Vince Cable set to propose graduate tax to replace tuition fees

by Stephen Tall on July 14, 2010

The BBC reports:

A graduate tax is to be proposed by the Business Secretary Vince Cable, in a keynote speech on the future funding of higher education. This would mean students in England would repay the costs of going to university through taxation once t hey began working. A review of tuition fees and student finance is due to report in the autumn.

Mr Cable, who has pledged to oppose raising fees, will suggest a graduate tax as an alternative system. This would mean students’ fees being paid by the government to universities – and graduates would then pay a higher rate of taxation.

At present, the government lends students money to cover the cost of fees, with this loan paid back when students enter work, until the loan is paid off. Under a graduate tax, the amount paid would depend upon earnings – compared with the current system in which a fixed amount is paid back.

Such a change could draw the political sting from the tuition fee debate – with Liberal Democrat MPs having personally signed pledges to oppose an increase in fees.

Lib Dem Voice polled party members signed-up to our private members’ forum about the issue of tuition fees last year, following Nick Clegg’s announcement that the Lib Dems would not be able to afford to abolish fees in one go. The result then was overwhelmingly in favour of abolishing fees – but as I noted at the time:

I was struck reading the comments made in response to this question how firmly wedded is the Lib Dem membership to free education up to and including an undergraduate degree. Only a small minority – just one in 12 – favoured a reversal of the party’s policy of opposing tuition fees.

Of course a lot has changed since then, most signifcantly the party finding itself in coalition government, in which position all manner of previous promises have to be re-examined. A graduate tax has sometimes been spoken of with grudging approval by some Lib Dems – and has been enthusiastically endorsed by Labour leadership candidate Ed Miliband, who labelled it a “fair alternative to Lib Dem betrayal” (ironically enough).

But a graduate tax does mean an end to the party shibboleth that university education should be free as of right. Is that something up with which party members (and the party’s MPs) will be willing to put?