Get real about returns

September 6, 2002

Professors of public economics should not make the kind of errors betrayed in Nick Barr's comments on the Organisation for Economic Cooperation and Development report on graduate earnings ("UK graduates earn highest rate of return", THES , August 30).

What kind or level of further contribution is Barr seeking? If the average graduate earns a working-life premium of £400,000, then the contribution will be more than £130,000 in direct tax, and considerably more in indirect tax. This is against an original government investment of, perhaps, £20,000.

How is it suggested that the graduate make this wholly unjustified additional contribution? By paying higher fees. Very few students pay their own fees. Where is the report to show that the real payers, the parents, gain some financial premium from this exercise in sensible investment?

The report supports only one conclusion. Talk of the student making a greater contribution is a ruse to hide usurious financial ambitions on the part of the Treasury.

The government can afford to double its investment in university education, creating real bursaries and providing realistic fees, without long-term liability and with the prospect of a high return, much greater, for example, than that achieved by mortgage companies and banks.

A. J. Morgan

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