§ Mr. McNamaraTo ask the Secretary of State for Education and Skills if he will publish his costings that underlie his estimate that the administration costs for a graduate tax would be in the region of £1 billion. [96671]
§ Mr. Charles ClarkeThe estimate of up to £1 billion was not for administration costs, but for the additional upfront cash costs of implementing a graduate tax over and above the cost of variable fees and loans, as proposed in the White Paper "The future of higher education". The costs of a graduate tax system are greater for several reasons
The graduate tax would need to support both maintenance and tuition costs, and the upfront costs of non-means tested maintenance grants for all, to be funded by the tax, are considerably more than the cash costs of means-tested loans;Under a graduate tax there is no possible mechanism for early additional repayments. With our existing loans, graduates are making additional repayments to clear their debts faster, and this reduces Government's costs. In addition, some students may choose not to take out a loan, but to pay up-front, which also reduces costs; andThe rate of repayment is slower for a graduate tax than for loans, and so it takes longer for the Government to reach 'break even' point.