To hit the LibDems, Labour give £2 billion to graduates earning 32%+ above the average wage

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Details of Labour’s tuition fees policy are emerging today. There is a proposed higher maintenance grant and higher interest rates for higher earning graduates. It will remain to be seen how much those two changes alter the regressiveness of the main proposal to reduce the fee cap to £6,000.

That basic policy proposal is to take £2 billion from pension tax breaks and give it to graduates who earn 32% above the national average wage.

This is because many graduates will not pay back their full tuition fees “loan” under the current scheme. So only those earning £35,000 or more will get an advantage from Labour’s decrease of tuition fees from £9,000 to £6,000, as Mark Pack explains:

The key thing to remember when judging changes to the existing tuition fees policy is that many people will get their fees written off rather than paying them off in full. In fact, it’s the possibility that it may be so many that the system ends up not saving very much money which has been a consistent thread of recent coverage.

So reducing the headline fees figure for all those people simply means that they end up paying the same – but the sum that gets written off at the end is smaller, rather than larger. The only people who benefit are those who would have paid off all or most of the fees – which isn’t the poorest but the better off. For today’s Labour figures it looks like it will only benefit those earning £35,000 per year or more – well above the average.

Money Saving Expert, Martin Lewis wryly comments:

The one positive of this plan is that cutting tuition fees is likely to reduce fear among those who don’t understand the system.


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