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Employers should match the tuition fee repayments their graduates pay and stop taking a ¡°back seat¡± in the funding of higher education, a new report recommends.

Despite being ¡°one of the primary beneficiaries¡± of the system, employers do not make a significant financial contribution, which is becoming ever more apparent during the sector¡¯s ¡°protracted financial crisis¡±, according to the Higher Education Policy Institute (Hepi) paper.

Author David Phoenix, vice-chancellor of London South Bank University, warns that attempts to incentivise employers to contribute to education, such as the Apprenticeship Levy, were ¡°doomed to failure¡± and have not fixed the skills gap.

While UK businesses pay slightly more than the European average in corporation tax (21 per cent), they benefit from the higher-level skills of their employees, he adds.

Amid the current financial crisis facing universities, the report warns that ¡°tinkering at the edges¡± of the existing funding model with incremental loan increases, efficiency drives and mergers will not help maintain a world-leading tertiary skills system.

Students and graduates are taking on more debt to fund the sector and universities are reporting a loss on publicly-funded teaching, leading to course closures.

Instead, the report calls for an effective tertiary education system with ¡°greater joined-up thinking¡±, including state support for lower-level gateway qualifications and the facilitation of greater engagement by educational institutions.

¡°While there is an onus on universities to continue to look for efficiencies in delivery there is a limit to how much students should be asked to contribute and it therefore seems clear, that¡­the only remaining solution is to ask employers to make a direct and substantial investment,¡± it says.

The report recommends that the government ¨C which has said it will not deliver a ¡°large injection of public money¡± into higher education ¨C should ask employers to match fund graduate tuition fee repayments, with this money being invested back into higher education. It is estimated this would raise around ?3.6 billion for higher education each year.

¡°For too long employers have taken a back seat in our tertiary skills system instead of being true partners in creating the talent they rely on,¡± says Phoenix.

¡°If the government is serious about kickstarting economic growth then they must encourage employers to facilitate workplace-based training in much more significant numbers than we have seen historically.

¡°In addition, they must create a framework whereby educational institutions are encouraged to engage in the delivery of programmes that address place-based skills needs as well as national skills priorities by working in tandem with employers.¡±

The report also recommends supporting the creation of best practice guides for professional, statutory and regulatory bodies¡¯ engagement with universities, and mandating the non-apprenticeship element of the coming skills and growth levy to only be used for credit-bearing courses related to regional skills needs.

In a foreword to the report, professor emeritus Ewart Keep and James Robson of the Centre on Skills, Knowledge & Organisational Performance (SKOPE) at the University of Oxford, say successive governments have only succeeded in asking employers to help design new qualifications and construct ever-more-detailed ¡°skills shopping lists¡±, defining what they want from providers.

¡°Employers have essentially become relatively passive customers of an education and training system rather than an integral partner in and component of that system,¡± they write.

patrick.jack@timeshighereducation.com