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."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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".
-
Revolut finally bags a UK banking licence – what's next for the fintech?Revolut has finally been granted a UK banking licence following three years of negotiations with the regulator
-
Could Labour impose a “double death tax” of more than 50%?Speculation is mounting that capital gains tax will be reformed in the Budget - and one option is to charge bereaved families the tax on top of inheritance tax. We explain how it could work
