Liberal Democrats in government are about to scrap student tuition fees for 54.2% of students. This may come as a surprise, but that is because this side of the story isn't really being told.
The Institute for Fiscal Studies has shown that for 54.2% of students in the future it does not matter how much their tuition actually costs. They will pay the same 9% of income over £21,000 a year for 30 years. In other words this new system is a graduate tax in all but name. It is why Vince Cable, the Lib Dem Business Secretary, calls it a graduate contribution.
It is, however, not an open-ended graduate tax as it has a cap. The cap works in such a way that graduates with higher earnings get to a point at which they have paid more than the original cost of their education. That additional amount goes up with the scale of a graduate's earnings and when they've reached that point they stop paying the graduate tax.
To me, that seems – given that we have a coalition government – a reasonable way of fulfilling both the Liberal Democrat policy of scrapping tuition fees as well as the NUS pledge in which we stated we would campaign for "a fairer system". This is that fairer system. People have got to get away from looking at this issue as student debt. It is not a debt, in most ways. The bailiffs won't come round if you don't pay the full amount because you have a low income. In fact, if you do not earn more than the threshold you pay nothing at all. In essence, what we have is a future tax liability.
So to that extent the adage "if it quacks, it's a duck" seem appropriate. If the payments are like a tax system, in which you pay a percentage of income, then it is a future tax liability.
It is also worth looking at the other changes that have been made since the Browne review. One is to increase the top rate of interest. This has the effect of making graduates who earn over £41,000 per year pay more into the common fund. The second change is that the scheme ensures those people who wish to pay upfront are unable to buy themselves out of making a contribution towards the less wealthy graduates. This means that the broadest shoulders bear the biggest load and that is only fair.
Recent discussions have concentrated on aspects particularly relating to full- time higher education. In a sense that is because this is the area where the questions as to whether or not the Liberal Democrats have done a U-turn are key. To me, it is clear that we have not stood on our heads. We have delivered "a fairer system", which is what we pledged to do. To give you a clear example: regardless of "the fee", the lowest-earning 25% of graduates will pay less in future than they do under the current regime.
There is more in the proposals that makes the system fairer. First, all students will have access to some finance for living costs. Those whose household income is under £60,000 have access to up to £3,250 in grants. This means the poorest students will be £700 a year better off. Second, there will be particular bursaries to encourage social mobility so that children of lower-earning households are encouraged to go to university; and there will be a requirement for universities to do more themselves to encourage those from disadvantaged backgrounds into higher education. Last, we will now have support for part-time students, treating them as equal to full-time students, and they will also be asked to pay a capped graduate tax.
Of course, in an ideal world student tuition costs would be paid for out of general taxation. Sadly, however, we do not live in an ideal world and are also in a coalition. Nevertheless, the current government proposals are far better than the current system. More will be done for poorer students, and the plan means that the "fees" element has no effect on the payments made by the majority of students. That is because the students don't pay fees, but pay a levy through taxation – which for 54.2% of students is not affected by the amount of "fee".
That is why I believe we have not only delivered on our pledge of a fairer system, but also delivered substantially on scrapping student tuition fees.