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Miliband's promise of a "radical offer" on tuition fees is a major policy hint

Is Labour set to abolish fees and introduce a graduate tax?

Is Labour set to abolish fees and introduce a graduate tax?
Ed Miliband delivers his speech to the Scottish Labour conference in Perth. Photograph: Getty Images.

Faced with the most significant period of Labour discontent since last summer, Ed Miliband retained his preternatural calm on ITV's The Agenda last night. "I took this job on three and half years ago and always knew this was going to be a close election," he said in response to the narrowing opinion polls. 

To a degree under-appreciated in Westminster, Miliband's strategy has been shaped by the constitutional novelty of a fixed-term parliament. As one shadow cabinet member put it to me, "We know the date of the next election. There’s no danger of the government cutting and running . . . So we can work backwards. We know when we need our pledge cards by, our manifesto by and our party candidates selected by." With major policy work on the economy (The Adonis Review), low wages (The Buckle Review), social policy (IPPR's Condition of Britain) and devolution (Local Government Innovation Taskforce) due to be completed before the National Policy Forum in July, Labour strategists are confident that the detailed agenda craved by activists will begin to emerge. 

In this regard, the most notable remarks made by Miliband last night were on tuition fees. After businesswoman Laura Tenison raised the plight of the young, he replied: 

Young people feel they have no control because they are going to get into mountains of debt if they go to university. We do want a radical offer on tuition fees because the future of our young people - something totally absent from this Budget - is a massive issue that our country faces.

The promise of a "radical offer" on tuition fees was flagged up by Labour sources as "significant" and "worth listening to". 

Miliband has previously promised to reduce the cap on tuition fees from £9,000 to £6,000, but it has long been clear that his ultimate ambition is to replace fees with a graduate tax, the policy he argued for in the 2010 leadership contestIn an interview with Labour List last year, he said: "We’re definitely looking at [a graduate tax]. I think there’s been some work going on at IPPR looking at the options too. We’ve said £6,000 [as a cap] before, and we’re looking at all of these issues for the manifesto, and what can be done."

The report on higher education published by IPPR (one of the most influential sources of Labour policy) last year, modelled an option under which tuition fees and student loans would be abolished and replaced with a higher rate of tax for graduates. This would consist of levying an additional 2 per cent of tax on all income over £10,000 for a period of 40 years (Labour may wish to adopt a graduated version). 

The policy enjoys the support of the NUS and other higher education organisations and, as the report noted, "is one of the most progressive forms of repayment system, since high-earning graduates will continue to pay the tax for 40 years, meaning they will contribute a greater share of the total cost than under the current system (when their contribution stops once they have repaid their loan)". 

One of the most common complaints made by Labour figures about the current system is that it allows the rich to contribute less than others by paying off their loan at a faster rate (thus avoiding interest on the debt). As well as ending this unfairness, the introduction of a graduate tax would also eliminate the fear of debt that deters some from applying to university.

And it would enable Miliband to make the politically potent pledge to "abolish fees", the policy proposed but not delivered by the Lib Dems. With Labour reliant on the support of Lib Dem defectors and the young (it leads the Tories by 42-28 per cent among 18-24-year-olds) to maintain its slight poll lead, a radical offer in this area is rightly viewed as crucial to election victory. Miliband's comments last night suggest it may be coming soon.