Labour leader Ed Miliband pledges to cut tuition fees

Ed Miliband
Ed Miliband
  • Doncaster North MP has pledged to cut tuition fees to £6,000 a year
  • If Labour are elected in May’s General Election the fee drop will be introduced in September 2016
  • Prime Minister David Cameron called the pledge a ‘cobbled-together policy that shows Labour is incompetent’.

Doncaster North MP Ed Miliband has pledged to cut tuition fees to £6,000 a year if Labour wins the general election, as other parties lined up to rubbish the proposals.

Under the proposals, the new policy would be introduced in September next year, benefit those starting new courses in the autumn and those already at university.

The Labour leader insisted that the move will be fully funded through a reduction in pension tax relief for higher earners.

In a speech at the Leeds College of Music, he said: “The scourge of debt from tuition fees is not only holding back our young people, it is a burden on our country,” adding that the policy will “go down as one of the most expensive broken promises in history”.

But David Cameron argued that the plan is ‘ill-thought out’ and would damage both universities and the economy, while Liberal Democrat Business Secretary Vince Cable said the policy is “based on a sound-bite” and “completely financially illiterate”.

Labour’s announcement first came in a message to supporters as Mr Miliband took to the stage in Leeds.

He told the audience: “We’re going to reduce the debt on university students. We’re going to reduce the debt on taxpayers.

“From September of next year, the next Labour government will reduce tuition fees from £9,000 to £6,000. Meeting our obligations to the next generation.

“It will benefit those starting courses next year. It will benefit those already at university.”

He claimed that the proposals will cut the burden on taxpayers by £40 billion by 2030.

The average reduction in the debt will be around £9,000 per student.

Labour also plans to raise maintenance grants for the poorest students to help them with their living costs by £400 a year. This will apply to those with family incomes of up to £42,000.

Mr Miliband, anxious to avoid a repeat of Nick Clegg’s failure to deliver a pre-election promise on tuition fees, said Labour’s policy would be a “red line” in any coalition negotiations after the election.

Asked whether the promise would be a ‘cast-iron’ one, he said: “Yes, yes, yes.”

The Labour leader had earlier told supporters: “Let me say to Britain’s young people: I made you a promise on tuition fees. I will keep my promise. I don’t simply want to build your faith in Labour. I want to restore your faith that change can be believed.”

Under the plan, graduates who earn more than £42,000 a year will pay a higher rate of interest on their loans - 4 per cent instead of 3 per cent, which Mr Miliband insisted would making it a more progressive system.

The party was still examining the idea of a graduate tax system for the future, Mr Miliband suggested.

In a message on Twitter, David Cameron said: “Labour’s ill-thought-out tuition fees policy would damage our universities and our economy - and hard-working taxpayers would pay the price.”

Speaking during a visit to Wales, Mr Cameron said: “This is a cobbled-together policy that shows Labour is incompetent and would lead to chaos.

“It doesn’t help the people it is meant to help. It helps rich people rather than poorer people. It would damage universities and build up a mountain of debt for Britain. That is why so many experts have roundly condemned it.”

Mr Cable said: “Labour’s policy is based on a sound-bite, and as a result is completely financially illiterate. It will either do great harm to universities or it will create a costly black hole in the national budget.

“For a party presenting itself as a government in waiting they are showing staggering ignorance of how university finance works.

“They are proposing to spend billions of taxpayers’ money for a policy which only benefits the very wealthiest graduates and helps few women. They cannot pretend this is a progressive policy.”

Universities UK (UUK) has previously warned that limiting the fees to £6,000 per year would create a £10 billion funding gap over the next five years, while Labour’s former business secretary Lord Mandelson has warned that any reduction in income from fees must be made good from other sources.

Today, university leaders welcomed Mr Miliband’s assurance that the shortfall caused by the fee cut would be covered, and increased support for student living costs.

Professor Sir Christopher Snowden, president of vice-chancellors’ group Universities UK, said: “ It will go some way to help reassure universities that a future Labour government would continue to provide a stable funding environment in the next parliament.”

Paul Johnson, director of the independent Institute for Fiscal Studies told BBC Radio 4’s The World At One that Labour’s plans would see a £3 billion increase in taxes on pensions to pay for £3 billion additional spending on universities. And he said that the financial benefit from the change would go to those graduates who go on to high-paid jobs.

Conservative Universities Minister Greg Clark MP said: “This incompetent, cobbled-together policy will cause chaos for hardworking taxpayers, for students and for universities.

“It benefits the richest graduates the most, not the poorest. It puts university funding at risk, and experts say it will damage the economy.”

An IFS analysis of the policy found that the primary beneficiaries of the change would be “m id-to-high-income graduates ... with the very highest earners benefiting the most” as the higher interest payments did not offset the repayment reductions from a lower cap.

It said it was “possible” the reform could help stimulate a recovery in the numbers taking on part-time study but would have little impact on the higher education involvement of young people from poorer backgrounds as they had not been put off by the hike to £9,000.

In itself, the think tank calculated, the fee change would cost the taxpayer around £1 billion in today’s money - but the tax pension changes would “more than offset the long-term increase in government debt created”.

Chancellor George Osborne claimed the Labour pension tax change would hit “ people on middle incomes - including nurses, teachers and firefighters”.

“Another Labour policy launch has collapsed into chaos,” he said.

“Far from hitting only the richest as Ed Miliband claimed, his new tax on pensions will hit many people on middle incomes including nurses, teachers and firefighters.

“So a tuition fees policy that only benefits better-off students is being paid for by hardworking taxpayers on middle incomes.

“It just shows that all Ed Miliband offers is higher taxes, more debt and the economic chaos those would bring.”