Non-graduates will subsidise students under Labour plans says think-tank

Labour's pledge to abolish university tuition fees and its ambition to "deal with" existing debt is regressive as poorer non-graduates would be subsidising students who will go on to earn £9,500 more, a think-tank has said.

The Centre for Policy Studies (CPS), a free-market think-tank co-founded by Margaret Thatcher, said the amount Labour has pledged to spend is equivalent to nearly 2.8 percentage points on the basic rate of income tax.

This amounts to a "significant" potential impact on the taxpayer, the think-tank said, although Labour has announced tax increases for corporations and the top 5% of earners, which among other measures would go towards funding the pledge.

The CPS also found that since the raising of the cap on tuition fees to £9,000, the participation rate of disadvantaged 19 year-olds in higher education has increased by 4.8%.

Furthermore, in Scotland, which does not charge Scottish or EU nationals fees, there are 3.5 advantaged students for every single disadvantaged student, compared to the rate in England of 2.4.

The think-tank said Labour's similar plan for England could lead to a rationing of university places and reduced numbers of disadvantaged students in higher education.

Daniel Mahoney, CPS head of economic research, said: "Statistics out today show that the participation rate of disadvantaged youngsters in higher education has increased by 4.8% since the £9,000 cap on fees was introduced. This is very welcome, and highlights how wrong Jeremy Corbyn was to suggest that fewer working class youngsters are attending university.

"It is also important to highlight that Corbyn's proposal of abolishing tuition fees could, in fact, be a very regressive move. Graduates, on average, earn £9,500 more a year than non-graduates. By increasing fiscal burdens on the taxpayer, the policy would, in effect, be a subsidy from less wealthy non-graduates to wealthier graduates.

"Moreover, Scotland has no tuition fees and the proportion of disadvantaged youngsters going to university is far lower than in England."

Universities minister Jo Johnson said: "This report shows that Labour's flagship general election policy is a sham.

"The only winners from scrapping tuition fees would be wealthy graduates - not the disadvantaged pupils whose interests Labour claim to have at heart.

"Labour are betraying young people, they've already broken their promise on student debt and now their tuition fee policy has been exposed as damaging for young people.

"The reality is that under the Conservatives, there are more disadvantaged students going to university than ever before and Jeremy Corbyn's plans would put this at risk."