ymu
Niall Ferguson's deep-cover sock-puppet
Of course they should.
So, the employers must pay. How can we implement this?
It's very hard to get an average, but HEFCE figures suggest that it costs about £7,300/year to educate the average student. Let's call it £25k per student before living costs.
They can't live on thin air, so let's add £5k/year for living expenses.
£40k. Let's call it £1k/year over a 40 year career. Some careers will be longer than this, but some degrees take more than three years and some graduates do more than one degree (only the first one is paid for by this system or the systems the politicians are arguing about). And it keeps the numbers easy for a back-of-the-envelope look at the figures.
I'm not going to worry about interest because this year's employer contributions will pay for this year's students, just as this year's NI pays for this year's pensions.
So the employers need to pay around an extra £1k per year in employer's NI contributions for graduate employees. The mean graduate salary is currently around £32k. So that's an extra 3% on employers' NI (from 12.8% to 15.8%). University overheads are up to 46%, so let's use this figure to guesstimate that it would increase the total cost of employing a graduate by 2% [=3/(100+46)].
This would have the effect of depressing graduate wages, so the graduates themselves would pay a part of these costs. They earn an average of about £100k (after tax) more than non-graduates over a lifetime, or about £2500/year. They'd lose about £20k of this if the costs of the extra NI ended up split 50/50 between them and the employer.
There would have to be no exception for graduates who trained abroad. Whilst this might seem unjust, creating a perverse incentive to recruit from overseas would not be a good idea. Consider it a penalty payment for not being willing to train up UK workers if no UK worker with the right skills can be found.
Employers who pay for an employee to do a degree would not be liable for the additional 3% NI contribution. It would not only be highly unjust if they did have to, it would make little sense for them to offer the chance to existing employees rather than recruiting a ready-trained one. Doing a degree part-time whilst working for an employer who needs you to have that degree is far, far more worthwhile than university as an extension of school.
This means the public sector would not pay the additional 3%. The employer has already paid for the training. There is no benefit in making public sector organisations look more expensive than they really are (by increasing their budgets to pay the extra 3%), or in making it more expensive for charitable organisations to sponsor public sector research.
Commercial organisations funding research or sponsoring employees in the public sector would have to pay the additional 3% in the grant, and the public sector employer would pass it on. Charities would have to pay it if they could not prove that the research was approved by an independent body and that the researchers were contractually independent (similar to measures taken by medical journals to prevent industry research being presented as academic research). No loop-holes, please!
This does mean that graduates in the public sector do not contribute because their wages do not get affected. But they earn less than those in equivalent roles in the private sector, so this seems fair. Consider it a small contribution to reversing the brain-drain to the private sector. They would only get off completely free if they spent their entire careers in the public sector.
Making it more worthwhile for employers to offer employees the chance to do degrees would be a massive bonus for people who are not in a position to go straight to university from school, and for those who did not thrive at school but do in the workplace (noone cares about school exam results for mature students). It would also likely have a positive effect on productivity. Promoting from within is generally a much better strategy than recruiting from outside.
Whilst no system can be perfectly fair, this would create a balance in contributions from graduates, employers and the taxpayers who benefit from an economy that needs a well-educated workforce. It has massive social benefits in terms of widening access to higher education, because every student would be able to have a grant of £5k to live on and pay no fees, and because workers would be able to access more opportunities by incentivising employers to fund them.
It would also disincentivise employers from employing graduates where no degree is necessary. This would be a good thing. Degrees are fetishised to a ridiculous extent. They do not mean very much, and should not be valued above non-academic training which can also take years to complete. We need skilled manual workers if we are to redevelop the manufacturing industry we so sorely need, and we do not need graduates working in call-centres (unless they are of a specialist technical nature, of course).
There would be no reason not to extend the same system of funding to non-HE training. It is currently very difficult to access proper training opportunities in this country. Incentivising employers to train their own employees, and penalising them if they do not, would be a Very Good Thing.
