Today: Labour pledges to cut tuition fees to £6,000
Ed Miliband has today announced that the next Labour Government will cut tuition fees from £9,000 to £6,000, and provide additional grants for students from lower and middle income backgrounds. This will be funded by restricting Pension Tax Relief for those on the highest incomes.
Labour will build a country where the next generation can do better than the last, with tuition fees reduced to £6,000, an apprenticeship for every school leaver who gets the basic grades, and smaller class sizes for 5, 6 and 7 year olds.
The current system is bad for students and bad for taxpayers.
- The decision by the Tories and the Lib Dems to increase tuition fees to £9,000 means that the average student will now graduate with £44,000 of debt. And almost three quarters of students will never pay their loan back in full – having tens of thousands of pounds of debt hanging over them for 30 years.
- That’s bad for the public finances, because the taxpayer has to meet the cost of writing off the debt. By 2030-31, the current student fee system is set to add £281 billion to the national debt.
Labour’s better approach is fairer for students…
- Labour will tackle spiralling student debt by cutting the tuition fee cap from £9,000 to £6,000 for all undergraduates from September 2016, and providing additional grants for students from lower-income backgrounds.
- Cutting the tuition fee cap will reduce graduate debt by nearly £9,000. Labour will also increase student grants by £400, so that the full grant increases from around £3,400 to around £3,800, benefiting all students with a household income up to £42,620. More than half of students will benefit.
… And because our policy is fully funded, it is fairer to universities and taxpayers too.
- Universities will not lose out because we will increase the teaching grant they receive by around £2.7 billion, the same amount that their fee income falls.
- Our plan will reduce government debt by £40 billion by 2030-31. Over the next Parliament it will mean over £10 billion less debt.
Our pledge will be funded by restricting Pension Tax Relief by £2.9 billion for those on the highest incomes.
- At the moment, people with incomes over £150,000 get tax relief on pension contributions at a rate of 45 per cent – more than twice that of basic rate taxpayers. This means that although they are only the top 1 per cent of taxpayers, they receive 7 per cent of all Pension Tax Relief.
- We will reduce the rate of relief for those with incomes of over £150,000 to 20 per cent – the same as basic rate taxpayers. And we will reduce the annual and lifetime allowances to cap the amount that people can put into their pensions tax free: £30,000 a year, or £1 million across a lifetime. This is far more than most people can ever afford to put into their pension pots.