Shares in the classroom

Opinion

Any successful businessman will tell you that two key factors in maintaining success and growth in a company are, first, to make maximum use of the skills and creativity of all the workforce and, second, to strike the right balance between dividend payments to shareholders and the use of profits from current operations to invest in future products.

Professional shareholders, such as the managers of large investment portfolios, recognise companies which achieve a good balance and are wary of organisations that live for the moment in the hope that minimal investment and a stroke of genius at the right time will achieve future competitive advantage.

The state funding of education is UK plc's way of ensuring that all the country's children are given the opportunity to make maximum use of their talents and provide businesses with the skilled and creative workforce of the future. Unfortunately, the current directors of UK plc are driven by the need to court their political shareholders with promises of low taxation, so that they stand a chance of retaining their seats at the next "shareholders' meeting".

Politically, the Government seems to take advantage of the fact that education is not a priority issue among the electorate as a whole due to the minority of adults who have school-age children at any one time. As a result, they have not chosen to invest wisely for the future but instead to stake all on the ability of schools to scrape through with meagre funds and not complain too loudly.

In an increasingly competitive world, the future of this country can no longer depend on the abilities of the privileged few whose parents can afford private education, nor on the children from showcase schools in the state sector who could fill their available places many times over.

The present reality of state education is one of mainly old-fashioned, crumbling buildings, insufficient books, stitched-together equipment and harassed and often abused teachers. It is a miracle of dedication by staff, governors and advisers that the system still works at all.

Whereas the objective of low taxation and low government spending is a good one, if the result is that the future prosperity of the country is put severely at risk, then the Government is doing the country a disservice. What is needed is a prudent level of investment that secures long-term growth, even if current disposable income and returns on shareholders capital are reduced slightly as a result.

What then, can be done to make better provision for education by a fair and modest increase in public expenditure raised from taxation? Although taxpayers are in a sense repaying the cost of their own education by funding the current generation, it is useful to look at ways in which an increment in investment could be sourced fairly.

One could argue that it would be unfair for those not directly benefiting from the education system to subsidise an increase for those that are. Equally, it is possible to assert that it is unfair for parents who pay for private education to also have to pay extra for the state system.

These are debatable arguments and depend on your point of view of the taxation system generally. But the fairness and practicality of applying an "education tax", either centrally or locally, only to parents with children at state schools is very questionable (even though some individual schools have thought about it as a way out of the present crisis).

Although children benefit directly from education, the real benefit is reaped by industry and commerce which are able to rely on a constant supply of well- developed youngsters to further their commercial competitiveness and prosperity and thence to increase the wealth of the nation.

Many major companies are only too well aware of this and are openly supportive of moves to improve education funding. Indeed, they realise that not only do they benefit from securing their future supply of workers but they also gain from having better-educated customers who are more open to their increasingly sophisticated products.

It would not seem unreasonable to ask businesses to pay a little more tax on their profits as an investment in their future workforce in the same way as they invest in training their current staff and in new product development. A small rise in Corporation Tax, provided that the proceeds were "ring-fenced" for adding to education funding (and not for supplanting funds from other sources), would go a long way to restoring the right balance of investment in our schools and in our country's future.

The writer is chairman of South Oxfordshire Governors' Forum.