Wednesday, November 24, 2010

Lefty firebrands demand a better deal for top earners

I was on the radio this morning debating with Max Brophy of the Education Activists Network - the group linked to the Millbank incident. While iPlayer lasts you can find it here, starting 1h05mins in.

As always it is a shame I didn't get to respond to some of Max's points directly. The fairly preposterous line that there is an ideological attack on the public sector - when the share of national income spent by the government is simply returning to the level it was in 2006. And it is a little bizarre that something called the Education Action Network is rioting, when education is relatively unscathed in the adjustment this country is making to the fact that it has a great deal less money to spend.

But my main point, which I almost managed to get across is this. While clearly we are in a coalition, and in no position to deliver on our original policy, it is worth noting that student debts are becoming very undebtlike indeed. There is no commercial loan you could take out that you would be let off altogether if your earnings were below £21000. For people on these incomes, there are essentially no fees and free education, before we even consider the new bursaries and maintenance provision. This is a big improvement on the status quo. The fees pledge is honoured, and in spades, for low earners. They pay no fees, nothing.

For people on middle incomes, repayments will be limited by income, and not by the size of the debt, which therefore becomes a notional debt not a real one. Payments defined and limited by income are usually called taxes, and this differs from a graduate tax in name only. Of course a pure graduate tax would keep the pledge. If this policy breaks the pledge for middle earners, it does so entirely because of what the payments are called. Toby Foster, the host, asked if the protest was really all about semantics, and it almost is.

But not quite. There are still the top earners - the top third or so - those who will end up paying £6000 fees, or in exceptional cases £9000. That's the full cost of their education in the chalk and talk subjects, and a little less in the more expensive subjects. These are the people we have let down in compromising on fees. So effectively what leftwing firebrand Max was demanding was a better deal for top earners. It's a funny old world isn't it.


Stephen Slominski said...

"There is no commercial loan you could take out that you would be let off altogether"

You seem to be suggesting that if graduates earnings fall below the threshold they will have their debt written off - this is not so - the debt remains and increases in size as it continues to accrue interest.
Graduates can't even get rid of their obligations by bankrupting themselves - student loan debt is exempt from the process.
There is no chance of being 'let off altogether'

Joe Otten said...

There is every chance of it being written off. Or more precisely about a 70% chance, in that this many graduates will never have to pay off the total "debt".

Yes, it will keep accruing interest for a while, and if your income goes up again you may have to start making payments - but these payments will be related to your income (i.e. effectively a graduate tax) rather than the size of this debt - unless you earn enough to pay it all off.

And after 30 years, you are 'let off altogether'.