Raise corporation tax to abolish tuition fees

Business must make its contribution to removing the fear of debt from our education system.

Did New Labour give big business too easy a time? On tax, the answer is a clear yes. The coalition government has inherited lower corporation tax than even the John Major and Margaret Thatcher governments had.

Our company tax rates are lower, too, than those in the US, France, Germany, Japan and Canada. Has this low taxation persuaded business to invest more in its staff? The answer is no. Expenditure on workforce training and education is lower here than elsewhere, as is the proportion of profits allocated to reinvestment in research and development.

Now, while the coalition government tells us all to tighten our belts, it proposes to reduce corporation tax still further. George Osborne's aim is to give us the lowest profit taxes in the G20, which would deprive the Treasury of £6.4bn a year at a time when new school buildings and free school meals are considered a luxury by Clegg and Cameron.

So why isn't this a major issue in the Labour leadership elections? Why are candidates not raising public awareness of what amounts to the legal pickpocketing of public-sector workers, students, the unemployed and pensioners in order to fund tax breaks for multinationals?

The University and College Union (UCU) proposes that, instead of cutting the tax on company profits, we should raise it to that of the average in the G7. This would raise enough money to abolish university tuition fees and give hard-working families an opportunity to get tap in to a better education without fear of debt.

It is not merely an ideological assault on business. A landmark 1997 report concluded that the beneficiaries of higher education should foot the bill. The report identified the three beneficiaries as the student, the state and business. We have seen both fees and top-up fees introduced to squeeze more money out of the student and sustained increases from the state. We have seen nothing from business.

The current debate on higher education funding has been far too narrowly focused on how to try and squeeze more money out the individual student through higher fees or graduate taxes. Our plans are the fairest way to make business, rather than students or taxpayers, pay for the numerous benefits it gets from UK higher education.

Simply raising corporation tax to the G7 average would raise £3.9bn in revenue and would allow the UK to abolish tuition fees altogether. Furthermore, it would not deprive the Treasury of the billions that Osborne's cuts will.

Access to education is a central driver of social mobility and should be a natural Labour issue. Shifting the balance from individual taxation to a tax on profits is ethical, and would fund public services such as education at a time when cash is short. Yet it would still leave the UK with one of the lowest company tax rates in the G7.

All the polling on student funding shows the country is vehemently against higher university fees, yet the Lib Dems have spectacularly conceded any ground they had gained in the area by reneging on their election commitment to campaign and vote against a rise in fees.

Most of all, for those who aspire to lead Labour, opening up this debate would begin to redress the idea that many people had when the party was in government: that it was on the side of the fat cats, not the people.

Sally Hunt is general secretary of the University and College Union, the largest post-16 education trade union in the world.

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Theresa May gambles that the EU will blink first

In her Brexit speech, the Prime Minister raised the stakes by declaring that "no deal for Britain is better than a bad deal for Britain". 

It was at Lancaster House in 1988 that Margaret Thatcher delivered a speech heralding British membership of the single market. Twenty eight years later, at the same venue, Theresa May confirmed the UK’s retreat.

As had been clear ever since her Brexit speech in October, May recognises that her primary objective of controlling immigration is incompatible with continued membership. Inside the single market, she noted, the UK would still have to accept free movement and the rulings of the European Court of Justice (ECJ). “It would to all intents and purposes mean not leaving the EU at all,” May surmised.

The Prime Minister also confirmed, as anticipated, that the UK would no longer remain a full member of the Customs Union. “We want to get out into the wider world, to trade and do business all around the globe,” May declared.

But she also recognises that a substantial proportion of this will continue to be with Europe (the destination for half of current UK exports). Her ambition, she declared, was “a new, comprehensive, bold and ambitious Free Trade Agreement”. May added that she wanted either “a completely new customs agreement” or associate membership of the Customs Union.

Though the Prime Minister has long ruled out free movement and the acceptance of ECJ jurisdiction, she has not pledged to end budget contributions. But in her speech she diminished this potential concession, warning that the days when the UK provided “vast” amounts were over.

Having signalled what she wanted to take from the EU, what did May have to give? She struck a notably more conciliatory tone, emphasising that it was “overwhelmingly and compellingly in Britain’s national interest that the EU should succeed”. The day after Donald Trump gleefully predicted the institution’s demise, her words were in marked contrast to those of the president-elect.

In an age of Isis and Russian revanchism, May also emphasised the UK’s “unique intelligence capabilities” which would help to keep “people in Europe safe from terrorism”. She added: “At a time when there is growing concern about European security, Britain’s servicemen and women, based in European countries including Estonia, Poland and Romania, will continue to do their duty. We are leaving the European Union, but we are not leaving Europe.”

The EU’s defining political objective is to ensure that others do not follow the UK out of the club. The rise of nationalists such as Marine Le Pen, Alternative für Deutschland and the Dutch Partij voor de Vrijheid (Party for Freedom) has made Europe less, rather than more, amenable to British demands. In this hazardous climate, the UK cannot be seen to enjoy a cost-free Brexit.

May’s wager is that the price will not be excessive. She warned that a “punitive deal that punishes Britain” would be “an act of calamitous self-harm”. But as Greece can testify, economic self-interest does not always trump politics.

Unlike David Cameron, however, who merely stated that he “ruled nothing out” during his EU renegotiation, May signalled that she was prepared to walk away. “No deal for Britain is better than a bad deal for Britain,” she declared. Such an outcome would prove economically calamitous for the UK, forcing it to accept punitively high tariffs. But in this face-off, May’s gamble is that Brussels will blink first.

George Eaton is political editor of the New Statesman.