Wednesday, 14 July 2010

Funding Education: Getting businesses involved

I've just had a brainwave... let me explain; I'll try and keep this simple.

It is a well-known fact that the private sector has a far better record of resource allocation and optimization than any centrally planned structure. I think a system that enables and encourages individuals and businesses to fund higher education (i.e. university) by using money that is otherwise headed for the taxman, could work very well.

For example:

Let us assume I am a businessman, running a small business and my projected Corporation Tax for the year is £30,000.

I pay for the university education of an individual to the tune of £6,000 per year for three years. This amount that I pay comes straight out of the Corporation Tax due, reducing it to £24,000 for the year. Of course the net result for me will be nil, so as an incentive my Corporation Tax is further reduced by a percentage of the funds I commit towards university fees. This could be from a scale ranging from 10% to 50%, dependant on the student's circumstances (various criteria apply, explained in next section*). Let's assume the reduction is 40%. This would further reduce my tax bill by £2,400. Instead of 30,000 I pay £21,600.

Everyone in the loop benefits:

(a) Me: I pay £2,400 less, but because I am paying for a child's education, I will choose who I sponsor carefully, I will ensure they do well by providing all the support I can provide - work experience during the course and possibly an apprenticeship or even a job at the end of the degree to gain real world experience from the word go!

(b) The student: Completes a degree with no debt. Has the backing of a business, opportunities of learning practically alongside the academics and a route into employment. The student is better able to make the connection between learning and using their skills in the right context.

(c) The Government: Doesn't have to wait for the individual to earn a certain amount before they start paying back the student loan. There is no student loan! Admittedly, the treasury recieves £8,400 less, but surely this £8,400 has just been spent in the most efficient way possible, with little beaurocracy, no wastage, is targeted at an individual who will make full use of the opportunity and helps create a route into the world of work. No government intervention required!

Now this is just me. Imagine this multiplied over thousands and tens of thousands of businesses and companies.

This can be devilishly simple to implement, possibly through the university admissions systems (UCAS?). Again, no additional government intervention required. For maximum benefit to the sponsor, to society and to individuals, there would have to be certain eligibility criteria to adhere to. Students from poorer backgrounds, areas high deprivation, generational unemployment, lack of education within the family (uneducated parents, etc) should attract a higher rebate (see * above), while those in better circumstance would attract a smaller deduction.

I don't know if such a system exists or if there are serious flaws in my idea, but it sounds good to me!