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Not for the first time, the Tories are playing incredibly smart politics with this Labour Government.
Over the weekend, shadow Education Secretary Laura Trott appeared on TV and radio and backed her Government counterpart, Bridget Philipson, into a tight corner by declaring the Tories would cut “unfair interest” on Plan 2 student loans.
The Conservatives arguably aren’t being ambitious enough. Their big idea is to cut the interest on Plan 2 loans to RPI (the Retail Price Index) only; so far, they have not suggested addressing repayment thresholds.
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Nonetheless, the announcement is timely. It also makes the Tories look more progressive on this issue than Labour, which is no mean feat given their record. Lest we forget, tuition fees of £9,000 a year plus were actually introduced by the Tories in the coalition government. As was the Plan 2 repayment system.
So, what’s coming up in this week’s The State We’re In:
The Tories have finally realised they need to speak to younger voters
Labour’s growing student loan problem
The heat is now being turned up on these loans, taken out between 2012 and 2023, primarily because the young people who took them out are no longer young – some of them are in their 30s and are being rather vocal about the financial pain they’re feeling.
See the New Statesman’s Oli Dugmore, who recently pointed out on Question Time that his degree cost more than every other panellist’s put together because they were old enough to have paid low (£1,000 a year) or no tuition fees. “Is that fair?” he asked. No, not really, their awkward silence suggested.
Britain’s current student loans system sees graduates without wealthy parents hit with a graduate tax of more than 6 per cent on top of their income tax and national insurance (NI) payments. That’s a marginal tax rate of 37 per cent on earnings over £25,000 and 51 per cent on earnings over £50,270. Eye-watering!
Student loan repayments are effectively a regressive tax. It entrenches intragenerational inequality because people with wealthy parents can pay fees up front and, often, get maintenance support from said parents.
It also has a scarring effect on graduates’ finances because the more they earn, the more they repay at a time in life when they need to be saving to buy a home, funding young children (if that’s something they want to do) and, crucially, paying meaningfully into a pension.
Before he was the Prime Minister, Sir Keir Starmer pledged to abolish tuition fees altogether. That pledge has since been abandoned. Starmer says it’s because getting NHS waiting lists down is more important.
Right now, Labour simply does not appear to have answers to these urgent problems. And Trott’s media round makes it clear that they won’t be able to get away with that much longer, not least because Nigel Farage’s Reform are also making a pitch to younger people, albeit as I reported from Reform’s conference in Birmingham in September, a rather disingenuous one.
This comes against the backdrop of polling, which shows the votes of young graduates appear very much up for grabs.
Labour has seen its polling numbers drop from 45 per cent among 25-29 year olds at the general election to 26 per cent in January. Its graduate vote has also declined from 42 per cent to 25 per cent.
Worse than not having the answers, Labour appears as though its simply does not care. Their answer to the plight of the under-40s in this country – the same young people that they’re relying on to work hard and fuel the economy with their labour – is “tough”.
Just before Christmas, I interviewed the Chancellor Rachel Reeves in Number 11 Downing Street. It was shortly after her Budget in which she announced that she was freezing the student loan repayment threshold as opposed to increasing it in line with wage inflation.
I pointed out to the Chancellor that this would drag more graduates into repaying their loans sooner because wages have gone up and leave them repaying their debts for longer. Her answer? She stood by her decision and barely acknowledged how hard things are for a generation of people who are struggling to move out of their parents’ homes, crowded into rented shared homes, delaying having children or throwing in the towel and moving to Dubai.
Incidentally, in that interview, Reeves also told me that she bought her first home in her 20s and acknowledged that she doesn’t think that would be possible today because of high house prices.
When challenged on expensive student loans and extortionate tuition fees, Labour is also, rather ironically, trotting out old Conservative lines.
Just over a week ago, the Housing and Communities Secretary Steve Reed appeared on Lewis Goodall’s Sunday LBC show. Reed told Goodall that Labour were defending the student loans system and that it was right that graduates contribute towards their education.
It will feel rich for a generation of government ministers who have benefited from low house prices and a cheap university education to offer nothing other than tough love to younger people. Not least because the bright idea of expanding higher education and funding it with tuition fees was New Labour’s in the first place (though the Tories did introduce maintenance loans in the early 90s). Before that, higher education was grant funded by local authorities.
Trott, on the other hand, who went to university when tuition fees were £1,000 a year, and Conservative leader Kemi Badenoch, who held up under a grilling from money expert Martin Lewis on Good Morning Britain earlier this week, are managing to appear as though they are on the side of graduates.
The Tories’ “New Deal for Young Workers”, as laid out by Trott, doesn’t stop at sorting out Plan 2 loans. She also said the Tories would create 100,000 more apprenticeships for 18-21-year-olds and subsidise up to £5,000 of those people’s wages to encourage employers to support the idea. This sets up a challenge for Labour, who have increased NI contributions for employers, which, critics say, has made it more expensive to hire young people for entry-level roles.
It’s easy to promise people the moon when you’re in opposition. Just ask Labour! But much harder to deliver when you’re in government. Just ask the Tories!
Nonetheless, Labour is in danger of being outflanked by the Conservatives on the issues that people are most affected by and most worried about. And, with Reform edging ever closer to power on Labour’s right and the Greens threatening them to the left, that should really worry Labour.
A little more compassion from government ministers towards young people would go a long way.
Housing crisis watch
The BBC is reporting that a group of housing sector leaders – which includes the homelessness charity Shelter and John Bird of The Big Issue, have written to the Housing minister, Matthew Pennycook, and called for the Government to launch a national strategy to bring empty homes back into use, amid record levels of people living in temporary accommodation and long waits for social housing. You can read more here.
What I’m watching…
Over the weekend, I re-watched Nora Ephron’s classic film adaptation of her novel Heartburn. I had forgotten how incredible Meryl Streep is in this film about the breakdown of a marriage (loosely based on Ephron’s own divorce), and was struck by how eternal tales of power struggles in heterosexual relationships are.
I also re-watched the 90s cult classic Cruel Intentions. I can confirm that it is still problematic as hell and excellent.