Miliband silent on a graduate tax

Labour leader says: “I can’t make a promise on tuition fees.”

Ed Miliband's speech today on the "jilted generation" (a phrase borrowed from the recent book by Ed Howker and Shiv Malik) offered much in the way of analysis but little in the way of prescription. In the section on tuition fees, for instance, the Labour leader attacked the coalition for increasing "the debt burden" on the next generation but, curiously, made no reference to his solution of choice: a graduate tax.

With an eye to Nick Clegg's woes, Miliband said: "I also know we can only meet people's desire for a better politics if we make promises we know we can keep. At this stage, I can't make a promise on tuition fees, but I am clear about our guiding principles." Yet last December, Miliband was so committed to a graduate tax that he forced Alan Johnson, then shadow chancellor, to perform one of the most humiliating U-turns in recent history.

In the same month, he wrote in the Observer:

We must have a system that promotes equal opportunity, avoids disincentives for students to apply to the universities and courses of their choice, and provides fair and sustainable funding for universities. That is why there is such a strong case for moving towards a graduate tax and why we will develop a proposal in our policy review. Any proposal will be underpinned by an independent assessment showing that it will improve social mobility and life chances and not weaken them.

But today: nothing.

Miliband's silence is a reminder of what is, in some ways, his fiscal caution. He may oppose many of the coalition's spending cuts but he has not promised to reverse the VAT rise (which would cost £13bn), and now he is not promising to replace fees with a graduate tax. With this in mind, it's worth remembering that no Labour government has ever reversed a VAT rise introduced by the Tories.

The party cried foul when Margaret Thatcher increased VAT from 8 to 15 per cent in 1979 (in order to reduce the top rate of income tax from 83 per cent to 60 per cent) and when John Major raised the tax to 17.5 per cent. But, in power, Gordon Brown welcomed the revenue.

Whether or not Labour wins the next election, £9,000 tuition fees and 20 per cent VAT are probably here to stay.

George Eaton is political editor of the New Statesman.

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Brexit is teaching the UK that it needs immigrants

Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past.

Why did the UK vote to leave the EU? For conservatives, Brexit was about regaining parliamentary sovereignty. For socialists it was about escaping the single market. For still more it was a chance to punish David Cameron and George Osborne. But supreme among the causes was the desire to reduce immigration.

For years, as the government repeatedly missed its target to limit net migration to "tens of thousands", the EU provided a convenient scapegoat. The free movement of people allegedly made this ambition unachievable (even as non-European migration oustripped that from the continent). When Cameron, the author of the target, was later forced to argue that the price of leaving the EU was nevertheless too great, voters were unsurprisingly unconvinced.

But though the Leave campaign vowed to gain "control" of immigration, it was careful never to set a formal target. As many of its senior figures knew, reducing net migration to "tens of thousands" a year would come at an economic price (immigrants make a net fiscal contribution of £7bn a year). An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent. For the UK, with its poor productivity and sub-par infrastructure, immigration has long been an economic boon. 

When Theresa May became Prime Minister, some cabinet members hoped that she would abolish the net migration target in a "Nixon goes to China" moment. But rather than retreating, the former Home Secretary doubled down. She regards the target as essential on both political and policy grounds (and has rejected pleas to exempt foreign students). But though the same goal endures, Brexit is forcing ministers to reveal a rarely spoken truth: Britain needs immigrants.

Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. On last night's Question Time, Brexit secretary David Davis conceded that immigration woud not invariably fall following Brexit. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (while sounding rather unconvinced), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

The UK’s vote to leave the EU – and May’s decision to pursue a "hard Brexit" – has deprived the government of a convenient alibi for high immigration. Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past. Brexit may have been caused by the supposed costs of immigration but it is becoming an education in its benefits.

George Eaton is political editor of the New Statesman.