Thoughts?
So, the employers must pay. How can we implement this?
It's very hard to get an average, but HEFCE figures suggest that it costs about £7,300/year to educate the average student. Let's call it £25k per student before living costs.
They can't live on thin air, so let's add £5k/year for living expenses.
£40k. Let's call it £1k/year over a 40 year career. Some careers will be longer than this, but some degrees take more than three years and some graduates do more than one degree (only the first one is paid for by this system or the systems the politicians are arguing about). And it keeps the numbers easy for a back-of-the-envelope look at the figures.
I'm not going to worry about interest because this year's employer contributions will pay for this year's students, just as this year's NI pays for this year's pensions.
So the employers need to pay around an extra £1k per year in employer's NI contributions for graduate employees. The mean graduate salary is currently around £32k. So that's an extra 3% on employers' NI (from 12.8% to 15.8%). University overheads are up to 46%, so let's use this figure to guesstimate that it would increase the total cost of employing a graduate by 2% [=3/(100+46)].
This would have the effect of depressing graduate wages, so the graduates themselves would pay a part of these costs. They earn an average of about £100k (after tax) more than non-graduates over a lifetime, or about £2500/year. They'd lose about £20k of this if the costs of the extra NI ended up split 50/50 between them and the employer.
There would have to be no exception for graduates who trained abroad. Whilst this might seem unjust, creating a perverse incentive to recruit from overseas would not be a good idea. Consider it a penalty payment for not being willing to train up UK workers if no UK worker with the right skills can be found.
Employers who pay for an employee to do a degree would not be liable for the additional 3% NI contribution. It would not only be highly unjust if they did have to, it would make little sense for them to offer the chance to existing employees rather than recruiting a ready-trained one. Doing a degree part-time whilst working for an employer who needs you to have that degree is far, far more worthwhile than university as an extension of school.
This means the public sector would not pay the additional 3%. The employer has already paid for the training. There is no benefit in making public sector organisations look more expensive than they really are (by increasing their budgets to pay the extra 3%), or in making it more expensive for charitable organisations to sponsor public sector research.
Commercial organisations funding research or sponsoring employees in the public sector would have to pay the additional 3% in the grant, and the public sector employer would pass it on. Charities would have to pay it if they could not prove that the research was approved by an independent body and that the researchers were contractually independent (similar to measures taken by medical journals to prevent industry research being presented as academic research). No loop-holes, please!
This does mean that graduates in the public sector do not contribute because their wages do not get affected. But they earn less than those in equivalent roles in the private sector, so this seems fair. Consider it a small contribution to reversing the brain-drain to the private sector. They would only get off completely free if they spent their entire careers in the public sector.
Making it more worthwhile for employers to offer employees the chance to do degrees would be a massive bonus for people who are not in a position to go straight to university from school, and for those who did not thrive at school but do in the workplace (noone cares about school exam results for mature students). It would also likely have a positive effect on productivity. Promoting from within is generally a much better strategy than recruiting from outside.
Whilst no system can be perfectly fair, this would create a balance in contributions from graduates, employers and the taxpayers who benefit from an economy that needs a well-educated workforce. It has massive social benefits in terms of widening access to higher education, because every student would be able to have a grant of £5k to live on and pay no fees, and because workers would be able to access more opportunities by incentivising employers to fund them.
It would also disincentivise employers from employing graduates where no degree is necessary. This would be a good thing. Degrees are fetishised to a ridiculous extent. They do not mean very much, and should not be valued above non-academic training which can also take years to complete. We need skilled manual workers if we are to redevelop the manufacturing industry we so sorely need, and we do not need graduates working in call-centres (unless they are of a specialist technical nature, of course).
There would be no reason not to extend the same system of funding to non-HE training. It is currently very difficult to access proper training opportunities in this country. Incentivising employers to train their own employees, and penalising them if they do not, would be a Very Good Thing.
Thoughts?
