'Student Finance 2012 changes – it's time to tackle the ignorance' blog discussion

2sides2everystory

We allow ourselves to be fooled by talk of the other half and how they live. Then fooled again when we allow the government to divide us by halves.

I am sure we agree james that it is worthy cause for a country like ours to over time raise the net worth of all our citizens. Education for all who want it is surely part of how we do it. Those that want it can turn up and use it. Those that don't want it still contribute. Maybe they benefit in other ways. A proportion of those not aspiring to a university education are probably daft enough to over-eat and smoke cigarettes. The fact is that a big society should work by being contracted to a broad common purpose, not by inviting people to pay as you go and port out with any golden numbers they find by sifting through the stock.

Another part of how we do it is to stop ourselves from being fooled by Messrs Grabbit & Run into believeing that they are essential entrepreneurs who are creating employment and wealth for all. They are not. They are sequestering wealth for themselves.

Our tax system should harness them so they cannot run away like cheeky kids wobbling the slot machines at the Amusements who just got lucky - we've all heard the rattles and upsets from those larks.

These people see themselves as above government. There should be no home for them in the UK unless they are prepared to pay much more tax. Look what happened when bonus rules were tightened ... they just grossed up the salaries, and created a cash market for the trading of bankers share options so that the 'net take now' was the same.

There is too broad a spread of wealth in the UK and this Student Finance Scheme just makes the divide even greater. The difference between low incomes and high incomes should perhaps long ago have been seen to be controlled, by higher income tax and taxes on the things rich people buy and that their employers provide - e.g. luxury cars, favoured class air travel, second-homes, pension schemes funded way above normal.

At the moment we've got the exact opposite being practised.

James, statistics can be used to show anything you want. I am sure you know it. You also know that what counts is what is felt by real people and experienced by them. Now unless you wish to label gizzie and I "losers" then there must be something wrong with the statistical arguments because they don't fit what we've seen.

I agree that the incidences of abject poverty have been largely eliminated over time but they were never the right place to begin any measurement were they? In the 1970s North Sea energy came on tap, and the worst anomalies should have been totally eliminated then. Discussion of "low incomes", "those on free school dinners", "the poorest in our society" are all loaded phrases, aren't they?

What we see is what counts, and I see a mess and wealth we could use for university education being skimmed off whilst the government aren't looking.

Lokolo

2sides2everystory wrote: »

I am sure we agree james that it is worthy cause for a country like ours to over time raise the net worth of all our citizens. Education for all who want it is surely part of how we do it. Those that want it can turn up and use it. Those that don't want it still contribute. Maybe they benefit in other ways. A proportion of those not aspiring to a university education are probably daft enough to over-eat and smoke cigarettes. The fact is that a big society should work by being contracted to a broad common purpose, not by inviting people to pay as you go and port out with any golden numbers they find by sifting through the stock.

Brilliant generalisation....

My brother doesn't smoke, do drunks, yes he goes out to party, just as anyone his age does. Has he gone to university? No. Is it because he doesn't have aspirations? No, he just isn't smart enough. He is not the only I know that is the same situation.

And the same as vice versa, some that do go to university don't pay anything back, claim off JSA for years and years etc. I know a couple of these people.

Why should those that do not go to university, continue to support those that do? They shouldn't.

jamesd

2sides2everystory, what part of the total income tax bill do you think should be paid by say the top 1% of taxable income earners? What about the top 10%?

By that I mean that if total income taxes take was 100, how much of that 100 should be paid by the top 1% and top 10%?

Should it be the top 1% paying 1% of all income tax? 10% of it? 50%? What do you think would be fair?

What is your income definition for Messrs Grabbit & Run? Would you call them the top 20% of income tax payers? The top 1%? The top 0.1%? Something else? What part of the income tax bill do you think that they should pay?

If we define losers by not repaying loans under the new system I'd also be a loser under the English rules. So many years at low incomes that I wouldn't repay more than a fairly small part of the loan. That's a cost that the lower earners still continue to pay: they will still provide part of the protection for graduates who don't end up making more than the average person, greatly reducing risk compared to normal credit deals.

