The University and College Union (UCU) has today (Sunday 22
September) urged and to use the autumn Budget to
increase taxes on profiteering businesses and help solve the
university funding crisis. The union, representing 130,000
education workers, said students must not be loaded with even
more debt because of previous Tory governments' failure to invest
in education.
The call comes on the opening day of Labour Party conference, as
UCU releases data showing a 4.3 percentage point increase in
corporation tax would raise £17bn. This could be used as an
education levy to provide universities with much needed extra
funding and end its tuition fee-based system, while still leaving
corporation tax below (29.3%), the rate at which set it (30%) [NOTE 1].
Such a levy would replace the £11bn in fees English domiciled
students pay each year with publicly funded teaching grants. The
levy is only focused on England, as fees are devolved in Wales,
Scotland and Northern Ireland. It would also provide an
additional £4.58bn to the higher education sector, equivalent to
an increase in tuition fees of up to £13k that university
employer body, Universities UK (UUK), reportedly suggested
earlier this week.
UCU's levy would see only profitable businesses pay for the UK's
university system, with those making the most profit paying the
most. Whereas UCU estimates that an increase in tuition fees
would see each cohort of students graduate with £5.1bn more in
debt and leave around six in 10 never paying their loans off,
even after 40 years of repayments (around 100,000 additional
students per cohort - English-domiciled students only) [NOTE 2].
The Office for Students has warned some English
universities are at risk of going under with two in five facing
budget deficits. Earlier this week UCU attacked vice-chancellors
for making reckless financial decisions after universities
slashed budgets,
cut jobs and
offered staff a pay
uplift of just 2.5%.
UCU general secretary Jo Grady said: ‘Labour must use the autumn
Budget to increase public funding for universities and secure
their long-term future. and should realise there will be
no decade of national renewal if the decline of our great
universities goes unchecked. After the state the Tories left us
in there is a material risk of a university going under unless
the Government acts.
‘But university employers now want students to bear the cost by
taking on yet more debt. Graduates already face up to 40 years of
repayments and staggeringly high effective marginal tax rates.
Rocketing fees would mean one hundred thousand more per cohort
would never pay their debt off. The tuition fee model has become
unworkable, it leads to yearly cycles of job cuts, hurting staff
and damaging student provision, and, by accelerating the decline
of our universities, it ultimately harms us all.
‘Education is a public good that enriches communities and
strengthens society. It should be publicly funded. Big business
reaps private profits from the graduates it employs, which is why
we are calling for an increase in corporation tax of 4.3
percentage points.
‘The Tories ran Britain into the ground and Labour's victory has
now given us a chance to rebuild, but this cannot be done on the
cheap: if won't borrow to invest then
she will have to tax private profit and wealth to fix
universities and the broken public sector.'
Notes
[1] Building on previous analysis for UCU,
London Economics has modelled the impact of raising the level of
financial resource per undergraduate (full-time) student to £13k
per student per annum. The analysis assumes that there is a
removal of tuition fees and increase in teaching grants, as well
as the introduction of an employer levy.
The levy would be raised through an increase in the corporation
tax rate, including both the small profits (currently 19%) and
main rate (currently 25%), through an increase in the rate by 4.3
percentage points to achieve a £13k level of resource.
The model only looks at tuition fees (and associated fee loans)
for all English domiciled students studying anywhere in the UK
(for both full-time and part-time students). This includes the
Teaching Grants paid to English Higher Education Institutions
(HEIs) by the Office for Students; to Welsh HEIs by the Higher
Education Funding Council for Wales; to Scottish HEIs by the
Scottish Funding Council; and to Northern Irish HEIs by the
Department for the Economy Northern Ireland. It does not model
Scottish-domiciled, Welsh-domiciled or Northern Irish domiciled
students.
[2] UCU used Department for Education
Student loan forecasts for England to model the
impact of a tuition fee rise to £13k for undergraduate borrowers.
If the average tuition fee loan increases to £13k, then each
cohort of undergraduate borrowers total debt (assuming a three
year course and no changes to the full-time/part-time split) will
increase from around £24.1bn to £29.2bn. Considering repayment
behaviour by lifetime income decile, UCU estimated that a further
two deciles of each cohort would never pay their loans off
compared with the current tuition fee loan regime.
