Tuition Fees - Broken Promises? - Two Points of View
During the debate on Tuition fees in the last few weeks a number of people have written anonymously to the website. There is little we can do to answer these comments but David Walker wrote on Wednesday before the debate to raise a number of concerns. The following correspondence shows the wide differences in the party at this time. It will only strengthen the party if these differences are aired and we welcome other comments for publication.
On Wednesday 08/12/2010 22:2, the day before the vote, David wrote to Alistair Stevens, Parliamentary Spokesperson, Barrie Taylor, President, and Shirley Holt, webmaster as follows:
Dear Alistair,
I see little point writing to head office at this late stage. The parliamentary party appears to have lost touch with its electorate.
What voters respect is INTEGRITY.
Obviously circumstances have changed but that does not absolve MP's from pledges made.
If the Student Tuition fees bill were to be voted down then the government would have to find another way to fund the fees allowed to universities or, if it refused to pay the universities, it would have to pay unemployment benefit to thousands of young people.
Nick said this evening on television "What other way is there of filling the gap?"
Well I am sure many party members could come up with suggestions which would have immediate impact and which will not end up in the financial fiasco that further 'loans' to students inevitably will.
Nick also said this evening that 'Most students won't have to pay it back' If not, then what is it all about?
A loan repayment which won't benefit the country by more than 50% and that over say 15 years for those who do choose to repay! How does that help the country today?
I think this is a device to get young people to pay for their own unemployment.
The word 'progressive' is being used in a way I don't recognise. I use the word progressive to mean 'improvement' but apparently the government is using it in a financial sense that most tax payers pay even more.
I re-iterate my earlier message that this will just cost enormous amounts in administration and end up in five years time being abandoned in chaos.
In the meantime Lib Dems will lose more than 50% of their voters (and significantly 100% of young voters) on the grounds of broken promises.
Please send a message through to someone tonight.
Regards
David Walker
Editors Note - Unfortunately the email arrived too late to forward before the vote but Alistair sent it to Nick on Thursday after the vote as follows:
Nick,
As PPC for the High Peak I would like you or one of your aides to consider the concerns of Mr David Walker, one of our hardest working supporters in the area.
He, rightly in my opinion, points out the many (or at least some of the many) pitfalls of this policy.
The cuts had to come somewhere, but surely we could have at least kept things as they are rather than introduce this hugely controversial policy, which for the "foot soldiers" in the country as a whole is a huge let down after the pledge that we made prior to the General Election.
We surely need to keep the confidence of the public (and our young supporter base) during the first year of the coalition.
Alistair Stevens
On Thursday, 9 December 2010 12:48, before the debate Shirley wrote:
Dear David
Thank you for your email. I am afraid I cannot agree with you as I fully support the position which Nick and Vince have taken.
There are numerous reasons why I believe the policy is right and FAIR - here are just a few of them
• I have believed in a graduate tax since I went to University in the 50's - I hated being dependent on my parents well into my 20's - but despite my working to get 5 scholarships they still had to support me - I would have been more than happy to accept responsibility for my own education and life.
• Graduate tax is not practical as our Universities would be swamped by students from the EU who have to have the same conditions but we would never get the tax back - also students who emigrated cannot be taxed. They will however have to pay the loan.
• Only 3% of the population were able to go to University in the 50's so the burden on the state for paying the fees was relatively small - but my parents paid twice for the maintenance section - once for me and then for my less well off fellow students who had very generous maintenance grants through their tax.
• When I ran a small business in the 1980's I put two employees through what would now be university courses - I, as the employer, had to pay their fees upfront (and I couldn't get a refund when one left me for a better paid job at the beginning of her second course), wages while they were at university and expenses to get to university. Both these students were the offspring of millionaires but were not prepared to be dependent on their parents. My pension is consequently that much smaller. The policy will also apply to part-time students who make up 405 of the student population.