For the new system I'd be a loser financially but those who know what I've done with my life probably wouldn't consider it to be a loss overall, given the value that I've helped to add to society and to my life. I suspect that the same may be true for you and gizzie.

mel12

Ok, so a question-

will the £21K threshold for paying the loan back increase in line with inflation?

If not, in 10 years time (or whenever depending on the inflation rate but you get the idea) when 21K is below minimum wage these debt repayments are going to start causing people huge problems, even if they look affordable at the moment. That would be really worrying me if I was thinking about university now.

2sides2everystory

jamesd wrote: »

For the new system I'd be a loser financially but those who know what I've done with my life probably wouldn't consider it to be a loss overall, given the value that I've helped to add to society and to my life. I suspect that the same may be true for you and gizzie.

Exactly. So you have to create losers to get the best out of society? I think not. You need Messrs Grabbit & Run to be a hare for losers to chase or the country goes to the dogs? I think not.

As for income tax proportions, I am not sure what you want me to say. I don't know the proportions right now, but I have already alluded to the fact that in casino banks it doesn't matter much because whatever the tax level, the income is grossed up to match any new tax initiative intended to curb excess. That's why I said tax excess in other ways. Thanks to your useful links in post #41 I can see that our Gini coefficient (inequality in the spread of household incomes between the richest and poorest) in the UK is far too high. Interestingly it is perhaps up there with the measurements presented by countries with a historical level of organised crime and/or corruption and/or tax evasion and/or black economy and/or are failed economies. I wonder where England sits versus Scotland in the same table. It will be perhaps be of no surprise to learn that the other European country I mentioned where free university education is still seen as a basic right has for years been well down in the bottom section of the chart (I won't say bottom half since this talk of halves which is how that particular paper starts I do not find useful).

You ask then how we define Grabbit & Run by income - that is a bit like asking what mass of tissue we have to get rid of we excise a cancer to get ourselves into remission. Surely when cutting we should be aiming at what we know is harmful to good surrounding tissue and what we know has been harmful to the body as a whole. There would be some collateral damage up there that's for sure, with some hard-workers who thought they were earning themselves a nice lifestyle by keeping their heads down and serving their time under Grabbit & Run finding themselves targeted by our treatment. Income tax is not specific enough. Banker tax perhaps? You are getting warmer.

And Lokolo, apply your counter to my generalisation in say Afghanistan where there are still lots of women who for various reasons do not wish to be educated at all. Would it be best for Afghanistan to let the old ways and their view persist and for just the few women with stamina to find their own way to the top of the heap? Of course not. So the old ways of government have been put aside and women have been positively encouraged to exercise a new right to a free education for the good of all. It can't be right that we are now discouraging a sector of our own society from the same thing based on a different kind of bigotry.

I should perhaps have used your words "not smart enough" in preference to my loose words "daft enough" but education education education is not wrong and lopping off the freedom of opportunity to obtain one or both of the last two has never been right.

Education creates the environment in which we all live and earn our living and pay our taxes. Less education means more inefficiency, more poverty, less frequent contentedness. More education yields the general uplift in living standards we would like to see in our country.

And mel, the answer to your question as I understood it from the mouth of Vince Cable a couple of months ago was No it doesn't increase. It remains £21,000. So I share your fear.

jamesd

mel12, "The repayment threshold will be reviewed regularly and increased in line with average earnings. As the threshold has not been increased since 2005, there will be a one-off increase at the start of our new system from £15,000 to £21,000", Browne Report, page 40.

2sides2everystory, I didn't suggest that the individuals were losers, but that they were people who were losers for the loan repayment system because they wouldn't repay fully. As individuals if they have been doing what they want with life that would make them winners: getting the education without paying for it. So all tax payers will end up subsidising their education to some extent.

