Education & Family

Graduate tax: Who stands where?

The Business Secretary Vince Cable has said a variable graduate tax, with higher earners paying higher rates, could be a fairer way for students to help fund their university education. What do university bodies, staff and unions think of the idea?

National Union of Students

The NUS sees the graduate tax proposal as a milestone in a lengthy campaign by students to ensure fairer university funding. The current system of top-up fees is regressive, it says, because top earners pay the same rate as those on lower incomes. Graduate contributions should be based on actual earnings in the real world, the union says.

NUS president Aaron Porter said: "A graduate tax is preferable to a market-based system of fees. We are keen to work with the government. If there are more tuition fee rises there could be a seismic backlash. Further detail of this plan is crucial to ensure that the system truly is a progressive alternative and not simply tuition fees by another name. Students and their families are not fools and will not be conned by rebranding exercises or marketing drives. A progressive graduate tax would be a signal of a just society, where people who benefit more pay more.

University and College Union

The union says the key test for students and their parents will be whether or not graduate debt goes up. It says the government should not rebrand student debt as a graduate tax and expect students to pick up the bill for its "punitive cuts agenda".

The UCU has called for business to pay its fair share towards higher education by raising corporation tax to the G7 average. It is concerned about government plans for the future of university funding.

UCU general secretary Sally Hunt said: "We were a little concerned to hear that Vince Cable was only now asking Lord Browne to look at graduate tax ideas. It certainly raises the worrying question of exactly what the review has been doing up until now."

UCU is the largest union for lecturers and other academic staff in the UK.

Russell Group of UK universities

The group does not agree that a pure graduate tax would be a better or a fairer system. Graduates, employers and society all benefit from higher education, it says, but taxpayers currently foot the lion's share of the bill and that is unsustainable.

The group says graduates should contribute more because they benefit significantly. It sees the current system as similar to a graduate tax, with no up-front payment by students and graduates only paying back a small fraction of their income when their earnings exceed £15,000. The current system has all the positive features of a graduate tax without the downsides, it says.

Director general of the Russell Group Wendy Piatt said: "We are particularly concerned that it would be many years before revenue from a graduate tax becomes available, so until then there would be a requirement for a very major up-front investment in universities by government - a very costly solution."

The Russell Group represents 20 of the UK's research-intensive universities, many of them older institutions including Oxford and Cambridge.

Universities UK

The body says because graduates benefit personally from their degrees, it is right that they make a direct contribution to the costs of study. Its submission to Lord Browne's review argued that the current tuition fee and loan system could more accurately be described as a "graduate contribution". It could be made more progressive, it says, with reforms such as charging a real rate of interest on student loans, which would reduce the taxpayer subsidy for higher earners.

President of Universities UK Professor Steve Smith said: "With proposals for 'variable graduate contributions tied to earnings', the sector would want assurances that proceeds from such a system would be re-distributed to universities".

Any changes to the system would have to promote student choice, secure the quality of the student experience and maintain the reputation of the higher education system, the group says.

Universities UK is made up of more than 100 executive heads of UK higher education institutions.

1994 Group

The 1994 Group says it wants to see a sensible and robust system of funding based on a "transparent, simple and fair system of graduate contributions tied directly to the education received". This should provide a long-term sustainable environment to ensure that UK's world-class universities can continue to deliver a very high quality academic experience to all students and meet business needs, it says.

The group's chief executive director Paul Marshall said: "It is crucial that all students with the ability to go to university are able to access the top universities."

The 1994 Group is made up of 19 research-intensive universities, including Exeter, East Anglia, St Andrews and Reading.

University think tank Million

Million+ say the most important challenge facing the secretary of state is ensuring that students and graduates "do not pay the price of cuts to universities".

Chairman Les Ebdon said: "Regardless of whether the current system of graduate contributions is reformed or a graduate tax introduced, Vince Cable gave every indication that graduates would pay more. This has to be squared with the coalition government's commitment to social mobility.

"A graduate tax may satisfy the left hand of the coalition and his proposals to introduce private providers may suit the right hand but the real question is what happens to people of all ages who want to study at university if student numbers are cut."

Million+ is a think tank which grew out of an organisation for new universities.

Pro vice-chancellor of Roehampton University Chris Cobb

"Generally I welcome the introduction of a 'graduate contribution' as it is a more progressive approach than loan and is less off-putting to applicants. However, I'm still not certain whether it is intended to simply replace the tuition fee income or whether it will additionally replace the Hefce block grant which is currently resourced through general taxation. In other words: where will the balance of funding fall between state and student?

"Also, does this spell the end of a market for domestic undergraduate students and variability of pricing - or will universities be able to charge fees in addition? If universities are restricted from charging fees thenwill some elite institutions question whether they should remain in the state sector?"

Shadow universities minister David Lammy

"This a PR exercise from a man whose party have just completed the biggest U-turn in their history. At the last election, and for the last decade, the Liberal Democrats have opposed any graduate contribution as an article of faith. Now they are in favour of an unlimited graduate contribution paid over the course of a life-time.

"He's trying to pacify his party's MPs and membership and prepare the ground for them to accept higher fees."

More on this story