One per cent tax would pay for all

The funding of higher education is firmly back on the agenda. This time it includes the issue of full-time students contributing to their tuition fees. The outcry has been enormous.

There is a very real funding crisis for institutions, staff and students. A worst-case estimate is Pounds 5.8 billion short by the millennium. The reality is that we are receiving 40 per cent less per student this year in real terms than we were in 1989, and that was after a decade of cuts.

There are a significant number of universities and colleges which are in serious financial trouble, and some of which, by commercial definitions, might well be bankrupt already, with many more to follow.

There can be no doubt that the quality of the full-time student experience is being degraded. Many students are now in paid term-time employment simply to try to limit the size of their debts. Universities and colleges have had to pass on many of the direct costs of courses. For example, field trips, visits, photocopying, materials for projects and new technology are often now having to be provided by students. This can be as much as Pounds 1,000 each.

The risk of the loss of the national and international reputation of higher education in the United Kingdom is severe. To run down higher education makes no social, political or economic sense, and threatens social cohesion.

There are three potential sources of funding: the state, employers, students and their sponsors. The outcry starts with students' contribution. Nearly 40 per cent of students already pay their own fees because they are part-time, and a considerable proportion of full-time students pay their own fees as overseas students, or full-time postgraduates.

A significant proportion of full-time students have had their private school fees paid for them by their parents yet when they benefit from higher education (the immediate object of a private school education) they make no contribution.

If this sizeable group alone were to pay full fees (using the tax efficient mechanisms they have to support private school fees), then this would raise sufficient funds for worthwhile and appropriate scholarships to support state-educated students.

This is unlikely to happen in the short term. Therefore we have to address the issue of financial contributions from students and their sponsors. A great head of steam has built up around the income-contingent loan scheme but I am wholly opposed to it and the recent experience from Australia suggests that we ought to be cautious.

While graduates recognise that they would contribute to future funding this should be done in such a way as to avoid an individuated loan. If, for example, 1 per cent were added to national insurance for all graduates (including existing ones) and their employers, and everyone who is a graduate paid an extra 1 per cent, as did their employer, throughout their working lives, this would more than meet the needs for the funding of higher education, and avoid students having individual debts. It would also pose few collection problems.

This proposal has the major advantages of being simple, easy to operate, applicable to all regardless of their mode of attendance, affordable, and encouraging of wider participation in higher education. Its one disadvantage is that politically it is probably not deliverable.

It is worth while remembering in this election year that the future of higher education in the UK is primarily a political issue rather than a social, cultural or economic one.

Mike Fitzgerald is vice chancellor of Thames Valley University.