The claim
“I know your preferred option is for a Graduate Tax. As you know, that is something we also looked at but rejected, partly because we felt it was actually more unfair.”
Deputy Prime Minister Nick Clegg, Letter to NUS President Aaron Porter, 30 November 2010
The background
Deputy Prime Minister Nick Clegg is really up against it with his tuition fees U-turn. Student protests across the country are carrying on despite the snow, over a hundred former Lib Dem parliamentary candidates have called for their party leader to keep the pledge, and to top it all, the guy in change Business Secretary Vince Cable, has said he would abstain from the vote if that’s what the group of MPs agreed.
Today he tried to quell the outcry, with a letter to National Union of Students President Aaron Porter. Don’t “damage our shared goal” of getting more poorer students into University, he pleaded.
And again he claimed the system of university fees of up to £9,000 a year, paid back after the graduate earns £21,000, was fairer than a graduate tax.
But is he right?
The analysis
Now, we should say that “fair” isn’t the same thing as “progressive.”
But we have looked before at how progressive the system really can be when those earning the most will pay off their loan more quickly, and so incur less interest on that loan. With those earning under £21,000 not repaying anything, it is middle earners who will be paying back the most.
There is one other problem with today’s claim – the thorny issue of a graduate tax. It’s something that Ed Miliband has said he is interested in, but there isn’t agreement in his shadow cabinet. Exactly what they will end up proposing is still the subject of one of those blank sheets Mr Miliband talked about.
Mr Clegg says “people on below-average incomes would end up paying more (with a graduate tax) than they would under our proposals.” Now, if a uniform graduate tax was charged on all taxable income, Mr Clegg might have a point, and this model of a graduate tax was rejected by Lord Browne in his review of higher education.
Under the system the government are pushing, those earning less than £21,000 will not pay anything, whereas, the Conservative party calculate, those same people would pay £290 a year (assuming they pay on all taxable income and at a rate of 2 per cent) under a uniform graduate tax.
As yet, though, there is no consensus about how a graduate tax would actually be formulated. Claire Callendar, Professor of Higher Education Policy at Birkbeck, said that a graduate tax is “completely untried and untested” and such a tax doesn’t exist anywhere in the world.
The NUS came up with their proposal of how it would work, University think-tank Million+ have come up with another, and so on. Each of these include different tax levels, different earning levels at which the tax could kick in and whether to end the tax after a certain amount has been collected or after a certain period of time. All of which could impact on how the tax could compare to the government’s system in the “progressive” stakes.
The verdict
It is unlikely Mr Clegg’s letter would have satisfied his opponents on tuition fees, and it certainly didn’t deter students from taking to the streets again today. But most of all, it is difficult for Mr Clegg to make comparisons of “fairness” with a graduate tax when there are still so many different versions in the offing.
