By Jason Theodorou

Business Secretary Vince Cable has said that a graduate tax could be used to shore up funding for English universities, and make for a fairer and better sustained funding system. Students would be able to repay the cost of their tuition via taxation when they begin work, with higher earning graduates paying a higher tax.

Mr. Cable is faced with the task of identifying savings in higher education spending, which currently accounts for half of the 19 billion pound budget of the Department for Business, Innovation and Skills. The Business Secretary must find a way of eliminating a quarter of costs within four years.

Universities say that unless they are allowed to charge students more, through an increase on the £3,225 they are able to charge in tuition fees, standards in teaching will fall. The education sector is already gearing up for mass job losses.

In a speech at London's South Bank University, Mr. Cable said that students would 'certainly have to' pay more, but argued that reform was needed in the way universities were funded, and he would invite a 'repayment mechanism... tied to earnings'.

The Business Secretary has also considered trimming university courses from two years to three years, or adapting university courses so that they could be completed remotely by students still living at home - in a model reminiscient of the Open University.

Aaron Porter, president of the NUS, said: 'Vince Cable's support for the principle of a graduate tax is to be welcomed...He is right to ask why, under the current unpopular and regressive top-up fee system, a care worker or teacher is expected to pay as much as a corporate lawyer or banker'.

'The fair solution is to abolish tuition fees and ensure that graduate contributions are based on actual earnings in the real world, rather than sticker prices in prospectuses, which are based on guesswork'.

Record numbers of people are applying to university, thanks in part to a lack of jobs spurring candidates to re-train as the UK leaves recession.

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