There are many flaws to the graduate tax. But this one – mentioned by Martin Wolf today – is something special. Will Ed Miliband or Vince Cable really be able to justify a system that gives a free ride to French, Polish and Romanian students?
Today there are around 120,000 European students at British universities (i.e from European Union states other than the UK).
The Treaty of Maastricht enshrined their right to a study on the same terms as any UK national. So they must be offered student loans rates at the same rates — subsidised to the tune of 23p in the £1. And they must be offered exactly the same terms on fees as any British student.
Now just imagine that a simple graduate tax was introduced. Any Greek, Irish or Spanish student would pay for their course by promising to give the British government a slice of their future income.
The snag is when they leave the UK, which most do. At the border they’ll thank us all for their superb degree — and wave goodbye to HM Revenue & Cutoms. The British taxpayer will be left to pick up the bill.
Does that sound more fair than student fees? No. Sure, there are problems chasing up loan repayments from European students. But at least it is a definable debt that can be paid back from anywhere in the world. A graduate tax, by contrast, dies at the border.
The main solution, meanwhile, is almost as painful as the problem: an EU treaty change.
A big EU fight. Years of painful wrangling to drive through a reform that either raises the drawbridge (blocking UK students from going to EU universities in the process) or introduces an EU-wide income tax (oh how they’ll love that on the Tory backbenches). Just what we need.
Jim Pickard
Kiran Stacey
