by Nick Keehan
With a student demonstration marching on Westminster today, it will be tempting for Labour to throw in its lot with the protesters and embark on wholesale opposition to tuition fees. Before we do, however, we should ask ourselves a question: how stupid do we think Nick Clegg and Vince Cable are?
Really stupid, that is. Not wrong. Not dishonest or unprincipled. Not sanctimonious, smug or irritating. Not ignorant or ill-informed, but stupid. Totally useless and incompetent. So inept and ineffectual that stuck on a sinking ship they would burn the lifeboats.
Whatever else they may be, Nick Clegg and Vince Cable are not that stupid. When it comes to tuition fees, however, this is what we are expected to believe.
Clegg and Cable, with opinion polls putting support for the Lib Dems at 10 per cent and below, are confronting the prospect not only of breaking their own personal pledges to vote against any rise in tuition fees, but also of having to face down a large rebellion of their own backbenchers, possibly including two former party leaders.
In these circumstances, you would think that a graduate tax would have been the answer to their prayers. It is relatively popular, it is progressive and, most important of all, it would have allowed the Lib Dems to keep the solemn promises they made to their constituents at the last election. It would have been something they could point to as a real achievement from going into coalition and might even have saved some seats at the next election.
With the government’s announcement on student finance last week, however, it was clear that as HMS Lib Dem slipped beneath the waves and the sharks started to circle closer, Clegg and Cable would happily wave the SS Graduate Tax on, declaring that they would be fine and could swim the rest of the way.
Politicians do not simply drop vote-winning policies for no good reason. There has to be a good reason why the Lib Dems did so. And there is: a graduate tax is complicated, ineffective and, from a policy perspective, pointless.
The problems with a graduate tax are set out clearly in the Browne report. It would not bring in sufficient revenue to fund higher education until 2041-42. There would be little relationship between what graduates paid and the education they received. Higher earning graduates would have to pay much more than the cost of their education. Graduates would also still have to pay off maintenance loans. The money from a tax would go to the treasury or some other central body, weakening the relationship between universities and their students. The contributions of EU and international students, as well as UK graduates who moved overseas, would be difficult to collect.
None of these problems is insurmountable, but a graduate tax would need to offer some pretty big advantages to make it worthwhile. It does not. The only supposed benefit of a graduate tax over fees and loans is that it avoids the headline fee. That is, graduates still have to pay the fee, they just do not know what it is and it bears no relation to the course they have studied.
In light of this, Alan Johnson was surely right in the summer when he wrote that it made no sense to pursue the idea of a graduate tax. Which makes it all the more bizarre and dispiriting that John Denham, in his response to the government’s announcement last Wednesday, stated that a graduate tax is now Labour’s long-term goal.
To be fair to Denham and the shadow cabinet, it is unlikely that they envisage a pure graduate tax as considered by Lord Browne. However, it is difficult to see how we could put forward a proposal that avoids the drawbacks outlined in the Browne report while still being a worthwhile change.
A Labour graduate tax might, for example, look something like the model put forward by the national union of students, which has a shorter repayment period and differs in a number of ways from the pure graduate tax dismissed by Browne. The suggestions made by Ed Miliband during the leadership campaign certainly seem to be reasonably consistent with the NUS’s proposals. If this were the case, however, it would only serve to make Labour’s position even more peculiar.
The NUS website attempts to tackle some of the “myths” about a graduate tax and purports to show “what a real graduate would look like”. Under a “real” graduate tax payments would be made as a percentage of a graduate’s earnings and for a fixed period, not for a graduate’s whole working life. Payments would only be made above a certain threshold. There would be a cap on the total amount paid. There would also be an opt-out scheme whereby the tax is waived if a student agrees to pay the maximum amount in advance. It turns out that a “real” graduate tax looks remarkably similar to a system of fees and loans.
If Labour were to make a graduate tax along the lines suggested by the NUS a long-term goal, we would go into future elections promising a complete overhaul of student finance, in order to deliver a system that was more centralised, more complicated and less effective, and whose primary benefit could be more easily achieved were graduates simply to throw their statements from the student loans company into the bin unread. Why would we want to do this?
A graduate tax works only as a piece of short-term politics. It might have made sense for candidates to support a graduate tax during the leadership campaign, but the Browne review put forward a progressive graduate contribution which provided a good opportunity to drop the opposition to tuition fees as quickly and as painlessly as possible. Our response should have been to accept Browne’s general principles and overall direction, but to press for a levy to ensure that those from wealthy backgrounds do not pay less by paying earlier and to raise some objections to the overall level of cuts to government funding. After the government’s response, we should also now oppose those changes to Browne’s proposals that will have a negative impact, such as making the maintenance loan means-tested rather than universal.
What our response should not be is to campaign on abolishing tuition fees and to make promises that cannot be kept or are not worth keeping. This works fine for a third party. For a party of protest. For a permanent opposition. It does not work for a party of government. Ask Nick Clegg. Ask Vince Cable.
Nick Keehan works in Parliament.