In his Autumn Statement to Parliament last month, chancellor George Osborne didn't have a lot to say on students – unlike the summer Budget when he announced a complete cut to maintenance grants for poor students (fuck those guys, right?). Of course, politics is also about what you don't say. In this case, Osborne didn't mention that the government was introducing a massive regressive change in student loan repayments. "The government will freeze the student loan repayment threshold for [those who started university after 2012] for five years from April 2016", the small print of the Spending Review, the document that accompanies the Autumn Statement, quietly announced.
Currently you start repaying your loan when you earn £21,000. That figure will be the same in 2020, by which point £21,000 will be worth a lot less, thanks to inflation. Effectively, you're going to have to start repaying your student loan on a lower and lower income each year.
Over the last five years, we've reached a stage where the government can do pretty much whatever it likes to students and higher education without too heavy a political backlash. If students can literally smash up the headquarters of the ruling party and not get listened to then you know things are tough.
Students need some help, and who better than a day-time TV star? Enter Martin Lewis, champion of middle Britain, star of ITV's The Martin Lewis Money Show (the UK's biggest consumer programme), founder of the Money Saving Expert website and regular guest on GMB, This Morning and has his own show on Radio 5 Live called Lunch Money Martin.
Martin is one of the most popular financial journalists in the country. He's the Brian Eno of air miles and customer complaints. His TV show and blog posts reach millions each week. And now, he's battling for students everywhere – on Monday he announced that he's hired lawyers to look into taking legal action against the government's change to student loans. Martin has fronted several successful public finance campaigns in the past. He believes he's got a chance making the government capitulate and he's up for a fight. We spoke to him about his campaign and its chances of success.
VICE: Hi Martin, can you explain a bit what the government is trying to do and why you're opposing it?
Martin Lewis: What's happened is that hidden in the small print of the Autumn Statement, and it was hidden in a cowardly way, was the fact that from April 2016 the student loan repayment rate will be frozen for five years. When the student loan system was changed in 2012, it was always said that from April 2016 that repayment threshold would rise with average earnings.
Now this does sound rather trivial, but this is known in tax as fiscal drag and it's a very clever way of bringing in the government more money and costing students a lot more money without them realising. The government thought they could sneak it under the door posts but my intention is to not allow that to happen. If they froze it at £21,000 for 20 years, for example, then that would be minimum wage in 2035. Five years of increases in average wages would have put the threshold up to £24,000 to £25,000 but, no, it's going to stay at £21,000. If you froze it again, and again and again, then what you would have is graduates working on minimum wage in Tesco repaying their student loans.
You were the head of the Independent Task Force for Student Finance Information, which advised the government on student loans, is this personal because of that?
I do feel a personal responsibility. I have worked all of my career to try to give out the best information I can; you can't always do it perfectly, but I told people in the past that this threshold would go up in April 2016; I told them that because I had it from the government, from the minister responsible himself, we were told the threshold would go up. We were told in every eventuality it would go up in April 2016. The government answered in parliament that it would go up in 2016. And I feel in hindsight that this is an objection to my being used as a mule by the government. That's why I'm doing it personally. I believe in this. I put my money where my mouth is on something like this.
And why are you the man to stop them?
Sometimes you worry that governments like to take on groups that they know aren't going to be able to challenge them, well in this case they happened to forget that I'm sitting here... Money Saving Expert is used by 15 million people a month, we have 11 million getting my email; my TV show is the biggest consumer show on television. I do speak to middle Britain and the government is well aware of that and they thought this was going to be a niche issue and I'm doing everything I can to make this a mainstream one. And to make them realise that they've chosen the wrong target this time... Students are revolting; they often revolt. We all know that. But what governments are more scared of are middle Britain parents. No disrespect to students: but you know, students and a Tory government are used to the mass student body not liking them. If you really want to scare them: get your parents and grandparents to start complaining.
Do you think the change will punish graduates on low incomes or even dissuade people from going to university altogether?
When you actually look at the impact of this, while it will hit everyone's cash flow, it will be those on lower to middle incomes that will be hit hardest by this. Low and middle earners won't clear the debt in the 30 years before it wipes, so what really counts for them is what they pay a month; this policy will increase what they pay a month compared to what they would have paid. Higher earners, will be able to clear the debt more quickly and will – this is crucial – have less interest on it to pay off. They will therefore save money. This policy hurts everybody's cash flow but directly increases the total cost of going to university for those who will earn a lower or middle-income salary. That's known as a regressive system: it benefits the rich and penalises the less well off graduates once they leave.
The problem we have here, and this is a real threat to social mobility, is that children of parents who went to university will likely still go to university anyway, that's the way it works. But children of parents who didn't go to university are much more risk averse and so when they hear that the government can change the terms of student loans after you sign up for them, and in some cases after they've graduated, I think that is going to scare a lot of people off. And I think it's going to scare those off who we most want to go to university for the sake of social mobility, which is those whose families haven't traditionally gone to university. And I think that if that happens, we're in an absolutely desperate situation.
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