‘Graduate tax’ could prompt brain drain, union warns

August 9, 2010

The cost of studying for the “key professions” would soar under proposals for graduate contributions tabled by the business secretary, Vince Cable, the main lecturers’ union claims.

The University and College Union evaluated the proposal via a model of 5 per cent tax paid over 35 years on salary levels recorded by the Office for National Statistics. The union reported that the typical doctor would pay £105,564 and the typical teacher £46,046.

In a speech at London South Bank University last month, Mr Cable proposed a system of “variable graduate contributions tied to earnings”. He described the current system of graduate repayments for loans as “a fixed sum – a poll tax – [that is levied] regardless of the income of the graduate”.

“It surely can’t be right that a teacher, care worker or research scientist is expected to pay the same graduate contribution as a top commercial lawyer, surgeon or City analyst whose graduate premium is so much bigger,” Mr Cable said.

He avoided the phrase “graduate tax”, but suggested it “may be possible to levy graduate contributions so that low graduate earners pay no more (or less) and high earners pay more”.

The UCU said that without protection for those on lower incomes or in professions such as teaching, social work and medicine, there could be a brain drain as graduates move abroad to avoid the tax.

Sally Hunt, UCU general secretary, said: “Whatever scheme is proposed to replace fees, the government must ensure that studying for key professions remains attractive and that the prospect of prohibitive costs over a lifetime will not put off the next generation of innovators and public servants.

“We urge Vince Cable to look again at the idea of taxing big business for the substantial benefit it gains from a plentiful supply of graduates, rather than merely looking to penalise students further.”

A “senior Conservative source” speaking to the BBC last month dismissed talk of a graduate tax, suggesting it was likely that the coalition government would seek to maintain the payment link between students and individual universities.


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