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23 May 2011

Miliband silent on a graduate tax

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

By George Eaton

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.

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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.