Debate Magazine

Student Fee and Loan Wibble.

Posted on the 19 July 2017 by Markwadsworth @Mark_Wadsworth

"[The Labour] party’s education spokesman has admitted that the tuition fees policy has a £100 billion…She has admitted that there is a £100 billion black hole in Labour's student fees policy.”
Damian Green MP, 12 July 2017

Fullfact then explains that the net cost will be a lot lower than that, bearing in mind write offs and so on.
The point is surely that student loans are the worst of both worlds, they have the characteristics of loans and of a super-tax on income (9% of income over £21,000 p.a.). So writing them off or down is not an upfront 'cost' the government but a reduction in tax revenues.
The best way of looking at govt tax revenues is the annual amount. The best summary I have found is by the Institute for Fiscal Studies. Page 22 suggests that expected the extra revenues from the 9% surcharge will be about £6 billion a year, covering two-thirds of the £9.7 billion upfront cash cost of higher education. That's not nothing, but only about one per cent of UK govt revenues/spending.
Here comes the real wibble, and article by somebody from the (right wing/supposedly free market) Institute for Economic Affairs in City AM:
Moreover, deeply regressive policies are finding their way back to popular status, with very little push back. That Labour has been able to get away with linking the abolition of tuition fees to “fairness” is shameful; expecting workers on the minimum wage to subsidise students attending Oxbridge – whose career prospects are likely to earn them a much higher salary in the future – is anything but fair.
As our Lord and Saviour said on Twitter recently:
Student fee and loan wibble.
Education is A Good Thing (up to a point, I'm not talking about Mickey Mouse degrees) for the nation as a whole, so I've no objection to the taxpayer chipping in as that's the best way of ensuring that everybody has an equal-ish chance in life. It's like a non-cash citizen's dividend. We'd expect those that go to uni to end up earning more than they otherwise, that's sort of the whole point isn't it?
For sure, the 7% of kids who went to private school have a better chance of going to uni, but is that really so unfair? Their parents have waived a state education place (cost to the taxpayer approx. £70,000 per child) and they have pissed well over £100,000 up the private school wall, most of that goes to teachers or suppliers, so that generates a minimum of £40,000 in tax revenues per child (PAYE, irrecoverable VAT, corporation tax on suppiers etc), more than enough to cover the cost of a normal three year degree of £35,000-ish.
The only reason for tuition fees is that government spending on higher education has remained constant but student numbers have doubled. If we halved them again and kept net spending constant, we wouldn't need tuition fees. If student numbers were slimmed down to a sensible level, say 25% of school leavers, and all private school kids went to uni, that still means that one-in-five state schools kids would get to go to uni "for free" on top of the "free" state education they have already enjoyed [sic].
If their is any "unfairness", it is that a lot of the 'professions' are really just leeching off the fact that the government lays down stupid and complicated rules which the layman can't fathom. So we have lawyers (if judges weren't so useless, we wouldn't need barristers on £5,000 a day to explain things to them), auditors etc. What they earn is just rent, it is an appropriation of other people's earnings or wealth without adding to it.
And as it happens, most people in these 'professions' went to uni and have a very middle class background. I'd be all in favour of stemming this flow of rent by radically simplifying the rules, having judges who apply common sense and abolishing the audit requirement. Or imposing price caps on them. Or failing that, subjecting their income to a higher tax rate. In an ideal world there's be a flat income tax of no more than 20%, but a higher rate of 50% for the 'professions' seems fair and reasonable to me.
That levels out the only real unfairness that I can see - that some high earners didn't go to uni, or did but do something useful and made their way in the productive economy. So a tax on the 'professions' would be a much more sophisticated version of the graduate tax.
And with a Citizen's Income system, student maintenance grants/loans would not be an issue, of course students would get it.

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