Like a lot of people getting involved in this debate I was relying on reports of the speech Vince Cable made. I have now been able to read the text, courtesy of "Lib Dem Voice"
I took a clipping of the relevant extract from the speech and so here it is, copied to my site for ease of reference. This is only part of the speech. Its the bit I thought relevant to graduate tax.
SPPECH STARTS
"....More broadly we need a debate, about the efficiency and effectiveness of some of the ways we have got used to doing things. And about who pays.
The reality is we are going to have to develop a model in which the balance of funding for higher education in England combines less public support and more private investment from those who benefit most from it. The funding model must ensure that well-performing universities receive a reliable stream of income, less dependent on the state, and that students see the system as fair – or fairer.
My generation had the remarkable privilege of being educated free. There was an implicit assumption that we paid for the graduate premiums in our income through higher income tax. But there was also a sense of unfairness articulated by Alan Johnson when he was Minister: why should a young postman contribute through his tax to pay for an already privileged group to avoid earning a living for three years and then emerge with higher earnings potential?
In any event, a model designed for 10% of the population could not be applied to 40%: hence the move to a graduate contribution.
We currently have what is misleadingly called a system of ‘tuition fees’. Many people believe, wrongly that when students arrive at university they or their parents are required to get out their chequebooks, or wallets, and pay more than £3000 for a year’s tuition.
The idea that students are repelled from higher education by fees owes much to this erroneous belief.
In reality of course most students meet these costs by taking a student loan, payable direct from income after graduation when earning a reasonable salary. In this sense, we already have a form of graduate tax. The problem is that it is a fixed sum – a poll tax – regardless of the income of the graduate. It surely can’t be right that a teacher or care worker or research scientist is expected to pay the same graduate contribution as a top commercial lawyer or surgeon or City analyst whose graduate premium is so much bigger.
The current system has the further disadvantage that it reinforces the idea that students carry an additional fixed burden of debt into their working lives. Yet, most of us don’t think of our future tax obligations as ‘debt’.
I am 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. I have spoken to Lord Browne about this and he has assured me that he is looking at this issue as part of his review.
By looking at the periods of time over which contributions are made, the level of thresholds that trigger the contribution, the rate at which contributions are paid, and the other key variables, it may be possible to levy graduate contributions so that low graduate earners pay no more (or less) and high earners pay more.
Universities could, indeed, generate higher income and that would be the aim as the Government is reducing its support. I accept that universities do, of course, need clarity about income streams now, in terms of what level of fees can be charged to whom, rather than an uncertain flow of revenue over the long term. Of course we need to get that technical financial engineering right: which is called, in the jargon, ‘securitisation’. But this – soluble – problem should not be the tail wagging the dog of student finance.
I do not want to see a complicated new system or one that creates uncertainty over the future funding of universities. Or one which deters anyone from university with the ambition to go, irrespective of background. There is a long way still to go in this debate and no decisions have yet been taken. But I would urge universities to help us think creatively about fairer mechanisms than the current one, recognising that for students and their families a central issue is securing an equitable system of graduate contributions."
SPEECH ENDS
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An interesting article in today's Independent by Frances Cairncross entitled "The way to fund our universities". She stresses the central role of universities in our society saying they have the same role now as car manufacturing had in the 20th century - which was a rather unexpected analogy for me - and are crucial producing the " raw material of a flourishing society. However this is under threat because universities act as the gateway to being middle class. Consequently tuition fees are seen "as a tax on entry to the middle class" and so are both unpopular as they stand, and impossible to increase without huge protests. This starves the universities of funds.
However she goes on to reject the graduate tax as a solution, but does so by using something very close to a straw man argument. The version of the graduate tax she criticises is a variant it would appear of the loan scheme. She does not actually describe the system she would reject in detail, but I think it is a kind of loan scheme as she says it would not work because:- 1. Graduates from the same degree course would pay different amounts. But surely this is the whole point of a fair tax in general. It taxes on ability to pay, which will of course vary between graduates. It is also true of the current system but in the odd way that the very well off and the comparitively poor pay least. It is the middle earners that pay most. 2. People who studied abroad would pay nothing. True. Which is no doubt a point of particular concern as she is Rector of Exeter College, Oxford and therefore well aware of international competition. But the great increase in tuition fees that she advocates would similarly make overseas universities more competitive. 3 Wealthier families would avoid taking out a student loan so that their children would not face a repayment bill. This is already a feature of the current system which the inverse pension scheme avoids. 4.Universities need money now, not in the future when payments start. I hope I have shown how the inverse pension scheme does overcome this problem, and allow funds to flow at once. She concludes this bit of her argument by saying the real cost of a student at Oxford is £18,000 a year. So if the scheme I favour were to be introduced and Oxford were not to continue to suffer a loss on each student, tuition fees for all, at all colleges would have to be set at 18,000 pounds. Or so it would seem. I wonder has anyone produced a table showing what the expenditure per student in each university is? More on this article later...Saw another iPad, on the Northern Line, a bit after 11am. It was a young woman this time. She was using it to read a print book. She had set the print to large. This is a good example of "horseless carriage" use as adjusting the print size is certainly NOT something one can do with an ordinary book...
This sugests to me that eBooks could be about to become disruptive; and will certainly start making inroads in the academic book market. When my daughter went to University last autumn we bought her a macbook, and she has told me that she does use etexts on that, but she is still a very heavy consumer of conventional books. Should her brother go to university in three years time, I now believe that an eReader will be part of his kit, but whether as a dedicated device or something he does with his lap top is not clear.