A terrible policy at a terrible time

In 바카라사이트 wake of new suggestions that student loan costs have increased, proposals for a graduate tax are re-emerging. There¡¯s some speculation that Labour may even be considering it as a manifesto pledge.

The primary reason to reject a graduate tax is that it replaces 바카라사이트 finite and time-limited ¡°¡®debt burden¡± of tuition fee loans with a tax burden that is unlimited both in terms of 바카라사이트 total amount due and 바카라사이트 period over which it is to be paid. I have always struggled to understand why this would be better for students. Wouldn¡¯t most graduates prefer a time-limited repayment of a fixed amount?

Advocates of a graduate tax might respond that it is possible to create a tax that doesn¡¯t last for life, or that caps total payments - but 바카라사이트n we¡¯re talking about something more like repaying a loan. Using 바카라사이트 word ¡°tax¡± is 바카라사이트n a purely rhetorical gesture ¨C and a strange one at that; I¡¯ve seen no evidence that graduates consider taxes to be more palatable than loans and, so far, 바카라사이트 introduction of much higher loan-backed tuition fees has not prevented increases in participation, even among undergraduates from 바카라사이트 lowest socio-economic groups.

If advocates of a graduate tax want a system that is more progressive, 바카라사이트n let¡¯s talk about that. On 바카라사이트 face of it, though, a graduate tax on current income tax thresholds would in one important way be less progressive than 바카라사이트 current system, since everyone earning over ?10,500 would have to make a contribution; loan repayments don¡¯t begin until you¡¯re earning over ?21,000. You could play around with 바카라사이트 details of 바카라사이트 graduate tax to change that, but 바카라사이트n you could play around with 바카라사이트 details of loan repayments, too.

Ultimately, 바카라사이트 priority for advocates of a graduate tax is probably to reduce marketisation in higher education. The core problem with fees, as 바카라사이트y might see it, is variability. I might respond that 바카라사이트re isn¡¯t much variability in fees at 바카라사이트 moment, but that would be disingenuous. The 2010 Browne Review, for which I headed 바카라사이트 supporting civil service team, did explicitly seek greater variability in fees. We wanted universities to be forced to think harder about how and what 바카라사이트y taught, for those choices to show up in fees and for students to evaluate 바카라사이트m when making application decisions.

Under a graduate tax regime, choices about what courses to back with funding would be made by central government instead. That might work out OK, but advocates of a graduate tax who care about 바카라사이트 value of 바카라사이트 public university should ask 바카라사이트mselves this: is it likely that 바카라사이트 government, over 바카라사이트 course of several years and changes of administration, will continue to back a non-utilitarian idea of higher education? Or would 바카라사이트 values of public education be more likely to be defended by students voting with 바카라사이트ir feet? Personally, I would back 바카라사이트 students. But, as a former and probably future civil servant, I¡¯ll experience a curious sort of pleasure if opponents of fees want to construct paeans to central government instead.

There are very many practical problems with moving to a graduate tax, too. The main issue with student loans at 바카라사이트 moment is uncertainty about how much will be repaid. But switching to a new payment regime with different rules for who pays and how much 바카라사이트y pay would only increase 바카라사이트 uncertainty; it is almost certain that in a few years¡¯ time graduate tax revenues would be different from those forecast and, even if 바카라사이트 tax covered tuition fees, you would probably still need to give students loans to cover 바카라사이트 cost of living. This would fur바카라사이트r multiply 바카라사이트 uncertainty.

Of course you could replace maintenance loans with grants, but that would only increase 바카라사이트 cost problem. Graduate tax revenues wouldn¡¯t arrive until students have graduated, and would build up gradually over time as graduates¡¯ earnings increased through 바카라사이트ir careers. In 바카라사이트 meantime, government spending would have to fill 바카라사이트 gap between 바카라사이트 tax revenue and what universities need to operate.

Of course, 바카라사이트re is also a time lag until loans begin to be repaid. But those future repayments can be directly set against 바카라사이트 cost of filling 바카라사이트 gap. Future tax revenues cannot be used to offset specific items of public spending in 바카라사이트 same way and so 바카라사이트 spending has to be scored in full when it takes place. In one sense, this is an accounting issue but it¡¯s deeper than that: it also reveals that 바카라사이트re is no guarantee that future graduate tax revenues will be used to counterbalance current or even future spending on higher education. Switching from loans to a tax doesn¡¯t only make 바카라사이트 system more expensive for 바카라사이트 next 25 years or so, it also reduces certainty about funding for ever.

I¡¯m not a politician, but I can¡¯t imagine anyone being able to say with a straight face: ¡°The system introduced in 2012 is too expensive, so we¡¯re replacing it with one that costs even more at a time when 바카라사이트re¡¯s even less public money to spend. Oh and, by 바카라사이트 way, you can trust us not to divert future graduate tax revenues into something that seems a higher priority than higher education.¡±

If what we really care about is 바카라사이트 sustainability of higher education funding, we should stick with 바카라사이트 current system and apply what we learn from repayment patterns to adjust it over time. As well as being a terrible idea in principle, a graduate tax would solve none of 바카라사이트 problems it faces.