Tax big business to scrap tuition fees, UCU urges Labour

Union calls for increase in corporation tax to address university funding difficulties

September 22, 2024
Jo Grady
Source: UCU

The University and College Union (UCU) has called on prime minister Sir Keir Starmer and chancellor Rachel Reeves to raise taxes on big business in order to fund the UK’s struggling university system.

As the Labour Party conference got underway in Liverpool, UCU has released analysis indicating that an increase in corporation tax from 25 per cent to 29.3 per cent would bring in £17 billion annually, which could be used to replace the £11 billion students in England currently pay in tuition fees each year while providing extra funding for the sector. Ms Reeves is expected to deliver her first budget as chancellor on 30 October.

Recent Universities UK (UUK) proposals, according to the BBC, call for increased tuition fees and greater government funding, reportedly stating, “If investment in teaching students had kept up with inflation, funding per student would be in the region of £12,000-£13,000.”

Speaking at the UUK conference earlier this month, Shitij Kapur, the vice-chancellor of King’s College London, said funding per student would need to rise to between £12,000 and £13,000 for universities to return to 2015-16 levels of stability, later telling Times Higher Education that he was “certainly not” calling for tuition fees to cover this increase.

“More and more of the burden is falling on graduates, and the UK is increasingly an outlier within the OECD on this,” a UUK spokesperson said after the conference. “We believe it is time for a rebalancing of responsibility for funding to recognise that.”

Should Labour increase tuition fees to cover up to £13,000 per student, UCU said on Sunday, each student cohort would take on £5.1 billion in debt, while six out of 10 would never pay off their loans.

“Labour must use the autumn budget to increase public funding for universities and secure their long-term future,” UCU general secretary Jo Grady said. “Keir Starmer and Rachel Reeves 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.

“Graduates already face up to 40 years of repayments and staggeringly high effective marginal tax rates. Rocketing fees would mean 100,000 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,” Ms Grady said. “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.”

emily.dixon@timeshighereducation.com

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Reader's comments (1)

The UCU press release states "The [corporation tax] levy [+4.3 pecent] is only focused on England, as fees are devolved in Wales, Scotland and Northern Ireland". This misunderstands the fiscal interrelationship between tax and spend policies by the UK government. Fees policy is devolved, but Corporation Tax is UK wide and it is impossible to determine which area profit is earned, so eg London based companies earn profit from revenues in England and Glasgow based companies earn profit from revenues in England. But SPENDING is subject to the vagaries Barnett formula and any switch from fees to grants for students living in England but studying anywhere in the UK results in an increase in the Block Grant to the devolved governments of approximately 20% of any increase in spending for England's students. Note that it's the location of the student prior to the commencement of study that determines which government department the cost of fees or replacing them with grants to the university falls not the location of the university. There is significant if highly uneven 'cross-border traffic' of students. This is particularly significant for Scotland' devolved government where the full cost of tuition of Scots-domiciled students is born by the government budget not the student. Any shift from fees to government funding for England-domiciled students by the UK government produces a significant increase in funding from HM Treasury to the Scottish Government which can be spent on universities and colleges (one third of Scottish-domiciled HE students are studying in the "FE sector"). In 1962 the Anderson Committee that introduced the previous system of mandatory grants and fee payments was one of the few UK wide education bodies that has ever existed. A new all-nation fiscal commission should be set up to agree the mechanism for resolving the tax/spend mechanisms for higher education that respects the boundaries of devolution, not one where the UK government arbitrarily imposes its will on devolved governments.

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