Graduate tax 'will benefit university dropouts'

The Institute of Directors warned that the introduction of a tax on graduates’ future earnings would punish those who worked the hardest and secured the best jobs.

In a report, it said a tax – one of a series of options being considered as part of a major review of student finance – could also lead to a “brain drain” as Britain’s most successful graduates are driven overseas.

The conclusions came as the Liberal Democrats passed a motion at their annual conference in Liverpool calling on party leaders to build cross-party consensus for a “graduate tax system” to replace tuition fees.