Will Liberal Democrats support a ‘middle way’ for higher education funding?

Vince Cable is a man with an increasing talent for controversy. His comments at Lib Dem conference regarding financial services produced a storm of media attention and predictable levels of controversy. But it was his statement on university funding in a fringe event that should have caught the eye. Cable seemed to make an important concession to his Conservative Coalition partners when he announced that a graduate tax would be “unworkable”. Cable’s statement came with the qualification that the essence of the idea, that graduate payments should be linked to earnings, was a “red line” on negotiations with the Conservative party. But it ignored the passing of a motion at conference which called for the party to explore the option of such a tax. The Times Higher Education covered the announcement.

While party members may feel some confusion over the party’s position, this should represent better news for the higher education sector. There were always likely to be a number of practical obstacles to a straight replacement of tuition fees with a graduate tax – will it break the link between the cost and value of a degree, discouraging competition? What is the definition of a graduate? How will money be allocated to individual institutions if stored centrally? And when will these institutions see this funding? Cable’s announcement appears to quash any chances of a full blown graduate tax replacement.

Although clearly not a complete climb-down, this does pave the way for a ‘middle way’ between the proposed raising of tuition fees and the development of a graduate tax. Director of Policy Exchange, Neil O’Brien, recently wrote an excellent account of what this may look like. Cable’s comments may well demonstrate a gradual edging towards this position, a more sensible extension of the tuition fees regime which would result in higher earning graduates continuing to pay fees past the total cost of their degree, to an agreed fixed limit. This would provide the fairness Cable and party colleagues such as Simon Hughes wish to pursue and could be a more palatable pill for the party faithful to swallow as an alternative to a straight increase in tuition fees.

Creases would undoubtedly need to be ironed out, but as an alternative to a graduate tax this would no doubt also be a huge relief to the higher education sector.

John Hood - Consultant
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