Tax business to abolish fees, union proposes

UCU cites Crossrail arrangement as evidence that plan could work. Hannah Fearn reports

March 3, 2010

Businesses should face a hefty tax hike to cover the cost of abolishing university tuition fees, the University and College Union says.

In a report published today, the UCU argues that raising the level of Corporation Tax to the average among the rich industrialised G7 nations would bring in enough money to make up the deficit.

At present, the UK tax stands at 28 per cent on profits above £1.5 million. The G7 average is 32.8 per cent.

The union claims its plans for a business education tax would still leave major UK firms better off than their G7 counterparts.

It added that the contribution of business to higher education is “negligible” at present.

The UCU cited the success of the 2p in the pound tax on London businesses introduced by Boris Johnson, Mayor of London, to pay for the Crossrail project as evidence that such a scheme could work.

Under the union’s proposals, companies that invested in continuing education would be rewarded with tax breaks.

Sally Hunt, general secretary of the UCU, said the proposals were “based on fairness”.

“We believe our proposals will be welcomed by hard-working families who want their children to benefit from education, but are put off by the potential debts created by university fees,” she said.

But Susan Anderson, director of education and skills at the CBI, said the UCU had “missed the point”.

“Damaging the economy by increasing tax on business won’t help young people go to university or boost their prospects when they graduate,” she said.

Keith Herrmann, deputy chief executive of the Council for Industry and Higher Education, added that the proposed funding arrangements could lead businesses to expect more control over universities – a situation the UCU would no doubt oppose.

Oisin McNamara, director of research, business and innovation at Northumbria University, agreed that compulsory levies may not be the best approach.

“A more positive way forward is developing long-term partnerships between higher education and business, whereby the latter pays the full economic costs of the services they receive, or shares the investment with the government if there are wider benefits.

“Universities need to work with the grain to help improve the competitiveness of business, as the future health of the public services depends on it.”

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