Graduate tax 'could cause mass exodus abroad'

If the government were to introduce a "graduate tax", it could lead to a mass exodus of UK students going abroad, it has been suggested.

According to Richard Lambert, director general of the Confederation of British Industry (CBI), the tax would also give universities less incentive to improve quality - breaking the link between the student and institution.

Under the tax plans, graduates would not take out loans to pay tuition fees, but instead, pay premiums based on their earnings once they start working.

The idea was first mooted by business secretary Vince Cable earlier this year. He asked for the plan to be considered when Lord Browne conducted an independent review into student funding.

"We think that a graduate tax would fall short of most of those benchmarks," Mr Lambert said.

"The risks are that it would break the link between the student and their chosen university, and distance graduate contributions from the education they receive. That would weaken the incentives for universities to sharpen up their act."

The CBI aims to create and sustain conditions in which UK businesses can compete and prosper.

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