Labour is planning a possible tax raid on pensions in order to fund a cut in tuition fees, it has emerged.
Ed Miliband is planning to cut tuition fees from £9,000 to £6,000 if Labour wins this year’s General Election, but will need around £2bn a year to fund the scheme.
According to The Times, Ed Balls has proposed cutting the tax breaks handed to those saving for a pension.
Pension tax breaks are worth roughly £24bn each year, but Labour believe more money could be saved by either cutting the £1.25m limit on pension savings free of tax or lowering the £40,000 savers are permitted to put towards their pension each year tax free.
Tax-incentivised pension was lowered by George Osborne from £50,000 last year, while the lifetime limit was cut from £1.5m.
Former universities secretary Lord Mandelson publicly poured doubt on Miliband’s plan to lower university fees last week, while concern has also been felt within his own shadow cabinet according to reports. Lib Dem business secretary Vince Cable said cutting fees would be a “populist gesture.”
Speaking to university vice-chancellors last week, Lord Mandelson said:
If any reduction in fees is announced, and I’m not assuming that it will be, it’s absolutely vital that replacement funding from taxation is identified and announced at the same time.Not in a generalised way, but in a specific way. Because that will ensure that no credibility gap is opened up either around university funding or the Labour Party’s commitment to reducing the fiscal deficit.