Like many people, I am sceptical that a graduate tax is a good answer to either the funding crisis affecting higher education institutions and students or the political challenges faced by Keir Starmer and others who have spoken of getting rid of tuition fees in England.
Promising a big new tax that would, in a few years’ time, come to affect over half of all younger adults seems unlikely to go down all that well on the doorstep as the next election approaches. There are surely better ways to persuade floating voters that you understand their aspirations. (There are good reasons why politicians usually prefer raising tax by stealth rather than by introducing a large extra charge explicitly badged as a brand new ’tax’.)
I explained some of the practical problems with a graduate tax, as I see them, in an article in the Guardian seven years ago, back when Owen Smith floated the idea as part of his challenge for the Labour leadership. I do not intend to rehash them here. Others continue to argue the case in favour. Here are three pieces backing the idea published by: HEPI (Paul Maginnis); Wonkhe (David Kernohan); and the Guardian (Peter Hain).
Anyone who wants to engage with a current version of the debate on the advantages and disadvantages of a so-called ‘grad tax’ should also take a look at the recording of the event HEPI hosted just before Christmas with the University of the Arts London, which included the presentation of detailed new modelling on a graduate tax and other funding options (by London Economics) and also gave a voice to those who disagree with such big changes. The video of the event is below (and here on YouTube).
This whole area is topical because many people, rightly or wrongly, sense His Majesty’s Official Opposition are currently following in the footsteps of many others in considering a graduate tax as a way to square the circle of a) promising to abolish tuition fees while b) simultaneously also promising fiscal rectitude and resisting the temptation to get the ‘big government cheque-book out‘.
Last week, according to the Financial Times, the Labour Leader said:
University tuition fees are not working well, they burden young people going forward … Obviously we have got a number of propositions in relation to those fees that we will put forward as we go into the election.
But I have to be honest about it, the damage that has been done to our economy means that … we will cost everything as we go into that election and we will do that with discipline.
Perhaps Keir Starmer, Rachel Reeves and Bridget Phillipson will indeed be tempted in the same way that earlier politicians, such as Vince Cable, were briefly tempted by the apparent benefits (such as backdoor redistribution) offered by a graduate tax.
One of the most influential Shadow Cabinet members, Wes Streeting, is after all the person who oversaw a detailed plan for introducing a form of graduate tax when he was President of the National Union of Students (NUS) and he has backed the idea much more recently too.
When I ask myself what a Labour Government might do, however, my starting point is always to look at what Labour Governments at Westminster have done in the recent-ish past or what the current Labour administration in Wales has done: in both cases, it is a fees and loans model rather than a graduate tax system that has won out (with, in both cases, more generous maintenance arrangements than are currently in place in England).
However, the main purpose of this blog post is not to engage in an old debate that comes around every few years – as so many educational questions do. Nor is it to push a particular point of view. Rather, the aim is to add to the HEPI website another important and overlooked historical document that cannot be easily obtained elsewhere.
In the past, we have posted Anthony Crosland’s Woolwich Polytechnic speech of 1965, which led to the firm binary line between universities and polytechnics, and also Kenneth Baker’s Lancaster University speech of 1989, which set a firm target for higher education participation long before Tony Blair’s 50% target.
Now, we are adding the 2003 document Why not a Pure Graduate Tax to the mix. Produced by the old Department for Education and Skills 20 years ago as a way of tackling the arguments of those opposed to the introduction of £3,000 fees in New Labour’s day (and kindly shared with us by Lord Willetts), the document is at risk of being largely lost from the historical record just as the graduate tax idea is rearing its head once more.
We have recently listed many of HEPI’s forthcoming events for 2023 on our Events page. Do take a look at the nine in-person and online events that we have coming up, including free webinars this month with HEPI Partners Kaplan and Taylor & Francis on international students and access to research respectively.