The top 1% of tax payers pay about 24% of all income tax. The top 7.9% pay 50% of all income tax. Would you call those Messrs Grabbit & Run when they are paying half of the income tax? Maybe they need to run faster...

HMRC publishes statistics on who's paying how much tax in their Survey of Personal Income Bulletins. For 2007-8, before the 50% tax rate was introduced, here are some of the interesting numbers:

7% of all income tax is paid by the top earning 0.07% of tax payers. Just 11,000 out of 14.9 million tax payers are paying 7% of the total income tax take. These are the people with incomes of a million Pounds and up.

24% of all income tax is paid by those making £150,000 or more, including those over a million. That's 0.98% of tax payers, 319,000 people.

31% is paid by those on over £100,000 including those above. That's the highest earning 2% of tax payers. 39% is paid by those earning £70,000 or more; the highest earning 3.9%. 50% is paid by those earning £50,000 or more; the highest earning 7.9%.

There's also a table by percentage of total tax paying population. That shows that the bottom half of all tax payers were on £18,500 or less in 2007-8.

The reason I mention this is to give context to just how high earning graduates will have to be compared to tax payers in general before they have to do any loan repaying, though I'm also addressing your reference to Messrs Grabbit & Run.

2sides2everystory

jamesd wrote: »

... The top 1% of tax payers pay about 24% of all income tax. The top 7.9% pay 50% of all income tax.

I am not surprised. As I was perhaps trying to say, liability to income tax is not necessarily the whole solution to equivalising net incomes.

Would you call those Messrs Grabbit & Run when they are paying half of the income tax? ...

Neither is it a good way to define Messrs Grabbit & Run.

G'd on by your earlier reminder of the Gini coefficient, I've been looking at another set of reports from the United Nations Development Programme which I find fascinating although so far I have yet to draw any conclusions for this thread:
http://hdr.undp.org/en/reports/global/hdr2010/chapters/en/

There's a lot in there about poverty, education, inequality and tax however.

You seem to have a handle on this stuff james, is there anything in that lot that strikes you as an argument for or against an increased tax burden on a important section of our society either instead of or in the guise of this latest initiative to put time and distance between current education budgets and re-distribution of the actual cost in rather republican-minded, over-complicated and perhaps not very useful ways?

I was struck by some of the stats in the tables near the end which can be viewed separately here, or via the Google Public Data Explorer here.

gizzie121

My husband agrees with students paying for their courses. I think he is influenced by the fact that I studied at Uni for 4 years and never used my degree. He didn't study at uni and now runs a successful business. However, one thing we all seem to agree on, whenever we get into this discussion with friends, is that there should be free degrees for areas of skills shortage in this country to make sure we're training for what we need. After that, everybody pays their own way. HOWEVER, I personally disagree with this idea that people on lower incomes shouldn't have to pay tax for others to go to university; because everybody benefits from having teachers and doctors, nurses and engineers. So the idea that only the recipient of the education should pay, rather than the recipients of the service they then provide, seems counter productive to me.

The aim should be a well educated nation. Surely, everybody in the country benefits from that, and therefore, it should come out of general taxation.

But this doesn't answer the question of the value and worth of a university education today. I'm less and less convinced, given the appalling standards we read about in the media.

DavidLuckhurst

The BIG QUESTION that you should be asking yourself is this: Will the Government actually be able to leave the student loan scheme alone for 25 years. OF COURSE NOT!!! Think hard, students and parents - what are you getting yourselves into???

Oldernotwiser

DavidLuckhurst wrote: »

The BIG QUESTION that you should be asking yourself is this: Will the Government actually be able to leave the student loan scheme alone for 25 years. OF COURSE NOT!!! Think hard, students and parents - what are you getting yourselves into???

There have been several changes since loans were introduced but none of them has been retrospective. There's no reason to think that this shouldn't continue to be the case, particularly considering the outcry there would be from graduates (many of whom will be in influential positions in the future) if repayment conditions were worsened for existing borrowers.

(By the way, parents aren't getting themselves in to anything.)