Labour leader Ed Miliband pledges to cut tuition fees in higher education from £9,000 to £6,000 a year if his party wins the May general election.
He wants to free young people from the ‘scourge of debt’ imposed by the Conservative-Liberal Democrat coalition and save the government £20 billion by 2030.
Who’s right? Is this a more pragmatic system for funding higher education that would help students and save money? Or is this just populism, a cheap shot at the government that aims to woo the student vote without helping the neediest?
The exact details of the plan are crucial: Miliband would finance the fees cut by reducing the annual pension tax relief allowance available to very high earners from £40,000 to £30,000. Labour says this would raise around £3 billion a year, enough to cover the fees reduction and ensure that the same amount of money flows to higher education institutions.
Miliband also wants to increase the maintenance grant, the annual stipend given to students whose parents pay basic rates of income tax, from £3,400 to £3,800 per year, funded by charging wealthy graduates a higher interest rate on their student loan.
Will poorer students benefit from the plan? The Institute for Fiscal Studies (IFS), an independent think-tank, says not. They argue that high-earning graduates will be the biggest beneficiaries of Miliband’s proposal, with little change for low-earners.
Here’s their logic: under the current system all debts are written off after 30 years and students only start making repayments when they’re earning over £21,000. They pay back 9% annually on earnings above this threshold.
This type of scheme means it is only the highest-earners who will ever be realistically paying off all of their debt and low-earners will have the bulk of their debt written off. It is therefore only the highest earners who would benefit from a reduction in the total debt payable. Under Miliband’s plan, low-earners would face the same set of loan repayments and would end up paying a similar amount as under the status quo.
It’s a win for some students, but only those who go on to get the best paying jobs.
The IFS also questions Miliband’s claim that the fees cut will encourage more applications from poorer students. Since the £9,000 fees were introduced, overall university applications have actually increased.
Pragmatically, therefore, the policy changes little for students. What of populism? Will the pledge win votes for Labour?
Given huge protests met the government’s decision to hike fees to £9,000 in 2010, following Nick Clegg’s now infamous commitment to scrapping them, Miliband wants to tap the swell of student anger. His manifesto pledge ensures that Clegg’s high-profile broken promise will be a constant theme of the election campaign and is a dog-whistle to students who defected to the Lib Dems in 2010.
And this student vote matters: a recent report by the National Union of Students found that 191 constituencies have a student population large enough to overturn the 2010 majority of the sitting MP.
Miliband’s fees pledge is also a strategic move to defend against the threat of the Green Party. Growing in prominence and popularity, the Greens have pledged to scrap tuition fees entirely and threaten to split the left-wing student vote. Miliband can ill-afford such a split and promising to cut tuition fees responds to the Green’s challenge.
Yet Miliband’s announcement also comes with political risks. Polls regularly show that Labour is still seen as less economically competent than the Tories and it struggles to shrug off the perception of being a ‘tax-and-spend’ party. A policy announcement such as this, which Conservative Chancellor George Osborne describes as being ‘paid for by hard-working taxpayers on middle incomes’, threatens to strengthen that perception.
The effect of the pledge on the student vote may also be limited. Steve Fisher, Associate Professor in Political Sociology at Oxford University, argues that the defection of Lib Dem voters to Labour, because of the broken tuition fees promise, has probably already occurred prior to Miliband’s pledge. The electoral impact of students this May is also likely to be diminished because of changes to registration rules that experts predict will decrease student turnout.
Pledging to cut tuition fees has grabbed the Labour leader headlines and arms him with a powerful soundbite to deploy in the TV debates. But, on closer inspection, both the pragmatic and populist impacts of the policy are marginal or uncertain. Promising to liberate students from a ‘scourge of debt’, however, is certainly disingenuous. Students should read beyond the headlines.
Photographs: Buzzfeed, Telegraph, Guardian, The Green Party