Chief Secretary to the Treasury warns Labour’s plan to cut student loan repayments will force up taxes for the rest of the country
- Tory John Glen demands urgent answers from shadow chancellor Rachel Reeves
Labour last night faced criticism over its plans to cut monthly student loan repayments for university graduates amid fears the party’s policies will result in higher taxes.
The announcement prompted experts to warn that either wealthier learners would end up paying more or there would be general tax increases to cover it.
Labour has already come under fire from the Institute for Fiscal Studies think-tank over its green spending agenda.
And the new proposals for student loans prompted Tory minister John Glen, Chief Secretary to the Treasury, to demand urgent answers from shadow chancellor Rachel Reeves.
Mr Glen said in a letter to Ms Reeves: ‘According to newly released analysis, your policy pledges would cost the equivalent of a 3p rise in income tax. This is in contravention of the Leader of the Labour Party’s pledge to not open the big Government chequebook and your own stated commitment to fiscal responsibility.
New proposals for student loans prompted Tory minister John Glen (pictured), Chief Secretary to the Treasury, to demand urgent answers from the Labour party
Shadow chancellor Rachel Reeves (pictured) last night faced criticism over its plans to cut monthly student loan repayments for university graduates amid fears the party’s policies will result in higher taxes
‘You will understand this is particularly concerning to me as the minister responsible for public spending as I and the Conservative party as a whole understand the vital importance of responsibility with the public’s money.’
He said recent comments from IFS director Paul Johnson about Labour’s plans to borrow £28billion for its Green Prosperity Plan suggested it created a ‘potential threat to the livelihoods of the UK public, due to the impact of your policies on inflation and interest rates’.
Labour this week signalled further changes to university finance, after its shadow education spokesman Bridget Phillipson promised Labour would reform the tuition fee system.
She told The Times that her party’s modelling showed scope for ‘a month-on-month tax cut for graduates’, meaning a reduction in monthly student loan repayments.
But the IFS raised questions about the wider implications of the latest proposals.
Kate Ogden, from the think-tank, said: ‘It is true that a combination of measures – such as reintroducing real interest rates on student loans – could deliver a more progressive student finance system. However, to avoid adding to government borrowing or general taxation, this would require high-earning graduates to continue repaying for longer.’
