Graduate tax: the devil’s in the detail

A graduate tax can be the fair, progressive and sustainable answer to HE funding. Let’s hope Vince m

While it is correct to say that the jury is still out on whether what Vince Cable means by a graduate tax will be progressive, it is clear to us at the National Union of Students (NUS) that it can, without question, be a very progressive way of funding higher education, and one that has some significant differences from the current tuition fee model.

The principle behind any graduate tax is simple -- you should be able to decide to study what you want to study, where you want to study it, without worrying about the different costs involved. You should then be able to choose to work, where you want to work, without worrying about having to pay back debts as quickly as possible. If you are subsequently able to contribute more towards your education, it is fair that you do so, while those that are not able to should not.

Under the present system, almost all students pay back the same "sticker price" (currently £3,225 a year), whereas a graduate tax would tax a percentage of their income. The system thus leaves a graduate who chooses to use their degree to become a careworker or a primary school teacher paying the same as someone who goes on to take a top job in the City.

Indeed, the current model actually leaves those who go in to more poorly paid jobs taking longer than others to repay their debts, thereby accruing interest on their debt over a longer period, and so paying more for earning less. This is fundamentally regressive -- as Vince Cable puts it, the current fixed sum acts as a higher education poll tax.

A graduate tax need not go on indefinitely; many currently suggest a cut-off point of 20-25 years. Similarly, some people argue for the introduction of a maximum total contribution, beyond which contributions could stop.

We must also not forget that this debate is not about the virtues of a graduate tax over the current system of fees, but about a graduate tax as opposed to a move towards a market in fees -- a market in which certain universities or university courses would cost considerably more than others. This would be a disaster scenario, driving those most worried about debt away from the elite institutions and presitigious course, and introducing dangerous competition into a sector which is entirely unsuitable for marketisation.

What is most important now is ensuring that, having made some positive sounds, Vince Cable now supports the introduction of a genuinely progressive and fair graduate tax model, rather than this simply being a clever rebranding exercise.

Aaron Porter is the president of the National Union of Students. He studied English literature at the University of Leicester and served as a sabbatical officer at the students' union.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.