Ed pledges £3k tuition cut – but how will he pay?
LABOUR is yet to come up with a way to pay for its plans to cut tuition fees by £3,000 a year, it emerged last night.
Ed Miliband is expected to launch the policy during the election campaign in an effort to woo former Lib Dem voters and students.
But Shadow Chancellor Ed Balls has not yet worked out how to fund the 30 per cent reduction, which is expected to cost £2.5billion a year.
At the start of January, Mr Miliband gave a strong hint that he would pledge to cut fees from their current level of £9,000 to £6,000.
Previously, Labour said if it were currently in power, it would pay for the cut with a corporation tax increase on banks and higher rates of interest for better-off students.
But this is yet to be firmed up as a manifesto commitment.
A student challenged Mr Miliband on the subject of fees in Manchester three weeks ago. The Labour leader answered that he would be making an offer but told voters to ‘watch this space’ for the details.
He promised the plan would be ‘credible and costed’ to avoid a repeat of Nick Clegg’s disastrous U-turn on the matter, after the Coalition raised fees to a maximum of £9,000 from 2012.
Mr Clegg’s failure to stick to his 2010 election promise not to increase fees is widely seen as a crucial reason for huge disaffection among Lib Dem voters.
The BBC’s economics editor Robert Peston reported on his blog last night that Mr Miliband wants to announce the fees cut next month. But he added that Mr Balls has been ‘asked to make the sums add up’.
A Tory source said the commitment to lower the cost of university tuition would ‘lead to higher taxes or borrowing’. The source also pointed out Mr Miliband would, by cutting fees, be reversing a pledge made during his Labour leadership campaign to introduce a graduate tax.
This would involve graduates paying more tax over a lifetime as a result of having a degree.
However last week, the party’s universities spokesman Liam Byrne indicated that Labour could still move to a graduate tax in the long term.
Cutting fees would be popular among students at a time when Labour is facing fierce competition for their votes from the Green Party, which wants to scrap fees altogether. A Labour spokesman said: ‘In trebling tuition fees this Government has found a system of university finance that puts a huge burden of debt on students, while almost costing the taxpayer more than it saves. It lets down both the next generation and the public finances.’
Labour introduced tuition fees in September 1998, with students expected to pay up to £1,000 a year. The fees were then increased to £3,000 a year during Labour’s second term in January 2004.
‘Make the sums add up’