Money saving expert Martin Lewis on Labour’s fees policy: ‘Poorer students will subsidise city investment bankers’

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Here’s part of what Martin Lewis, the Money Saving Expert, said on the BBC’s World at One today:

This is the worse type of politics for me. It is the politics that may appeal to people on the surface but it is financially illiterate…If any other party was launching a policy that effectively meant that poorer students would be subsidising city investment banking graduates, which is what this does, there would be protests in the streets and it would be led by the Labour party. I simply don’t understand how they’ve launched this.

Let’s look at this very simply. It’s not the amount that you borrow for university that counts, it’s how much you have to repay. You repay 9% of everything earnt above £21,000 and you do that for 30 years. So, as your previous guest said, most people will not repay in full over 30 years their £6,000 tuition loan and the maintenance loan they get on top. In fact, I’ve done calculations that it will only be graduates on starting salaries of £35,000 a year and we assume that goes up ahead of inflation year after year. That’s why I say city investment bankers, city accountants and city lawyers are the people who will gain from this policy. But to do that universities will be able to give less bursaries for poorer students.

…but the whole concept here of cutting tuition fees is a populist focus group policy that does not benefit the people that the public thinks it does and the sooner we stop calling these things student loans and start calling them what they really are, which is a graduate contribution which only the successful financially actually pay back, the less people will be scared off going to university and the more we can have a constructive discussion about it. And Labour has deliberately, I believe, fallen into the trap of going with the didactic that this is a debt, and all their language is about talking about a debt, when what really counts is how much you repay afterwards and all sides of the political spectrum need to change on this.

Here’s the full audio of what Mr Lewis said on the programme:

http://www.bbc.co.uk/programmes/p02kz8sr/player

Featured article image by the Cabinet Office

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5 thoughts on “Money saving expert Martin Lewis on Labour’s fees policy: ‘Poorer students will subsidise city investment bankers’

  1. Unfortunately Martin Lewis doesn’t appear to have understood even the rudiments of what Labour is proposing. The whole point is that universities will be compensated for the decrease in tuition fees. One wonders what Mr Lewis thought was going to be done with the additional tax revenue that’s being proposed!

    If he had read the “executive summary” of the IFS report on the policy, he would have seen that “University funding would be held constant under their proposal, with additional teaching grants distributed to universities to offset the lower fee income that they would receive.”
    http://www.ifs.org.uk/publications/7612

    So he is completely wrong to suggest that “universities will be able to give less bursaries for poorer students.” (And of course, the effect of the tuition fee cap won’t be determined by people’s wealth or poverty when they’re students, but by their subsequent earnings after they’ve graduated.)

  2. Paul, it’s been pointed out to you that this is factually incorrect.

    Are you really going to let it stand without correction? What does that say about your own integrity? All’s fair in love, war and politics? The end justifies the means?

  3. Chris – all comments on this site go into a moderation queue and I only check them once a week. So please be patient.

  4. How silly of me – I assumed when my comment disappeared, after showing up for some time as “awaiting moderation” that it had been deleted, like all my recent comments to LDV – including the one pointing out precisely the same factual error in Martin Lewis’s “analysis”. (If you regularly delete valid but politically inconvenient comments, there’s a limit to how pious you can be when people assume you’ve done it again, even if they’ve only been “held in moderation” for several days!)

    But obviously my second comment still stands. Why have you let Martin Lewis’s comments stand uncorrected – the untrue headline about “poorer students” and all? You can see his comments are based on a fallacy, can’t you? Do you prefer to let an attack on a political opponent stand, even though you know it’s factually untrue?

    • Chris,

      Thank you very much for your comments.

      I have published all the comments you have submitted on this site.

      If you wish to make a point about the Liberal Democrat Voice editorial policy, the editorial team of that site can be contacted on voice@libdemvoice.org.

      Peace and love.

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