This blog has been kindly written for HEPI by Professor David Phoenix, Vice-Chancellor of London South Bank University (LSBU) and CEO of LSBU Group.
You would be hard pressed to find someone in either the higher education sector or Westminster willing to argue that the current funding system for universities is working well. The value of outstanding loans reached £182 billion in March last year. (By comparison, the current estimated cost of the entire Covid-19 vaccine rollout is £11.7 billion). At the same time, the unit-of-resource for teaching students is rapidly shrinking, with the £9,250 tuition fees now worth only around £6,600 in 2012/13 prices once inflation is factored in. And although the changes to the loan conditions coming in this autumn will increase the repayment term for graduates, generally there is little political appetite to increase the financial burden on students further by raising the loan cap.
It is somewhat inevitable then that the issue of a graduate tax has once again raised its head as a potential way of simplifying the entire process. While much ink has been spilt on both the positives and negatives of such an approach, I think one of the most compelling arguments against implementing such as system is to look at how other areas of our education system which are funded through direct taxation have faired – namely further education.
