Could a business education tax mean an end to tuition fees?

Sally Hunt is the general secretary of the University and College Union

The challenge of who pays for higher education was clearly laid out in a landmark report from Lord Dearing back in 1997. He said the main beneficiaries of a university education had to pay their fair share. Since 1997 students have been hit with university tuition fees, followed by top-up fees and there has been continued state support.

What we have not seen is any real contribution from the third beneficiary identified by Lord Dearing – the employer.

The UCU report released today, “In place of fees: time for a Business Education Tax“, recommends raising the level of corporation tax in the UK to the G7 countries’ average. This simple ‘business education tax’ would raise enough money to abolish all university tuition fees and would still leave our rate of corporation tax lower that of France, Japan and the United States.

It would also leave corporation tax at a lower rate than when the Tories were last in power. Crucially, it would only hit the really big boys – those earning more than £1.5 million a year in profits – leaving 96 per cent of companies in the UK unaffected by the change.

The simple fact is that despite benefiting from more generous business tax arrangements than other countries, UK employers spend less on employee training and development and invest less than the global average in supporting university research and development.

Without being forced to contribute business would continue to carp from the sidelines about standards and curriculum, but refuse to put its hand in its pockets. Our proposals are not going to give students a free ride. The investment still required from students will be a considerable one to meet the cost of rent, food, bills, books etc.

Our proposals are part of an emerging consensus that business must pay its fair share. We have seen the hugely popular Robin Hood Tax, the backlash against bankers’ bonuses and a special tax from Tory Mayor of London, Boris Johnson.

Johnson’s 2p in the pound tax on central London businesses has been introduced specifically to fund a project that the businesses will benefit from. The difference between Boris’s tax and our tax is that one in five businesses will be hit by his tax; just one in 25 will be hit by ours.

Employers also need to stop seeing investing in education or training as some kind of unnecessary evil.  A study in 2006 found that three-quarters of the gain from staff training goes to the employer, with the other quarter going to the staff member.

• Graduates generally enjoy higher productivity than other workers which is beneficial to the company.

• UK employers spent just 1.3% of total labour costs on training, whereas the EU average is 1.6%. France spends 2.3%; Holland 2% and Sweden 2.1%. We already spend less on training for the individual employee.

• UK employers spent €1,068 per training participant compared to the EU average of €1,385. Germany spends €1,637 and France €1,898. UK employees average 7 hours training per year; compared to nearly 14 in France. And a third (33%) of UK companies hadn’t delivered any formal training to their staff in last twelve months.

• On average, the Times Top 100 graduate employers will employ 138 graduates each in 2010. Our plans would favour tax breaks on our business education tax for companies who fund their employees to learn new skills, thus creating a virtuous cycle of positive practice.

Our proposals are based on fairness. The future for the UK is as a high-skilled knowledge economy and that requires business to pay its fair share towards something which benefits us all.

We believe our proposals will be welcomed by hardworking families who want their children to benefit from education, but are put off by the potential debts created by university fees.