Taxed by graduates

Employers' leaders this week warned against increasing participation in higher education - and said the number of undergraduates may need to be cut.

An Institute of Directors report argues that society may gain less from graduates than currently thought, and warns that the higher taxes which would be needed to fund universities could damage the economy. Relatively high graduate wages may not reflect increased productivity, the report says.

The Dearing review called for a massive increase in higher education participation rates.

IOD policy director Ruth Lea said: "I am concerned that the sort of further expansion the Dearing report has in mind can only result in a further dilution of quality. Some consideration should be given to reducing the number of graduates and improving their quality."

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