Miliband risks pitching young versus old with fees pledge

Labour leader Ed Miliband is taking the biggest gamble of the election campaign so far by announcing today he is going to cut student fees from £9,000 a year to £6,000 – and pay for it by raiding the pensions of the middle classes.

Miliband risks igniting a inter-generational war of envy with his controversial solution to what he calls the “betrayal” of Britain’s younger generation, who have got deeper into debt while the older generation has become wealthier.

“A country where the next generation is doing worse than their parents is the definition of a country in decline,” he will say in a speech in Leeds. “None of us want to see our kids treated like this. This is a disaster for them and a disaster for the future of Britain too.”

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Many agree with Miliband’s sentiment - but not with his solution.

The cut in tuition fees will reduce funding to universities by £2bn. Labour aims to make up that shortfall by reducing the tax relief on pensions for those on the higher rate of incomes from 40 per cent, possibly to 20 per cent.

Chris Leslie, shadow Chief Secretary to the Treasury, told Radio 4’s Today programme that with the current £9,000 annual fee, the cost to taxpayers of those students who never pay their fees could add £16bn to the national debt by 2020. “The current student fees system is imploding,” he said. “We have to sort this out.”

Miliband is calling today’s promise to students his "fourth election pledge”. The cut in tuition fees could be coupled with more help for students facing a cost-of-living crisis on inadequate maintenance grants.

But the risks are undoubtedly high – on the generation front and in terms of Miliband’s election chances.

The Daily Telegraph reports Ros Altmann, the government’s adviser on older generations, warning Miliband that by "pitching young people against older people” he will trigger a war of envy between the generations as the election approaches (it’s ten weeks from today).

Vince Cable, the Lib Dem Business Secretary, insists the current fees system is sustainable and has called Miliband’s alternative “financially completely illiterate”.

The Guardian says Lord Mandelson and other senior Labour figures have warned that it could lead to a funding crisis for the universities and there is no evidence that the higher fees have been a deterrent to applications by children from poorer families.

UCAS, the university clearing house, has reported that applications from students of deprived backgrounds are at a record high.

While a quick vox pop among 17 and 18-year-olds by The Guardian this morning finds those about to go to university thrilled at the news, many within Labour fear that Miliband risks losing far more older voters than he will gain in younger ones.

Under-18s don’t have a vote anyway, and students currently at university tend not to bother to vote, either through apathy or because they share Russell Brand’s view that there “is nothing worth voting for”.

As for those approaching pension age, the proposed cut in tax relief tax relief will hit thousands of ordinary workers - teachers, senior nurses, policemen - because the 40 per cent tax kicks in at only £31,785. Previously, for every £1 they invested in their private pensions, they got 40 per cent in tax relief. Under Labour it could go down to 20 per cent.

While Miliband risks alienating more middle class savers and pensioners, David Cameron is going all out to win the “grey vote” (particularly those “greys” threatening to desert to Ukip). He has promised to protect the winter fuel allowance and free bus passes, regardless of how much they have in the bank.

Miliband’s insistence on the tuition fee cut has also created a divide within the shadow cabinet. Ed Balls, the Shadow Chancellor, wanted his boss to stick to a long-term Labour plan for the introduction of a graduate tax which would rise according to earnings when students eventually get jobs.

The two Eds are clearly not together on this one – and there has been talk of Miliband shifting Balls from Chancellor to a lesser position if Labour win on 7 May. The question today is whether Miliband’s stance on tuition fees makes it less likely that he’ll ever be in a position to make that change.