When Gordon Brown announced that the short-lived Department for Innovation, Universities and Skills was to be merged into Lord Mandelson’s new Business, Innovation and Skills ‘super ministry’, others expressed concerns that I would normally be inclined to share – that the move sends a reductively utilitarian message about the role of tertiary education. Instead, I found myself rather lonesome in the sector by supporting this approach.

This summer, the first generation of students liable for so-called ‘top-up’ tuition fees, of just over £3,000 per year, will be graduating with record levels of debt into the worst graduate jobs market since the expansion of higher education. Members of the National Union of Students are acutely worried about their employment prospects in the recession, so it is right that the government should turn its full attention to our economic recovery.

Many who have attended NUS conferences in the past may be surprised by our pragmatic and hard-headed approach, but this is not a one off. Later this year, the government will begin its review of student tuition fees in England. It is crucial for all concerned that the Labour party gets this issue right.

I am not ideologically opposed to markets and believe they have their place, especially when they deliver efficiency and real benefits to the consumer through competition. But I believe a real market in university fees, which has yet to emerge while fees remain capped at just over £3,000, will produce a whole range of unintended consequences detrimental to the pursuit of social justice.

In September 2008, we published a critique of the variable fees model, which examined what might happen if the fees cap were increased to £7,000 (a modest target for some vice-chancellors). In short, we concluded that the richest institutions benefit most from poor performance in widening participation to under-represented groups; that the ‘diversity’ that would emerge would act to reinforce existing social inequality in both opportunity and outcome; and that the system fails to ensure that those who enjoy the greatest financial benefit from higher education contribute their fair share.

In a radical departure from our history of simple opposition, we have published alternative proposals that will ensure that graduates contribute a fair share; that universities are funded on an equitable and sustainable basis; and – crucially – ensure that universities receive the additional investment they need to provide a first-class student experience and compete on the international stage.

This would not be a simple ‘graduate tax’. Our model would establish a new ‘People’s Trust for Higher Education’, governed by an independent board, to which graduates would make a contribution over a fixed period of 20 years. Under our system, the notion of tuition ‘fees’ and existing upfront fees for part-time students would be abolished. Instead, graduates would make a monthly payment for 20 years that is linked to their earnings and how much undergraduate education they’ve undertaken. The actual proportion of earnings sought in contributions would be variable and progressive, ranging from 0.3% of earnings from the lowest quintile to 2.5% for the top quintile. The revenue generated would be equivalent to the doubling of the existing cap on fees, without the negative consequences of the market.

Our proposals are also designed to provide far more flexibility and support for lifelong learning and a major boost of employer funding and support, by eliminating the barriers that exist for part-time study and creating a voluntary employer contribution scheme, with tax incentives. It would create greater choice for students about what to study and where, by removing the market in price. It would create greater choice in graduate destinations, by removing the pressure to pay off a ‘debt’.

No system is perfect, and we don’t claim that our proposals can solve every problem. But it is a demonstration that alternatives exist, a sign of a student movement willing to engage in a real debate and a recommendation to Lord Mandelson that the NUS deserves a place at the heart of the forthcoming review.