• To check Vince's claims I prepared the attached spreadsheet (see link below) which is based on the figures in the table. These can all be changed on the spreadsheet and the repayment data in the yellow row shows the effect. In fact probably the most important factor is the rate of salary increase which I have set as 10% - which may be rather generous. If however the salary increases at the same rate as wage inflation then the student will pay back nothing and the debt will be written off after 30 years. You will also note that at maximum the repayment is 5% of salary and this does not kick in until the salary exceeds £90,000, 17 years after graduating and so the regime should not materially affect the ability of the graduate to obtain a mortgage - the policy is progressive.
Tuition Fees £6000
Maintenance £4000
Total annual Expenditure £10000
Years on course 3
Trigger Salary £21000
Wage inflation 5%
Starting Salary £20000
% annual salary increase 10%
Repayment 9%
Interest Base rate 0.5%
Inflation 3%
I believe that students who really want a University education are mature enough not to be deterred by the debt and to appreciate the FAIRNESS of the policy.
Best Wishes
Shirley
On Thursday 09/12/2010 15:42, before the vote David replied:
Dear Shirley,
Thank you for your careful and considered response to my views.
My thoughts are that the word 'fair' may not necessarily mean the same thing to all people. I assume you mean a sort of socio-economic balance which is appropriate in these circumstances at this time. But in my opinion that doesn't make it appropriate to the future of the nation.
I think that I need to know more about the reasoning behind the method being chosen (which I heard today is being taken by only one other western European government.)
From the figures that you present it is obvious that this is not intended as a means of saving money or generating income for the exchequer now. It will take many, many years to recoup the money that the government will have to put forward for the loans. So maybe their intention is to sell off the loans to banks and investors at a reduced price and allow the private sector to reclaim the debts over the years.
All this will be expensive to manage and as my previous message implied, the variable interest rates coupled with the indeterminate first starting dates will require considerable administration costs. There is also the major concern that successive governments will retrospectively alter threshold levels, repayment period and interest rates to suit their political and financial circumstances. Even if, as you suggest, as much as 75% is recouped over thirty years it is still a loss financially.
Both you and I grew up when times were considerably harder than today but we always knew that to have well educated dynamic people was the only way to move the country forward. I believe the same applies today and that education is the greatest investment the country can make.
The sums involved could be met several times over by concentrating on 'tax avoidance' with immediate benefit to the economy but the government has chosen not to increase activity in this area and indeed is making 1,300 tax inspectors redundant.
So it is not without reason that students are revolting. My major concern is that all these young people now reaching voting age may now lose the little trust in politicians that Nick was beginning to generate. And this would have been the electorate from which Lib Dems should have benefited.
I would still contend that there has to be another way.
Best wishes
David
On Friday, 10 December 2010, after the vote Shirley wrote
Dear David
Thanks for the email. I had been thinking about a Graduate tax for at least 50 years and very hard since the summer - I produced the spreadsheet this week because I wanted to see what all the promises really meant.
I agree with your comments regarding the time it will take to recoup the money but this would also apply to a graduate tax because much as I think it would be fair to tax all graduates retrospectively - for example you and I would pay an extra 1p in the pound for each year we were at university - I am told this is not practical.
As regards financing the project I assume that the government will issue gilts, which will be purchased by our pension funds and annuity providers so that the interest paid by the graduates will provide for our pensions.
I also agree that we should chase the tax evaders and tighten up the rules to drastically reduce tax avoidance. Unfortunately I don't think this would be of immediate benefit to the taxpayer but only to the greedy accountants and lawyers.
With regard to the cost of administration I assume that this will be handled by the existing Student Loans Company (http://www.slc.co.uk) so that hopefully there will not be a large increase.
So far we have only had one resignation from High Peak Liberal Democrats since the election and in fact we had a new member this week. Most of the net increase of 18 members (20%) in the last year have been under forty and a high proportion are students.
Best Wishes
Shirley