Letter: Equity and affordability in the debate over graduate tax

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The Independent Online
Sir: I am pleased to see that the debate about fees for higher education, which I promoted five years ago from the Department of Education and Science, seems to be maturing. As your leading article ('Time for a graduate tax', 24 June) argues, the massive expansion of 'free' higher education raises the question of its affordability; and the extent of the private benefits from higher education raises the question of its equity.

You are right also to point out that the scale of the growth of higher education - necessarily subject to close scrutiny of unit costs - raises increasingly the question of quality. It is a mistake, however, to see the solution, as you do, as lying in the direction of a graduate tax.

(1) The student loan scheme has been fully operational for several years (and, I might add, highly successful, with none of the adverse effects on access predicted by its opponents); only the primary legislation to extend its scope to the repayment of fees - a one-clause Bill - is lacking.

(2) Advocates of the graduate tax have always failed to recognise the force of arguments about the propriety of the use of the tax system in this fashion, the precedents it would create, and the political weight of these considerations.

(3) In international terms, student loan schemes are more the norm than graduate taxes.

(4) There is an equivocation about whether a graduate tax would be payable throughout the life of the graduate, or would simply repay the amount borrowed. If the former, then it must be recognised that many graduates will pay over their lifetime substantially more than the cost of their fees. There would be strong objections to this; and because of the scope for converting the second approach into the first, these objections would arise even if the second approach were adopted.

(5) The graduate tax idea is based upon mistaken etatiste assumptions about higher education: the essential transaction is between the university and the Treasury, which will largely determine terms and conditions. Ultimately, the yield of the new tax would be assimilated to the general flow of revenue and expenditure. Any gains in terms of the funding/quality trade-off could be rapidly lost. With student loans, by contrast, the essential contract is between the university and the stu-

dent/graduate: Treasury control should properly be limited only to stating the upper limit on the amount of money borrowed from the loan scheme.

In their consideration of the fees issue, the vice-chancellors have laid down some sound principles about access and equity. It is, I think, surprising that they do not also strongly assert the principle that whatever scheme is adopted should promote, rather than further erode, institutional autonomy.

Yours faithfully,


MP for Wantage (Con)

House of Commons

London, SW1

24 June

The writer was Minister for Higher and Further Education and Science 1987- 1990. He was responsible for the introduction of the student loans scheme.