Ed Miliband holds firm to 'financially illiterate' scheme

Ed Miliband is right to reach out to the younger generation – but do his numbers really stack up? Emily Hohler reports.

Last Friday, four years after Labour leader Ed Miliband first announced that the party would cut university tuition fees from the coalition's maximum of £9,000 to £6,000 a year, he confirmed that the pledge remains firm. The £2bn cost would be funded, he said, by cutting tax relief on pensions.

Politically, it's not hard to see his reasoning, says The Guardian. In a close election where every seat matters, student votes in a handful of constituencies could make all the difference. Plus, the coalition has been "inexcusably generous towards pensioners", says the Financial Times. Miliband "strikes a chord" when talking of the "faded hopes of the younger generation".

However, this interpretation is "misleading". The coalition's system has its flaws repayments were woefully under-estimated, for one but the reforms were a step in the right direction. The fairest system would allow as many qualified students as possible to go to university, with those who profit the most from the experience paying the most. "By and large that is what has been achieved."

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Successful applications from the poorest students are up by 20% since 2010. Graduates only have to start repaying once they earn £21,000, tilting the burden towards the wealthier. As a result, cutting tuition fees will also benefit those who are paid the most.

Quite, says Camilla Cavendish in The Sunday Times. Ostensibly, Labour's policy hands a "cool £9,000" to every student on a three-year degree course. In fact , it won't unless they end up with a "salary so eye-watering that it triggers the last chunk of the student loan the bit Miliband is axeing".

MoneySavingExpert's Martin Lewis condemned the plan as "financially illiterate" and calculates that only those with a £35,000 starting salary would benefit.

And by removing this extra cash, Labour will put at risk the outreach programmes, bursaries and fee waivers for "bright, disadvantaged students". Since the money raised by cutting pensions tax relief will go to the Treasury, not universities, the "modicum of independence" and resulting innovation they have enjoyed will go into reverse.

This policy will do nothing for Labour's poll ratings on economic competence, as an irritated Ed Balls knows, says The Sunday Times. The pre-election animosity between the two Eds, and the expensive, statist, headline-grabbing policies, "do not augur well for how Labour might perform in government".

Emily Hohler

Emily has extensive experience in the world of journalism. She has worked on MoneyWeek for more than 20 years as a former assistant editor and writer. Emily has previously worked on titles including The Times as a Deputy Features Editor, Commissioning Editor at The Independent Sunday Review, The Daily Telegraph, and she spent three years at women's lifestyle magazine Marie Claire as a features writer for three years, early on in her career. 

On MoneyWeek, Emily’s coverage includes Brexit and global markets such as Russia and China. Aside from her writing, Emily is a Nutritional Therapist and she runs her own business called Root Branch Nutrition in Oxfordshire, where she offers consultations and workshops on nutrition and health.