Vince Cable makes speech on higher education funding
July 15, 2010 11:36 PM
"I do not want to see a complicated new system or one that creates uncertainty over the future funding of universities. Or one which deters anyone from university with the ambition to go, irrespective of background," said Vince Cable.
"I do not want to see a complicated new system or one that creates uncertainty over the future funding of universities. Or one which deters anyone from university with the ambition to go, irrespective of background," said Vince Cable.
Vince Cable today gave his first speech on higher education since becoming Business Secretary, in which he suggested that a graduate tax might be a fairer system for funding universities than tuition fees.
An independent review, led by Lord Browne, is currently looking at how universities will be funded in the future and will report in the Autumn. Once it is published, the Coalition Government will judge its proposals against the need to: increase social mobility; take into account the impact on student debt; ensure a properly funded university sector; improve the quality of teaching; advance scholarship; and encourage a higher proportion of students from disadvantaged backgrounds.
Speaking at London South Bank University this morning, Vince Cable said:
"My generation had the remarkable privilege of being educated free. There was an implicit assumption that we paid for the graduate premiums in our income through higher income tax.
"But there was also a sense of unfairness articulated by Alan Johnson when he was Minister: why should a young postman contribute through his tax to pay for an already privileged group to avoid earning a living for three years and then emerge with higher earnings potential?
"In any event, a model designed for 10% of the population could not be applied to 40%: hence the move to a graduate contribution.
"We currently have what is misleadingly called a system of 'tuition fees'. Many people believe, wrongly that when students arrive at university they or their parents are required to get out their chequebooks, or wallets, and pay more than £3000 for a year's tuition.
"The idea that students are repelled from higher education by fees owes much to this erroneous belief.
"In reality of course most students meet these costs by taking a student loan, payable direct from income after graduation when earning a reasonable salary. In this sense, we already have a form of graduate tax. The problem is that it is a fixed sum - a poll tax - regardless of the income of the graduate. It surely can't be right that a teacher or care worker or research scientist is expected to pay the same graduate contribution as a top commercial lawyer or surgeon or City analyst whose graduate premium is so much bigger.
"The current system has the further disadvantage that it reinforces the idea that students carry an additional fixed burden of debt into their working lives. Yet, most of us don't think of our future tax obligations as 'debt'.
"I am interested in looking at the feasibility of changing the system of financing student tuition so that the repayment mechanism is variable graduate contributions tied to earnings. I have spoken to Lord Browne about this and he has assured me that he is looking at this issue as part of his review.
"By looking at the periods of time over which contributions are made, the level of thresholds that trigger the contribution, the rate at which contributions are paid, and the other key variables, it may be possible to levy graduate contributions so that low graduate earners pay no more (or less) and high earners pay more.
...
"I do not want to see a complicated new system or one that creates uncertainty over the future funding of universities. Or one which deters anyone from university with the ambition to go, irrespective of background. There is a long way still to go in this debate and no decisions have yet been taken. But I would urge universities to help us think creatively about fairer mechanisms than the current one, recognising that for students and their families a central issue is securing an equitable system of graduate contributions."
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