Is the graduate tax actually fairer?

Paying for education indefinitely is more likely to act as a deterrent to poor students.

In his first key speech on higher education, Vince Cable has outlined proposals for cutting costs in universities. The graduate tax, which Cable claims would be fairer and more sustainable, has attracted the most attention.

Under the current system, students take a loan from the government which they use to pay their tuition fees and part of their living costs. This is paid back gradually when the graduate starts earning more than £15,000.

At first glance, that sounds rather similar to the measure being proposed -- money is paid over someone's career, and the amount increases with earnings. The main difference is that the graduate tax will be infinite; in effect, it will mean that graduates are permanently paying a higher rate of income tax.

The jury is out on whether this is "progressive" or not. The main argument in its favour is that it would be linked to income, meaning that high earners will ultimately pay more and could subsidise those less well off.

Ed Balls -- a proponent of the graduate tax -- said it means that graduates will contribute to costs, "but only once they are in work and clearly based on their ability to pay".

I'm not convinced by this. It is already the case that repayments start only once you are earning, and the situation would presumably stay the same if fees were to rise further. The difference is that, currently, everyone ends up paying the same amount, whereas the idea under the new system would be for the rich to end up paying more.

There are many problems with this. While the National Union of Students has been advocating a graduate tax for the past four years, they have also pointed out that a graduate tax can fail to take into account the diminishing importance of education and the increased role of work experience in establishing a career (note: they believe that their proposed model neutralises this). Paul Cottrell of the University and College Union (UCU) argues that poor graduates could even end up paying a higher percentage of their income through a tax than through a loan system.

Two years ago, Sutton Trust research on the impact of tuition fees showed that teenagers from poorer families were forgoing a university education because they were concerned about debt.

Another argument for a graduate tax is that abolishing the upfront payment aspect would remove this deterrent. This is disingenuous. As it stands, it is assumed that you will pay back your fees at a later date. You fill in a form for a loan, and the money goes straight to the university without passing through your bank account.

While a graduate tax could be framed as the abolition of fees, I find it difficult to believe that essentially paying for your education for ever would be less of a deterrent than a fixed amount of debt. Surveys have shown students concerned that they will be paying back their student debt for a decade; surely, permanently paying more tax is worse?

I'm inclined to agree with Sally Hunt of the UCU, who has called the proposal "an exercise in rebranding". Isn't this just higher fees by a different name?

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Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle