Miliband announces £6K tuition fees pledge

Ed Miliband has pledged that a Labour government would lower fees to £6,000 and raise maintenance grants by £400

February 27, 2015

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The Labour leader said his party would lower fees as of September 2016 if in government, a move that he said “will benefit those starting courses next year” and “will benefit those already at university”.

He said the policy, which the party estimates will cost £2.7 billion a year, would be funded by changes to pension tax relief.

Ed Balls, the shadow chancellor, meanwhile confirmed that the interest rate on student loans would be raised from 3 per cent to 4 per cent for those earning above £42,000 a year.

Mr Miliband said this was a “progressive” move. Critics have claimed that a £6,000 policy would benefit mainly higher earners by allowing them to repay their loans faster.

Mr Miliband attacked the government on the finances behind the current £9,000 fees system, arguing that it will “go down as one of the most expensive broken promises in history”.

In a speech at Leeds College of Music, Mr Miliband said the party was today “publishing our Zero Based Review into the current tuition fees system”.

He said it “reveals beyond doubt that the scourge of debt from tuition fees is not only holding back our young people, it is a burden on our country”.

He added: “The government’s tuition system will have added an extra £16 billion more than predicted to public debt by 2020.

“If left unchanged the whole system will have added £281 billion of debt by 2030.”

Mr Miliband said that under a £6,000 system, “the average reduction in the debt will be around £9,000 per student…And the national debt, the burden on taxpayers, will be cut by £40 billion by 2030.”

He continued: “We’re going to clear up the mess of the tuition fees system left by the Conservatives and the Liberal Democrats.”

He called the policy “fully funded”, saying that financing would come from lowering pensions tax relief for those earning over £150,000 to 20 per cent and reducing the lifetime allowance for tax-free savings to £1 million.

He continued: “And we will reduce the annual allowance for what you can save tax-free in your pension to £30,000: still nearly 10 times higher than the average pension contribution.”

For students, Mr Miliband said that “for those with family incomes up to £42,000 we will raise the maximum maintenance grant by £400 a year from September 2016”.

Mr Miliband repeatedly attacked Nick Clegg, the Liberal Democrat leader, for his broken pledge on tuition fees, saying this had “left a whole generation doubting politics”. He said: “I made you a promise on tuition fees. I will keep my promise.”

The Labour leader framed his policy on fees as not just an appeal to younger voters and disillusioned former Lib Dem voters, but to families.

“Every parent, every grandparent, every person in our country, cares about the future of our young people,” he said.

“Today is the day we say: we will not make the young pay the price of hard times. I appeal to every parent and grandparent in Britain, every concerned citizen: Let’s together turn around the prospects of young people.”

The Labour party said in a statement that the £6,000 fees policy means “students who are now in their first year at university will see their fees capped at £6,000 in their third year. Students who start university this autumn will see their fees capped at £6,000 from their second year onwards. And students who start in 2016 will see their fees capped at £6,000 from the start.”

Labour also said that universities “will not lose out”. “Our plan is fully funded, so we will increase the teaching grant universities receive by the same amount that their fee income from English students falls – around £2.7 billion,” the party said.

john.morgan@tesglobal.com

‘Technical degrees’ plan highlighted in Labour report

“Access to higher education is not just about getting our young people into the most elite universities,” the Labour party has said, pledging to introduce reforms such as earn-while-you-learn “technical degrees”.

Labour published an interim report on its “zero-based review” of the higher education budget on February, following Ed Miliband’s pledge that the party would lower fees to £6,000 if it was in power.

Since the beginning of 2014, shadow chief secretary to the Treasury Chris Leslie has been “examining detailed departmental expenditure as part of the first round of the Zero-Based Review, analysing every departmental budget and exploring public service reform and redesign in detail with each shadow team,” the report says.

The higher education report highlights the fact that lower than expected graduate earnings forecasts mean that the proportion of loans the government expects to write off, the Resource Accounting and Budgeting charge, is rising.

Labour says that the Office for Budget Responsibility’s 2014 projection is that lower student loan repayments will add £75 billion to the government’s debt by the end of the next Parliament in 2019-20 – £16 billion higher than the OBR had projected in 2013.

Citing OBR figures and House of Commons library calculations, Labour says that the post-2012 student loan system is “set to add £281 billion to the national debt” by 2030.

In a conclusion titled “priorities for the next government”, the report says: “Labour recognises that access to higher education is not just about getting our young people into the most elite universities.

“It is also essential that we have a system that is adaptable and meets the needs of a variety of learners, such as mature students, those with dependents and students who have other responsibilities.

“It must also be a system that caters for those who wish to progress along the vocational – not just the academic – track and allow people to study whilst they work and access courses closer to home.”

The report adds that Labour will make a priority of “new earn-while-you-learn ‘Technical Degrees’; degrees which students can study for, in a wide range of subjects, while they are in a job and drawing a wage. This will support universities to drive new collaborations with industry.”

Addressing what it calls the government’s “failed system”, the report adds: “Our manifesto will set out Labour’s approach to deal with these problems. And our Zero-Based Review, will continue its work in the early months of the next Parliament looking at the fiscal position of the current loans system, to determine the extent of the problems and the longer-term impact on the public finances.

“It will also look at wider issues with the current part-time student system including very large drops in numbers in recent years.”

See also: Shadow universities minister Liam Byrne explains why tuition fees should be £6,000

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Reader's comments (2)

So prior to the 2010 election Vince Cable, by his own admission, was even more financially illiterate than Labour are. The problem with the £9k fees are they were introduced at the worst possible time. Graduate jobs are scarce, the industry is being disrupted by technology and globalisation and they were introduced more for ideological reasons than anything else. So as a parent I will be a minimum of £9k per child better off under labour. Yeah, I'll give them the benefit of the doubt with my vote. Well done Eds!
If you remember, the Coalition anticipated that most universities would charge about £6K pa and only a few would charge £9K pa. Given the complete misreading of how a market works by the Coalition, universities inevitably all charged £9K pa to avoid appearing inferior to their peers. This change would only rectify a disgraceful wrong inflicted on students, their parents and the taxpayer by the Coalition. Like Eduard, I will be at least £9K better off and will be able to help my child with living costs at university. Hopefully, the funding via reducing top rate tax relief on pension contributions will not mean VCs continue to complain about the policy.

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