Dear Ed Miliband,
Aside from your current promise to cut tuition fees being grossly unfair to the students that are currently paying the recently-hiked costs, plus the fact that it is a promise that was rapidly broken by the Liberal Democrats after the last election due to it being an entirely untenable strategy to implement, the problem I foresee with this change is that, in the long run, it does not actually help students from low-income families and nor will it help universities.
Right now, even though the fees are £9,000 a year or more, graduates do not have to repay any of this if their earnings are below £21,000 per annum. If tuition fees are cut from £9,000 to £6,000 a year as you propose, many universities will continue to face an increasing funding shortfall. Regardless of this amendment to tuition fees, they will continue to ask the government for more money or to increase the fees, as some have already, to above £12,000 p.a. The money has to come from somewhere - loan repayments being just one avenue.
Now I turn to the fact that, by cutting these fees, you intend to pay for this £2.7 billion of cost by taking money from pensions, particularly impacting on workers who are in middle and upper-middle management occupational pension plans. People like senior nurses, matrons and midwives - surely these are the type of people we need to encourage to stay in the health service, as they continue to provide their expertise with very little thanks. It would in fact appear to contradict Labour's support for the NHS and its staff members.
So, let's look at the figures a little more closely:
The £1 million total pension pot to be capped will provide £27,000 p.a. at current annuity rates. Contrast this with MPs' pensions and they would need a pot of £1.637 million to be able to obtain two-thirds of their final salary at retirement, taking these at the current rates of £67,000, this would provide a pension of £44,220 p.a. The question that comes to mind is would this new cap be implemented against MPs' pensions, which are earned - in full - over only 20 years - or would it be from all other occupations in the public and private sector, which are based on either 30 or 40 years of pensionable service?
As you may see, you are affecting ordinary working senior management and not the very wealthy, as you claim. Surely the challenge instead should be in building up the employability of those leaving university with such debts to ensure that not only are they reaching over the £21,000 per annum earning capacity but are substantially exceeding it. Finding strategies to do this is key to increasing the speed with which money can be ploughed back in to the education system, as is finding more suited ways of gaining extra funding for cash-strapped universities.
Next time you try to cut from the top, reach a little higher.
Party membership number L1248091
Image Source: The Guardian