorrow politician like Mr Cable.
Imposing a higher tax on more successful graduates is wrong on two counts. One, that highly paid graduates are already taxed at a higher rate than poorly-paid ones. Two, the individual returns on higher education conceal the fact that much of the higher pay of graduates is a reward for underlying ability, experience and effort rather than the qualification. Econometric studies of pay indicate that only a fraction is explained by a degree or other qualifications.
In many cases, high-earning graduates make their money in fields which have nothing to do with their degrees. I pray in aid the case of Lily Cole, currently studying the history of art at my old college. She is a top model and actress, who will earn huge amounts in her future career. Of course she should pay fees like everybody else, but why should she or others like her be taxed at a higher rate than, say, Twiggy, who has featured with her in Marks and Spencer adverts but never went to university?
The coalition has a doctor’s mandate to cut government spending. Mr Cable’s proposal does nothing for this, and indeed there is a suggestion that in the interim period between the existing scheme and the proposed graduate tax, government net spending on HE would actually increase.
As someone working in higher education, I believe that we should be reducing dependence on government funding of all kinds. A graduate tax would reinforce our dependence on the state, with all its pettyfogging regulation, its attempts to outguess the market and its hamfisted social engineering. It would turn the clock back a decade. We don’t need it.