Taxes on businesses to fund education budget increases

A significant proportion of increased education funding in Budget 2018 is expected to come from businesses rather than the general taxation system.

Businesses can expect to pay a higher rate of employers’ PRSI, as the Government seeks to add close to €200m to the National Training Fund (NTF) to invest in further and higher education.

A consultation this year, announced in Budget 2017 a year ago, set out the proposal to increase the amount employers pay into the fund from 0.7% of each worker’s pay to 1% over three years. This could see the figure rise by 0.1% next year, and again in 2019 and 2020.

While its introduction is uncertain, as is whether it would kick in from the start of next year, it is the only funding stream which has been alluded to in any pre-budgetary commentary from Mr Bruton or his department.

The Government is committed to providing €160m extra to higher education across three years, which began this year. Although €36m was provided this year, the bulk of that went to new initiatives for improving access and other programmes, leaving little provision to allow colleges cater for increased student enrolments.

If the minister meets Fianna Fáil’s demand for an additional €110m investment in third-level, most of which the opposition party wants to come from an increased NTF, it will barely keep pace with student growth either.

This is based on the Irish Universities Association’s estimate of a €59m cost of meeting the demands associated with rising numbers in their sector alone, excluding the institutes of technology and other colleges, and a further €8m the universities say would be required to provide grants for some of the extra students.

The rising student population in primary and second-level schools is expected to continue until 2022, which should see teachers’ pay bill taking up the bulk of any increases outside of higher education. This year alone, without reducing class sizes or addressing any other significant policy increases around teacher supply, the cost of teachers’ pay is going up around €300m to over €4.1bn — as their numbers climb toward 70,000.

This could leave unions and school managers unhappy later today that Education Minister Richard Bruton will not be addressing the long-running question of class sizes, particularly at primary level. There was some leeway on this question in this year’s budget for second level, when effective increases in pupil-teacher ratios affected by the removal of ring-fenced guidance counsellors’ posts in 2012 were reversed by Mr Bruton.