'Oh, so that's who Richard Morris is..." Lord Hattersley on The Daily Politics

'An influential activist' - The Guardian

'Iain Dale, without the self loathing' - Matthew Fox in The New Statesman

You are a tinker...' - Tim Farron

Sunday, 4 September 2011

If it looks like a duck and quacks like a duck, it's probably a graduate tax...

This is a post about tuition fees. I've had a week to think about it and I've changed my mind.

I've blogged before that I believe that the answer to the hole we are in over tuition fees is less to do with getting people to understand the facts and more to do with behavioural economics - people react more to the 'fact' that we broke our promise on fees than whether the new deal is a better one for students.

Then I got asked the other day how I would have done things differently. And I did have an answer to this. We should have said we hate fees, if we had won a majority we would have abolished them. But we didn't win a majority, so we adopted Plan B. We did all we could to dilute the Browne proposals and then we should have abided by the coalition agreement and abstained in the vote. This would have been an honourable course of action and I'd rather suffer a few days of brickbats from the opposition of 'not brave enough to take hard decisions' - a charge we would have quickly disproved thanks to the fiscal policies we are pursuing - than what actually happened. We'd be better off now if we had done this.

But now I've changed my mind. Or rather, I've got a better answer.

Someone asked my in the comments why didn't we just call the new system a graduate tax and be done with it.

And of course, they are right.

The charges are only paid by the student. They are paid after graduation. They are linked to earnings. They are not a 'debt' in the sense that they are not linked to your credit rating - so for example it doesn't affect your chances of getting a mortgage.

It is therefore, effectively, a graduate tax.

So, for the life of me, I can't understand why we didn't - and don't - call it that. I see that Martin Lewis thinks it should be thought of like that (thanks to Mark Thompson for the link, it's point 18 in the article).

It may be all packaging. But we wouldn't have broken a pledge, and it would have saved an awful lot of grief.

Although, if I'm honest, it's still not what I'd prefer - paying for education from direct taxation. Call me old fashioned...


  1. I heard (but can't remember the source of this, but it was a senior politician) that the Treasury wouldn't allow ministers to refer to the policy as a graduate tax.

  2. Wow! That IS interesting. It does rather beg the question why did Vince explicitly rule out a Graduate tax as unfair if there was a plan to callit that which was ultimately ruled out by civil servants? At the time the main argument was that it would be unfair as you couldn't get foreign students to pay the tax once they left the country. But the system we have ended up with doesn't solve that problem anyway. Lots of food for thought there....thanks !!!

  3. But it's only even close to a graduate tax if you are studying for your first degree. If you're an ELQ (equivalent or lower qualification) student, like many of us at the OU, it's a fee, as there are no loans available - so it isn't a tax!

    Worse, the rise in fees to the equivalent of £5,000 per (full-time) year at the OU for new students from England in 2012 onwards is approximately a 3.5x increase in costs, compared to a 2.7x increase in costs for those going to traditional universities.

    Instead, what the increases to tuition fees have done is put a huge barrier in the way of people wishing to either retrain or study for personal development. So much for "lifelong learning" and the re-skilling our increasingly complex world of work requires.

  4. And I agree with your final remark Richard. We have a (largely) progressive taxation system and HE should be largely (but not exclusively) funded from that.

  5. Thanks Tim - I am (as usual on this blog) making sweeping generalisations to get a general point over! So guilty as charged! I'll check out what you say as I thought the system had been changed from 2013 for all students - thanks for pointing this out, v interesting

  6. Hi Richard,

    This Times Higher Education article sets the position out quite well. On current numbers, around a quarter of the OUs students are ELQ like me. The change doesn't affect existing students provided they study continuously until they complete a degree, but not everyone can and it also affects people who just want to take a particular module without linking it to a degree or other qualification.


  7. Great - thanks Tim - will read with interest

  8. It isn't a graduate tax becase a) it is time limited, and b) it is only on future graduates not all graduates.

    A graduate tax on all graduates would have been much fairer, much more progressive, and could have been levied on income above a reasonably high theshold at a fairly small rate.

    If its introduction was combined with a rationalisation of taxes on income it would hardly be noticed.

  9. Hmm I agree with points 2 and 3 there, but not so sure about point 1. Is it really a definition of 'a tax' that it can only be called that if it is universally applied? I shall look it up.... Have a look at my new post on this too - would be interested in your views...