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In place of fees: time for a Business Education Tax?

4 March 2010

A 2010 report by UCU proposes raising the level of corporation tax in the UK to the G7 countries' average to raise enough money to abolish all university tuition fees.

The union says the move would still leave the UK's main corporation tax below that of France, Japan and the United States, and that 96% of companies in the UK would be unaffected by the change.

UCU says plans for a Business Education Tax (BET) are the first coherent attempt at making business pay its way for the numerous benefits it gets from UK higher education.

In place of fees: time for a Business Education Tax? UCU/Compass, Mar 10 [126kb]

FOREWORD by Sally Hunt
UCU general secretary

I believe that access to higher education is a central driver of social and economic fairness. Making it achievable and affordable for all who would benefit is a policy challenge any civilised society must meet. Yet the direction of policy in recent decades has been to make the cost of going to university more expensive, not less.

UCU proposes that tuition fees should be abolished. Rather than charge students for their education, we would charge large employers who benefit from the plentiful supply of graduates through a new Business Education Tax (BET). This innovative, practical and radical approach produces more money for higher education than the current tuition fee scheme, and costs less to administer.

Best of all, it removes one of the barriers to social and economic justice that stand in the way of our country. The right to an education is something we hold in trust for the next generation. All those who have the ability to benefit from university should have the right to attend, and no one should be excluded on the grounds of cost.

by Neal Lawson
Chair of Compass

University used to be essentially free. As places have increased, the quality of the UK labour force should have increased with it. More people doing better jobs, being paid more money should be able to fund the cost of HE expansion. But the system is under huge financial strain. Government funding has shrunk and in its place we have the worst domestic policy decision of the last thirteen years-variable tuition fees.

This is a big claim given other decisions such as the abolition of the 10p tax rate but is justifiable on the basis that the implicit goal of VTFs was the creation of a market in higher education. Better institutions would eventually charge more and just like buying jewellery or a car, the individual consumer can decide best how to maximise their utility. University would compete with university and students would be conditioned to a life of debt and pick courses that led to the highest paid jobs. The decision marked the triumph of the needs of the market over those of society. Those not used to debt or without parental support would be left behind.

Compass wants to see a debate flourish about alternatives to VTF as the government parks the issue for the election with its review that everyone expects will recommend a lifting of the fee's ceiling, thus making the situation worse not better. This timely report comes up with one way of filling the funding gap just when public money is at its tightest. If it is businesses that benefit from the growth in supply of graduates then it is businesses that should pay for HE expansion. The case here is well made by UCU.

Last updated: 13 January 2016