Scrap fees and fund university through business tax, says new report

3 March 2010 | last updated: 11 December 2015

A report released today by UCU recommends 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.

The union says its 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. The landmark 1997 Dearing report listed the three beneficiaries of higher education as the individual, the state and the employer and said the key was finding a fair way to get all three to pay their share.

Since Dearing's report fees and top-up fees have been introduced, the state has continued to invest, but the employers' contribution has been negligible.

Since the report fees and top-up fees have been introduced, the state has continued to invest, but the employers' contribution has been negligible. 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. The union said the investment required from students would still be considerable to meet the cost of rent, food, bills and books.

UCU said the report is a radical and pragmatic response to a pressing problem for the UK. The union cited 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. On average, the Times Top 100 graduate employers will employ 138 graduates each in 2010. The union argues that companies like these are benefiting from the plentiful supply of graduates without paying towards them. The union said 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, said: '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.'

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.'

Corporate tax rates, G7 2009

Combined corporate income tax rate (%)

Japan

39.54

United States

39.1

France

34.43

Canada

31.32

Germany

30.18

United Kingdom

28.00

Italy

27.5

G7 average

32.87

SOURCE: OECD (.xls)

Comments