A graduate tax is the fairest solution

As a sixth-former, I think a graduate tax would increase social mobility and maintain world-class hi

When hundreds of thousands of students take out their iPod headphones and tear themselves away from Call of Duty to rally in the streets, you know the government has done something seriously wrong. After all the pre-election talk of a fairer education system, why does the coalition think that increasing tuition fees and slashing the teaching budget by 80 per cent will achieve this?

Make no mistake, the steep rise in fees will stop huge numbers of bright, but less affluent students from applying to university. Coupled with higher interest rates on these fees, it creates a daunting prospect. As a sixth-form pupil, I can confirm that there is a growing attitude within our year group at school that university is becoming an unaffordable option. This is not only completely unfair, but crucially, it also reduces Britain's ability to produce a high-quality workforce. Surely the government cannot ignore the long-term problems of restricting university access only to those who can afford it? They wouldn't be making such important policies while only thinking ahead as far as the next election, would they?

It's fine to complain – and even to take to the streets in protest – but that is pointless unless solutions can be found. One alternative being explored is the introduction of a graduate tax, a policy endorsed by the Labour Party and the National Union of Students. It seems a good solution – allowing the abolition of upfront fees, replaced by the introduction of a heavier income tax on graduates (an additional 0.3-2.5 per cent) based on the type and location of the course. This tax would last for roughly 20 years and would be paid only if the graduate was employed and earning in excess of £15,000 a year.

This would be fairer than the current system, because lower-income graduates would bear less of a burden than if they paid a fixed price for fees. This in turn would create an incentive for students from a low-income background to strive for higher education, increasing social mobility. Of course, higher-income graduates might end up paying more under the system – but then, they can afford to.

The graduate tax also prevents huge debts in interest payments accumulating, making it an efficient way of funding higher education. And it would prevent the creation of a market in fees, which would force students to choose their university based on price. Admittedly, graduate tax would fall hardest on those whose education costs were high and salaries were low – this would include those in vital jobs such as teaching, social work and nursing. But this can be counteracted by reducing the rate of graduate tax in these sectors of employment. After all, such a tax would raise more revenue in the long run than the proposed fees system.

But would a graduate tax work in reality? When Vince Cable first hinted at the possibility, he described it as a "variable graduate contribution tied to earnings", cunningly avoiding the lead balloon that is the word "tax". It shows how clever wording and public image have become more important than policy.

Inevitably, there are criticisms of the graduate tax. Russell Group universities are opposed because they fear they would only get the same level of funding from the tax as less elite institutions. Yet this doesn't have to be the case – funding could be linked to how much tax revenue is gained from that university's graduates. For example, if Oxford students paid 10 per cent of the national total of graduate of tax that year, then Oxford would receive the same 10 per cent as their funding.

Admittedly the setting up of a trust fund to collect graduate tax, and funding the universities during the lag time between the introduction of a graduate tax and when its full benefits are reaped, would be a sizeable task – but a worthwhile one in the long run.

Call me an idealist, but an efficient graduate tax could completely remove the burden of higher education from the general taxpayer. Even so, a combination of graduate tax and government funding derived from general taxation should be the answer to funding a world-class standard of higher education. I still think that the taxpayer should contribute to higher education because of the benefits to Britain of having highly educated workers. After all, the next generation of workers will be the ones driving the economy – while those who have enjoyed heavily subsidised higher education in past decades sit back and draw their pensions.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.