Introducing an employer levy to fund English higher education would disincentivise companies to hire graduates, the chief executive of Universities UK has warned.
Vivienne Stern said the system currently used in the country – with a combination of private fees and public grants to pay for universities – was essentially the right one, and although tweaks were needed, radical reimagining was not necessary.
She was speaking in response to proposals outlined by Johnny Rich, chief executive officer of the Engineering Professors’ Council, during a webinar organised by the Lifelong Education Institution looking at the future of higher education funding.
Rich argued that employers should pay money to the treasury for every graduate they hire, reducing the amount students are required to pay back in loans.
Expanding on a proposal previously shared in a report by the Higher Education Policy Institute, Rich insisted that employers would pay less under the scheme because they could lower the salaries of graduates.
He said employees would still take home higher pay than they currently do because they would pay lower student loan contributions.
Amid?the financial pressures facing?universities, there have been wider calls to force?companies to pay more into England’s higher education system. Businesses are seen as one of the biggest beneficiaries of the system –?because of?their ability to hire skilled workers – but contribute little to it directly.
But Stern, who has led Universities UK since 2022, said employers were likely to see the proposal as an additional tax, with many already suffering?as a result of the increase in national insurance payments introduced in 2025.
She added that the policy would disincentivise universities from recruiting students from lower socio-economic backgrounds who may find it harder to secure a job – in which case the university would not be paid – while incentivising employers to “hire non-graduates”.
“They might very well think we could take that amount of money that we would be putting in...and do a much better job of training somebody to do the job that we want them to do,” she said.
Stephen Isherwood, joint chief executive officer of the Institute of Student Employers, agreed that employers would perceive the policy as a tax.
“I think we have to be careful about…putting in place a greater financial burden on employers or more red tape, which might cause employers to look elsewhere,” he said.
Stern instead insisted that better “balance” between public and private contributions was needed to cover higher education costs, with students currently shouldering most of the burden in England.
Previous analysis by Hepi found that the average cost to the exchequer per student in England was approximately ?1,630 in 2023/24. In comparison, this was ?9,130 in Scotland, ?3,780 in Wales, and ?4,810 in Northern Ireland.
Stern described the English system as “out of whack”, insisting “there’s a public as well as an individual benefit” to higher education.
She suggested that?tweaks to the current system would be a better solution to the current funding crisis.
“We’ve battled for 20 years to get a system in place which is, broadly speaking, the right thing. Huge amounts of blood and political capital have been spent on the road to get a higher education contribution system, which is probably, broadly speaking, sustainable,” she said.
“The parameters are wrong,” she continued, adding that funding and fees should be indexed with inflation. “But fundamentally this system can be made to work.”
Stern added that there is scope for employer contributions, but that co-payment initiatives such as degree apprenticeships and the lifelong learning entitlement are “smarter” ways “of attracting employer contributions”.
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