A proper graduate tax

The chaos that has characterised this government’s approach to higher education has presented a threat to the sector and a challenge for Labour. Our universities are one of the great UK success stories, admired throughout the world. But they have been confused and undermined by Tory/Lib Dem policies. So what should a Labour vision for higher education look like?

We lost the tuition fees votes, but won the graduate tax debate. In their more desperate moments, ministers argue that the new system is like a graduate tax. Clearly it is not: graduates will pay back what they had to borrow to go to university, not a fair share of their subsequent earnings. Our proposal to cut fees to £6000 is an immediate response to immediate problems, but not a policy for the next election. We should pledge to implement the proper system of graduate tax argued for by both Ed Miliband and Ed Balls. We should also look at loans for taught postgraduate courses, where commercial loans are declining as demand is growing. In an increasingly competitive graduate market, a master’s degree is essential for many careers and those from ordinary families must not be put off from further study because of increasing graduate debts.

But our focus must be on more than student funding. We must build on the key role universities have in re-balancing our economy and driving growth. Sheffield University, for example, has established a national model for this approach with its Advanced Manufacturing Research Centre, which combines academic research and innovation with Sheffield’s traditional engineering skills. It’s attracting investment from major international companies and creating opportunities for the local supply chain. Strategic investment in our universities is vital to the future of our regional economies, and must be part of the active industrial policy that will be a central part of our next manifesto.

International students bring huge benefits to the UK. They enhance our universities’ cultural richness and intellectual quality, and the relationships they forge bring long-term economic benefits after returning home. Their financial contribution is worth £8 billion to our economy, yet this is jeopardised by changes to international student visa requirements which the Home Office itself calculated could lose the UK economy an extraordinary £2.4 billion. But the real loss is to potential income – if we followed our competitors by encouraging, not discouraging international students, our current HE export earnings could double. We should embrace the broad coalition of universities and business which is arguing for students to be taken out of the immigration debate by no longer classifying them as migrants.

These measures would restore stability and provide direction to the HE sector. They would enable our universities to develop the knowledge, technology and jobs for the future, and ensure all who want to study and realise their potential can. Our universities don’t have to cost the earth, but with the right support, they can change the world.