Cable lays plan for graduate tax

Vince Cable today laid out the ground rules for debate on funding higher education and strongly hinted he favours a graduate tax. But he stressed this was the start, not the end, of the debate.

Cable, an ex-lecturer at the University of Glasgow, said that after 50 years of expanding universities the UK now had to accept that a period of shrinkage was unavoidable.

He said that whatever future system was chosen it was all but inevitable that students would pay more.

Cable said he accepted the economic contribution of universities. He said:

They do this directly in the case of science, maths, engineering, computer science, medicine, modern languages, and professional services like business studies and accounting.  Even much maligned ‘media studies’ helps to feed one of Britain’s most rapidly growing and successful industries.  And what my father used to describe as ‘arty farty’ subjects feed into the rapidly growing and successful industries like creative design, publishing and music. 

Cable pointed out that when he was in sixth form there were barely two dozen universities to go to, compared to 160 today.

The Business Minister said that in reality almost all students already pay a form of 'graduate tax' in the form of student loan repayments. The problem is that this is like a poll tax - it's the same for everyone regardless of their expected income.

Graduates with medical degrees for instance can expect a higher lifetime income than male arts graduates.

He said: "Payments should be variable and tied to earnings... 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."

He accepted that universities wanted security around funding, but warned they would also have to think creatively about bringing in extra funding. He suggested a greater range of courses and qualifications could be one way to do this like two-year courses or allowing students to transfer between colleges more easily.

The full text of the speech is here. ®