Graduate tax still a long-term option, says Chuka Umunna

The Mancunion interviewed Chuka Umunna ahead of the General Election this coming Thursday. Before Parliament dissolved, Mr Umunna was a Labour MP for Streatham and hopes to be re-elected again come Thursday. Umunna studied Law at the University of Manchester and since 2011 has been Shadow Secretary of State for Business, Innovation and Skills. This position covers a wide range of issues including business, enterprise, science, and importantly for the readers of The Mancunion, Higher Education policy. I questioned Mr Umunna on a wide range of issues he would be in control of if the Labour Party were to form a government after May 7th.

Speaking to The Northern Echo back in January, Mr Umunna said, “we will not be able to go straight to a graduate tax—but getting there as soon as possible is my priority.” I therefore opened the interview with the shadow Business Secretary by questioning him on whether he still believed this was the best policy, or whether he was now in favour of university tuition fees being reduced to £6000, as is now the manifesto pledge of The Labour Party. Mr Umunna told me that “in an ideal world we’d have a more progressive system and that’s why, in terms of the principle of the graduate tax, it is something that we are very much still in favour of.”

However he continued by saying, “we don’t want to promise anything that we can’t deliver,” in line with Ed Miliband, who on the last of the television election specials last Thursday, said the Labour Party would rather “under-promise and over-deliver.” Chuka explained that “what we know that we can deliver is a reduction in fees from £9000 to £6000 a year.”

Mr Umunna accepted that “the current system is not sustainable in the long term”; however he continued by saying that “what we believe we can deliver is the tuition fee reduction now” therefore “what we know, we can do for the course of this parliament.”

Chuka was also keen to mention something he believes it is often missed off reports: “We are going to be increasing the maintenance grant from £3400 to £3800, which should benefit around half of students.”

Students would benefit under Labour’s tuition fee plans if they are entering Higher Education from September 2016, or are in the middle of a course at this time.

The policy of lowering fees was criticized back in February by 20 Vice-Chancellors in a letter to The Times, who said that it would create a £10 billion hole in revenues over the next government. In response to these worries, Mr Umunna said “it is a properly funded commitment, and it has been welcomed by various different Vice-Chancellors.”

Staying on the topic of Vice-Chancellors, I then spoke to Mr Umunna on the contentious subject of Vice-Chancellors’ pay. Back in March The Mancunion covered the story that university bosses are earning on average £260000 per year, the top ten earning between £392000 and £623000. The story also highlighted the lack of transparency involved in setting these pay levels. The University of Manchester, as an example, refused to share copies of the minutes of their remuneration committee, tasked with determining the pay of the Vice-Chancellor and senior post holders. Current Business Secretary Vince Cable said such pay levels were “hard to swallow.”

When asked what he thought of these pay levels and whether he believed there should be more transparency Mr Umunna said: “we’ve argued for more transparency in terms of the pay of senior executives in the private sector, because it helps grow levels of trust but also it is healthy to have transparency. I think therefore the same principles should apply to university Vice-Chancellors’ pay and, frankly, if you’re delivering the goods and getting the results for the students in the university, then you have nothing to be afraid of in terms of transparency.”

We then moved away from the topic of Higher Education to address the growing issue of the skills gap and its impact upon the UK’s manufacturing sector. A government report at the end of last year highlighted how many industries are suffering due to an ageing workforce, with a stark example being that 70 per cent of highly skilled nuclear workers are due to retire by 2025. I therefore questioned Mr Umunna on whether tackling this issue was all about encouraging young people to take up vocational training options, or whether he thought to fix the real issue we need to encourage more investment into manufacturing to create the jobs for these students.

“The first thing is, we want to ensure that people are doing the course and gaining the qualifications that employers need; we need to make sure that young people are aware of the opportunities out there and frankly, this government’s massacred careers advice throughout the course of this Parliament, which is why we are going to introduce proper careers advice services for young people, where they will get access to one-to-one careers advice from the age of 11. At the moment there’s a national careers advice service but that provides advice just to adults, we want to make sure that young people get a look in.

