Business can save public universities, say education campaigners

By staff writers
December 10, 2010

Opponents of the government's huge higher education cuts and fee hikes say a broader, alternative focus on the future of public universities and sustainable funding regimes is needed.

As the coalition claims that there is 'no alternative' to the policies it pushed through parliament on 9 December, which critics say threaten the very fabric of tertiary education, attention is returning to a report released earlier this year by the University and College Union (UCU), which suggests that businesses - major beneficiaries of university education - can and should help resolve the higher education funding crisis.

In Place of Fees: Time for a Business Education Tax, published jointly by UCU and Labour pressure group Compass, has been welcomed by Tax Research UK, by the Green Party, and by the thinktank Ekklesia, among others.

It recommends adjusting the level of UK corporation tax to the G7 countries' average in order to raise sufficient funds to abolish university tuition fees and maintain block grants, levelling England with practices in Scotland and Wales.

The report, first published in March 2010, says that the move would still leave the UK's main corporation tax below that of France, Japan and the United States, and that 96 per cent of companies in the UK would be unaffected by the change.

UCU has argued that its plans for a Business Education Tax (BET) are a coherent attempt at enabling business to make a fair contribution in exchange for the numerous benefits it accrues through higher education institutions in the United Kingdom.

Since the landmark Dearing Report in 1997 - which cited the importance of universities to individuals, communities, culture and enterprise - the employers' direct contribution has been very small, while top up fees have been introduced and public investment has continued. But now that £2.9 billion of the £3.6 billion university block grant has been removed and students are threatened with doubled or trebled tuition fee increases of up to £9,000 a year, it is vital that this inequality is addressed, say reformers.

Research published by the university think-tank million+ and London Economics suggests that the majority of students (60-65 per cent) will be worse-off under the government's current plans, pushed through yesterday by Business Secretary Vince Cable. It says that social mobility, equal access and participation will also be adversely affected.

Speaking to Channel 4 TV News yesterday, Professor Nicola Miller, head of the history department at University College London, one of the highest ranked universities in the world, stressed that a mixed economy for supporting higher education is vital.

But she warned that the policy adopted by the coalition government would destabilise sustainable funding regimes, because the removal of the block grant and reliance on ever higher fees makes the sector hugely over-reliant on variable market forces.

Professor Miller said that she and colleagues would be forced to look at teaching reductions which would hit quality and access.

Conservative MP Damian Hinds, who is on the Education Select Committee, a staunch backer of the coalition policy, said that he “didn’t really understand” the points Professor Miller was making.

Meanwhile, the UCU report points out 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.

Proponents of a Business Education Tax say it is "a radical and pragmatic response" to a pressing problem for the UK, citing Conservative Mayor of London Boris Johnson's 2p in the pound tax on central London businesses to fund the Crossrail project as evidence of an emerging consensus that business must pay its fair share for public services from which it benefits.

Graduates generally enjoy higher productivity than other workers which is beneficial to the company, says the report. On average, the Times Top 100 graduate employers will employ 138 graduates each in 2010. UCU argues that companies like these are benefiting from the plentiful supply of graduates without paying towards them.

The union says its plans would favour tax breaks on the BET for companies who fund their employees to learn new skills, thus creating a virtuous cycle of positive practice.

UCU general secretary, Sally Hunt, commented when the report was first released: "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 are asking that the UK increases corporation tax to the G7 average, which would still leave it lower than the rate when the Conservative Party was last in power. 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."

The director of Tax Research UK, Richard Murphy, said: "This tax pays for the investment we need if the future of British business is to be secured. The tax, paid in effect by the current owners of UK plc, ensures that the next generation will have both the skills needed to replace our current work force and sufficient resources to buy the shares from them that they own so that those current owners can have the pensions they'll need in their old age. As such the tax is an essential part of redressing the current crisis in inter-generational relationships in the UK where the young are continually losing out to an older generation."

Symon Hill, co-director of the beliefs and values thinktank Ekklesia, who has worked with student groups for a number of years, said: “What the government is presently doing is not just increasing fees beyond the reach of many ordinary people but eliminating a whole tranche of funding which imperils the very future of public universities in Britain."

“A commercialised, technocratic, and elitist tertiary education system that sidelines arts and humanities and pushes sciences and technology into an marketised cul-de-sac would destroy the university as a place of free learning, creativity and alternative perspectives,” Mr Hill added.

Ekklesia argues that BET, adjustments to general taxation and spending priorities, an increased bank levy and a micro-tax on financial transactions are amongst the mechanisms that need to be re-examined in order to make higher education and public services sustainable - rather than "sleep-walking into the damaging and wrong idea that Britain can no longer afford truly public universities."

Compass has today (10 December 2010) published a letter in the Guardian newspaper which seeks to bring together those opposed to the marketisation and commercialisation of universities and "the final transformation of our education system from a public into a private good."

The full report, In Place of Fees: Time for a Business Education Tax, can be read and downloaded here (*.PDF Adobe Acrobat document):


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