David Miliband becomes Labour’s lone star against a graduate tax

Unlike the other leadership candidates, Miliband stands firmly against a graduate tax to save univer

In a speech on education in Bristol today, David Miliband has marked himself out as the one and only Labour leadership candidate not to back a graduate tax. That is not to say he wants to see higher education scaled back; he doesn't just oppose the coalition cut of 10,000 university places, he actually argues for even greater expansion of university participation to 60 per cent.

Diane Abbott voted against the government when Labour legislated for variable tuition fees in 2004 and was a vocal advocate for a graduate tax. Ed Balls now tells us that he argued at the time for a graduate tax from his position inside the Treasury.

Andy Burnham said he was attracted to a graduate tax at the early hustings events and at the weekend Ed Miliband said he would develop a graduate tax proposal to submit to Lord Browne's inquiry into higher education finance.

But today, David Miliband marked himself out by refusing to fall in line and saying that university "expansion must not come at the expense of quality . . . graduates, not students, will need to contribute more. There are a number of ways of achieving that, such as reforms to the student loan system or variations on a graduate contribution scheme. But the principles are clear: cost must not deter access and contributions must be based on ability to pay."

His argument for increasing the participation rate is a compelling and economically literate one. In the UK currently, 45 per cent of the under-30s attend university -- a lower level than for Finland, Australia and New Zealand. And Barack Obama has pledged that by 2020, America will once again have the highest proportion of university graduates in the world, surpassing the top country, South Korea, which has 53 per cent.


Ed Balls gets criticised for his advocacy of "post-neoclassical endogenous growth theory", but investing in a world-class university sector is now a consensus response to globalisation. Successful innovation clusters invariably have world-class universities at their heart, as well as highly skilled workforces that stop the race to the bottom while sustaining quality jobs in the most future-proof of industries.

So, if all the candidates are in a similar place in opposing higher education cuts, why is David Miliband striking out and seeking to differentiate himself on higher education funding? Why call for growth in the sector without explaining how to finance it? What is the difference between a "graduate contribution scheme" and "a graduate tax"? What are the "reforms to the student loan system" that appeal to him?

One contributor to an online Q&A Ed Miliband took part in yesterday criticised the graduate tax idea for discouraging students from living "frugally". But as Ed Miliband argued, it all depends on whether a new graduate tax is used to fund university tuition or student living costs. One of the challenges for the Browne review is get a fair balance of funding for universities themselves and for student maintenance support.

An open debate about the range of alternatives is exactly what Labour needs this leadership contest to be about: not a contest of characters and personalities, but of policies and ideas. Abbott, Balls, Burnham and Ed Miliband need to explain how much a graduate tax would be and whether they propose any exemptions.

Today, however, David Miliband has done what Ed Balls did over immigration and made himself a lone star in a big policy debate. Expect him to be challenged on why at the hustings in Lambeth tonight.

Richard Darlington is head of the Open Left project at Demos.

Richard Darlington is Head of News at IPPR. Follow him on Twitter @RDarlo.

Getty Images.
Show Hide image

Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.