“We need to sort out [the fact] that we don’t have enough people coming out of the system with the technical skills that employers tell us they need, which is why we’re guaranteeing young people who get the grades at school an apprenticeship if that’s what they want to do after they have left.”

Mr Umunna hadn’t yet indicated whether his party would also look into encouraging manufacturing investment alongside these plans. He was therefore questioned further.

He responded: “It’s a question of working strategically with the different sectors to grow their industries—so, for example, if you look at the car industry, the problem with that industry is… that we’re very good as assembling cars but we haven’t sufficiently developed the supply chain of the businesses that make the parts.”

He suggested that the only way this can be resolved would be by “working in partnership with the industry to grow and develop the supply chain by making sure people have the skills.”

In their manifesto, Labour have proposed to “ban exploititive zero-hours contracts,” which proposes that anyone working “regular hours for more than 12 weeks will have the right to a regular contract.” I posed the possibility that under this proposal an employer could sack someone on this contract in their eleventh week to prevent them ever getting a regular contract.

Mr Umunna made reference to personal experience to explain why he believed this was an unlikely scenario: “In practice, talking from my own professional experience—I used to be an employment lawyer—employers do not habitually sack employees who in time become entitled to some employment rights.”

He continued by citing research conducted into the zero-hours issue by the former head of Human Resources at Morrisons, saying his findings were that “employers wouldn’t do that—not least because if you’ve got somebody on a regular pattern for 11 weeks, as an employer you have to invest a lot of time and resources in training that employee up and so obviously if you just get rid of them on the twelfth week that money would have been wasted.”

In response to a question as to why zero-hours contracts couldn’t be banned altogether, he said they have completed “a consultation both with employees, trade unions and employers on this issue, and the consensus was not to abolish them altogether, because while they are used to exploit [some] people, there are some students that are often cited, for whom that arrangement can be acceptable and works OK for them.

“There are some employees who actually quite like the arrangement, and obviously that’s only where they are not being exploited under them and they’re not carrying all the risk, so they’re not, for example, having shifts cancelled at the last minute—that’s what we will have to stop.”

I then inquired whether, alongside the attention on zero-hours contracts, short-hour contracts would also be given attention. For example, this interviewer cited experience of many friends who work on four-hour contracts, when in fact they regularly work over 40.

Mr Umunna said that it should be the case that, “if they’ve got an employment contract that is four hours, under the law, if they have been working forty hours a week regularly for a long time, it would be quite straightforward for them to argue that their contract had been changed. It is less easy to do that if you are on a zero-hours contract”.

However he continued by accepting that “there’s no denying it that in some senses, trying to ensure fairness in a workplace when there are employers who will insist on trying to get over the rules that are put in place to ensure fairness, is a bit like running up a down escalator, and we’re always happy to think and review the situation to make sure we’ve got the right balance. If we see further abuses then obviously we’ll take action.” He added, “the reason that zero-hours [contracts] became such an issue is because actually we changed the rules around agency workers, so that if you had been working after 12 weeks as an agency worker you would get similar rights to those doing exactly the same job but who had a permanent position in your workplace. It was partly in response to us stopping this kind of abuse, of the agency situation, that there was a growth in zero-hours contracts.”

As many young people are unaware of the current employment laws that he had referenced and what they are entitled to as employees, I put to Mr Umunna whether better communication was needed for all employees of their employment rights. He responded, “one of our proposals is to make sure that if someone is put on a zero-hours contract they are told that they are on a zero-hours contract. A lot of people don’t actually realise that they’re on them.”

Mr Umunna had opened the interview by apologizing for the fact that another rapidly approaching engagement meant that our interview had to be limited to seven or eight minutes. I therefore knew we were on sticky ground when, as we approached 13 minutes, we tried to ask him about how to best tackle the BME attainment gap at university level. I was keen to explore this, as earlier last month Mr Umunna told the London Evening Standard that he wanted to see 1 in 7 company directors coming from black or minority ethnic backgrounds.

Unfortunately, time had beaten us and he quickly commented on an important issue that “If you’re a black or minority ethnic young person you’re much more likely to be unemployed. We’ve got to make sure before we can even look at pay that we’ve sorted out the unemployment issue around different diverse communities and then of course we’ve got to look to close the pay gap too.”