Hugo Rifkind

University tuition fees are a tax. Accept that, and maybe we can make them work

3 April 2014

2:00 PM

3 April 2014

2:00 PM

Regardless of how many brains David Willetts has got, it’s not surprising that tuition fees are a mess. They’re a mess because they are a tax, and intended to do the sort of job for which taxes were invented, yet are also pretending not to be one. It’s like needing a dog but buying a cat, and then expecting it to catch a stick. It’s madness.

This pretence exists because a Conservative-led government did not want to be the progenitors of a stonking great new tax. Least of all one targeted at precisely the sort of graduate professionals who Conservatives so badly need to vote Conservative, in order for there to go on being any Conservatives at all. Taxing graduates for being graduates feels statey and Milibandy and downright foreign. It even feels less Conservative than taxing everybody else on their behalf, which is irrational, but true nonetheless.

Although taxing graduates is what we’re now doing anyway. And not even nicely. Think of fees as a tax and you swiftly realise that it’s a horrible, horrible tax, which would have to behave far better if it had the balls to admit it was one. If income tax worked like this, then everybody who earned over £21,000 would pay the same lifetime sum, and then would never have to pay anything else. Unless their parents had paid it for them when they started work, in which case they wouldn’t ever have to pay anything.

Personally, I’m not sure the ‘fee’ ruse paid off, anyway. For one thing, it makes students worry about it, in a manner which they never would about future taxes, because they are 19 and will be forever and sorry I stopped concentrating where’s the bong, etc. For another, it simply hasn’t worked. Because, you see, there was one, big, real way in which tuition fees weren’t a tax, and that was in the way that they were to be targeted and discrete. Money comes in, from old students; money goes out, to universities. All stand-alone and neat.

Except it isn’t. Two years ago, the coalition estimated that 28 per cent of loans would have to be written off, because those graduates simply wouldn’t earn enough to pay them back. Now they’ve revised that figure up to 45 per cent. If it nudges up a bit more, apparently, then all this is going to cost the taxpayer even more than university education did when we simply paid for it. Which is a sentence worth staring at for a while.

Of course, it probably won’t. Youth unemployment remains high (although oddly no higher than it was when they brought in tuition fees in the first place) and graduate recruitment is still in the doldrums, but one will eventually go down and the other up. Even then, though, tuition fees are going to be a mess.

Too much is going on with them at once. Almost certainly, quite a lot of the cabinet reckon that far too many people go to university anyway, but this is a thing almost unsayable in British politics. So when applications dropped in the first two years they had to feign sadness, even though this was probably precisely what they wanted to happen. Now, as students realise they probably won’t have to pay anyway, applications are starting to creep back up again. This, the coalition must trumpet as a success, even though they would surely rather it hadn’t happened.

Now fees ought to go up, except they can’t, because that would make lots of people feel they couldn’t afford to go. They’d be wrong about this, of course, as cabinet ministers would be keen to point out, even while (keep up) they might secretly wish that it was entirely right. And meanwhile, Labour is making deranged noises about putting fees down in order to raise more money (what?) while simultaneously wittering about giving people vouchers worth a certain amount, while enabling them to fund the rest by…

Oh, stop it. Make it a tax, already. From graduation until, say, the age of 40. And if that seems like it is going to cost too much, then have a crack at the universities and get them to make it cost less. It’s the only sensible option, and it’s basically what happens already anyway. Otherwise, this current farce — this juggling of private funds with stonking great bailouts — is only going to get worse. Give it ten years, and it’ll be as bad as the railways. You know I’m right.

Known unknowns

I keep having the same conversation. Various aspects of the Better Together campaign keep warning Scotland with various forms of financial ruin should Scotland go it alone.

‘Bad idea,’ I always say.

‘No, no!’ is the response. ‘The polls are clear that people are really worried about this stuff!’ And then the next polls come out, and ‘yes’ has sneaked up another notch. ‘Ah well,’ people say. ‘Perhaps we didn’t scare them enough.’

No. Stop it. This is never going to work. Maybe you’ll get away with it because the ‘no’ lead remains so strong, but that doesn’t stop it from being an utterly lousy strategy. Do you think that Scots don’t already know that independence would be a romantic and foolhardy leap into the unknown? Of course they do. Even those of them who want it so terribly badly. Indeed, especially them. That’s the whole point.

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