While George Osborne’s U-turn announcement today about scrapping controversial plans to cut family tax credits and ditching cuts to police budgets have dominated the headlines, it’s also been revealed that the UK government are shafting students and young people again.
Osborne didn’t mention it in his Spending Review speech today in the House of Commons, but the Tories have managed to sneak through the fact they won’t be raising the threshold for students repaying their loans in line with inflation.
Basically, that means ex-students will continue to repay 9 per cent of everything they earn above £21,000 (before tax) after they graduate, which will cost youngsters a lot more in the long run.
The freeze was made, despite massive opposition to the idea.
The Government consulted on freezing student loan repayment threshold. 84% opposed it; the Govt went ahead anyway. pic.twitter.com/ZPoUfgOI1C
— Josh May (@JoshMay_PH) November 25, 2015
As reported by the Guardian, the Department for Business, Innovation and Skills (BIS) said:
To reduce government debt, the student loan repayment threshold for Plan 2 borrowers will be frozen until April 2021.
Plan 2 borrowers are those who took out loans from 2012 onwards.
The disappointing revelation comes hot on the heels of today’s news that British universities are now the most expensive in the world.
Labour MP Wes Streeting has already called the move a “betrayal”, while Martin Lewis, founder of MoneySavingExpert.com, is absolutely furious with the decision, and accused the Chancellor of cowardice for opting not to mention the freeze in his speech today.
Agreed. Regard this as a personal betrayal of those graduates and work we did for Willetts on independent info https://t.co/QdxgbWOLAe
— Wes Streeting MP (@wesstreeting) November 25, 2015Advertisement
According to Lewis, because of the rate of inflation, the freeze means 2 million graduates will end up paying £306 more each year by 2020-21 than they would have done without the change.
Speaking to the Guardian, Lewis said:
This is a disgraceful move and a breach of trust by the government that betrays a generation of students. It has chosen to freeze the repayment threshold even though 95% of the consultation responses did not support the freeze – what was the point of a consultation if when there’s huge objection it does it anyway?
It is risking fundamentally threatening any trust people have in the student finance system. It is one thing to set up a system that is unpopular but it is entirely different to make retrospective changes that mean you cannot even rely on what you were promised at the time you started to study. Even though it was warned of the huge dangers of doing this, it’s still blundering ahead, ignoring all right thinking concern.
The fact that the Chancellor didn’t even have the balls to put it in his Autumn Statement speech shows that he knew how unpopular it would be. If a commercial company made retrospective changes to their loan terms in this way they’d be slapped hard by the regulator – the Government shouldn’t be allowed to get away with it either.
Elsewhere, Osborne still said he planned to make deep cuts to public spending, slashing it by £20billion in order to get Britain out of debt by 2020.
While his plans to ditch the plans to cut £4.4bn worth of tax credits for working families proved popular, as did not going ahead with cuts to the police force in the wake of the Paris attacks, it will still be the poor who are hit hardest by today’s announcements.
— George Osborne (@George_Osborne) November 25, 2015
£12bn worth of cuts will still be made to social security over the next five years and, although he pledged billions extra for the NHS, student doctors and nurses will still continue to suffer with an end to bursaries.
In other announcements, Osborne revealed there’d be no cuts to arts and sport, more funds for mental health and perinatal care, a rise in the basic state pension, more spending on infrastructure, a proposed fresh crackdown on tax avoidance, and billions more was promised for defence and foreign aid.