Letter: Graduate tax: unfair penalty or key to university growth?

Sir: Your article 'Treasury planning charge on students' today concludes by quoting the often-used justification for a graduate tax - 'Proponents of a similar scheme (to the Australian one) argue that graduates can expect much higher lifetime earnings . . .' If this were true, it might (a highly debatable point) justify such levies, but the 'fact' itself is doubtful.

The Government has repeatedly made this assertion about graduate earnings. The basis and justification for their figure (25 per cent increase in earnings) has never been clarified. However, it appears to refer to the rate of before-tax earnings after graduation. It ignores the years during which graduates do not earn (and many parents pay out to support them), and the fact that they will anyway pay tax at a higher than average rate if their earnings are above average.

The only independent research of which I know was sponsored by BP and is published by BP Educational Service in Learning should pay. The key conclusion of this is 'on average, males can expect a rate of return to higher education of around 7 per cent, while women reap a rate of return of 6 per cent. These estimates are very much lower than the 25 per cent return used by the government to justify the introduction of student loans'. Ironically, the work was carried out by the LSE, now a leader in proposing to make extra charges on the students themselves.

Apart from this, policy on higher education will never be right if we only look at the benefits to the individual. It is a matter of national economic survival that we educate the able to their maximum potential - and then use their acquired skills. Loading them with discriminatory costs and taxation is hardly going to achieve this end.

Yours sincerely,

A. M. HULME

Sutton Coldfield, West Midlands

7 June