Ed Miliband’s proposal to fund a reduction in university fees by raiding private pension pots will kill off aspiration in the young and has been branded “bonkers” by a Lancashire business advisory and accountancy firm.
Chartered accountant and business development specialist John Toon, of the Pierce Group, believes the Labour leader’s plans will be wholly counter-productive by not only creating a funding crisis for higher education but by stifling the future prospects and earnings potential of the very students he professes to support.
In a blog on the subject, he echoes the comments of Money Saving Expert’s Martin Lewis, who has called Ed Miliband’s suggestion, “financially illiterate.”
He commented: “University graduates are the most likely to gain careers with salaries that will put them in the higher earnings tax bracket.
“And, under the new Auto Enrolment pensions’ policy, they’d be required to put five per cent of their earnings into a pension for the rest of their working life, yet on higher annual earnings, they would lose around hundreds of pounds each year if pensions’ tax relief is abolished as a consequence of the Labour leader’s proposal to pay for the reduction in tuition fees this way.”
Blackburn-based Mr Toon added: “The question I would ask as a student is, do I want my tuition fees reducing now by a third, or do I want to pay a year on year penalty on my future earnings for life, if I’m fortunate enough to achieve my earnings potential?
“For me it would be a no-brainer but the only way to avoid the loss of tax relief would be for me to lower my horizons and settle for less from my career.
“It’s utterly bonkers, because it’s robbing people of aspiration. After all, what’s the point of gaining a university education, if not for the potential for higher earnings and better prospects?”.
Mr Toon also points out that students benefiting from reduced tuition fees under any future Labour government would still have to service their student loan debt if they earn above the threshold of £21,000 per year. He suggested they would actually be worse off in the long-term.