FINANCING HIGHER EDUCATION IN ENGLAND: THE FISCAL

Government and public finances From the perspective of the government and the public finances, the amount paid to educate and support UK students at English universities consists of direct teaching grants and the disbursement of student tuition fee and maintenance loans through the SLC net of any repayments. [...] The amount of money that would be raised by the all-age graduate tax depends on the size of the liable population, their incomes, the rate of tax and the threshold chosen. [...] The reasons for the lower amount raised from an all-age graduate tax set at 2.5% in the longer term are: first, that the rate at which the tax is levied (2.5%) is lower than the rate at which student loans are repaid (9%); second, that the population that the tax is levied on is smaller because it is restricted to people working in England who attended English universities and excludes the income. [...] Current Plan-2 student loans As the figures for 2018 in Table 6 show , the current system results in an expected cost to the general taxpayer in the region of £7-8 billion per year.18 This is the difference between government outlays in teaching grants and loans for fees and maintenance of around £15 billion and the present value of expected future loan repayments of around £8 billion. [...] So, it would take a rise in the basic rate of 1½p in the pound or a rise in the higher rate of 5p in the pound to cover the cost of the Labour Party’s proposals.