Tax's 'toxic' shock would poison fundraising stream

The government has been warned that replacing tuition fees with a system of graduate contributions tied to income would have a "toxic" effect on university fundraising.

The warning from a leading expert in the field came as reports suggested that the idea, tabled by the business secretary, the Liberal Democrat Vince Cable, had little support among senior Conservatives in the coalition government and was unlikely to come to pass.

Mary Blair, former director of development and alumni relations at the London School of Economics, told Times Higher Education that the proposed system - which Mr Cable was careful not to describe as a graduate tax - would cause untold damage to universities' ability to raise income from alumni and other supporters.

"The damage to the environment that we have worked so hard to build up would be enormous," she said. "If you're going to pay a tax ... why would you ever want to give any money? There is nothing to feel good about in paying a graduate tax for 25 years."

Dr Blair, who is American, was a member of the task force chaired by Eric Thomas, vice-chancellor of the University of Bristol, which advised the previous government to support university fundraising opportunities.

Its recommendations led to the introduction of the matched-funding scheme, which has successfully encouraged institutions to improve their alumni-giving programmes.

Mr Cable's plans would see the highest earners paying more for their university education than those who take home lower salaries after graduating. However, major gifts often come from the richest graduates, who would be expected to pay the most under the plans.

"It would be almost toxic," Dr Blair said. Money given to universities helps to develop excellence but is no substitute for government support, she added.

"It buys something that makes the university stand out; it gives them something that would not be possible for them to do if they existed on (state) money alone."

Graduates could also be discouraged from giving by the fact that they would not know whether their obligatory contributions were going to the university or project of their choice, she said.

Joanna Motion, vice-president of international operations at the Council for Advancement and Support of Education Europe, agreed that Mr Cable's plans were "damagingly wrong-headed".

"Philanthropy is about the power of people to decide where their money goes, rather than the impersonal government deciding for you," she said. "For philanthropy to education to continue to flourish, we need the link between students and their university to be close, not severed as it would be by this system."

She said the business secretary appeared to be working at cross purposes to Chancellor George Osborne and the culture secretary, Jeremy Hunt, who have urged arts organisations to embrace "American-style philanthropy". "The arts are looking closely at the success of universities in this regard, yet the momentum and achievement in giving to the (academy) is threatened by this proposal," she said.

hannah.fearn@tsleducation.com.