The Tory-Lib Dem university battle isn't over yet

Lifting the penalty on early student loan repayments won't be enough to keep the Tories happy.

The government's tuition fees package, you'll recall, was filleted with "progressive" amendments designed to persuade recalcitrant Lib Dems to back the plans. But we learn from the Daily Telegraph this morning that one of those concessions - fining graduates who pay off their student loans early - has been revoked.

Vince Cable had planned to impose a five per cent charge on the value of early repayments in an attempt to prevent "wealtheir students" from avoiding interest charges. Back in October 2010, the Business Secretary said:

There is an issue about people who go on to very high-earning jobs and who therefore pay off relatively quickly and we do have to think about how to find a way by which they make some sort of contribution towards low-earning graduates.

It was always a dubious proposal. Some of the wealthiest students (or, more accurately, the children of wealthy parents) bypass the loan system altogether by paying their university fees upfront. Indeed, as the liberal think-tank Centre Forum observed, it would likely be low-income graduates who lost out since "debt aversion not affluence is the biggest cause of early repayments".

But this isn't just about bad policy. The Lib Dems agreed to abandon the proposal as a quid pro quo for the appointment of Prof Les Ebdon as the director of the Office for Fair Access. Although Cable's favoured candidate, Ebdon was attacked by the Tories as a supporter of "social engineering", with Michael Gove privately lobbying against his appointment and the business select committee voting against it.

One Downing Street source cheerfully tells the Telegraph:

The Lib Dems were very keen to appoint Ebdon and we felt very strongly about penalties for early repayment of loans. This is hopefully good news for tens of thousands of families, as well as many Conservative MPs who had raised concerns about the penalties.

But it's hard to imagine Tory MPs will be so sanguine. It is they, rather than the Lib Dems, who look like the losers from this affair. The abandoment of early repayment charges is a minor concession that, in most Tories' eyes, hardly compensates for Ebdon's three-year appointment.

To the consternation of the Russell Group, Ebdon has threatened to forbid universities from charging the maximum £9,000 tuition fee if they do not meet targets on widening participation. An option he describes, in language strikingly reminiscent of Cable, as "the nuclear button".

Cable will confirm Ebdon's appointment next week but expect Tory MPs to take every opportunity to undermine him.

George Eaton is political editor of the New Statesman.

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How a small tax rise exposed the SNP's anti-austerity talk for just that

The SNP refuse to use their extra powers to lessen austerity, says Kezia Dugdale.

"We will demand an alternative to slash and burn austerity."

With those few words, Nicola Sturgeon sought to reassure the people of England, Wales and Northern Ireland last year that the SNP were a party opposed to public spending cuts. We all remember the general election TV debates, where the First Minister built her celebrity as the leader of the anti-austerity cause.

Last week, though, she was found out. When faced with the choice between using the powers of the Scottish Parliament to invest in the future or imposing cuts to our schools, Nicola Sturgeon chose cuts. Incredible as it sounds the SNP stood shoulder to shoulder with the Tories to vote for hundreds of millions of pounds worth of cuts to schools and other vital public services, rather than asking people to pay a little bit more to invest. That's not the choice of an anti-austerity pin-up. It's a sell-out.

People living outside of Scotland may not be fully aware of the significant shift that has taken place in politics north of the border in the last week. The days of grievance and blaming someone else for decisions made in Scotland appear to be coming to an end.

The SNP's budget is currently making its way through the Scottish Parliament. It will impose hundreds of millions of pounds of cuts to local public services - including our schools. We don't know what cuts the SNP are planning for future years because they are only presenting a one year budget to get them through the election, but we know from the experts that the biggest cuts are likely to come in 2017/18 and 2018/19. For unprotected budgets like education that could mean cuts of 16 per cent.

It doesn't have to be this way, though. The Scottish Parliament has the power to stop these cuts, if only we have the political will to act. Last week I did just that.

I set out a plan, using the new powers we have today, to set a Scottish rate of income tax 1p higher than that set by George Osborne. This would raise an extra half a billion pounds, giving us the chance to stop the cuts to education and other services. Labour would protect education funding in real terms over the next five years in Scotland. Faced with the choice of asking people to pay a little bit more to invest or carrying on with the SNP's cuts, the choice was pretty simple for me - I won't support cuts to our nation’s future prosperity.

Being told by commentators across the political spectrum that my plan is bold should normally set alarm bells ringing. Bold is usually code for saying something unpopular. In reality, it's pretty simple - how can I say I am against cuts but refuse to use the powers we have to stop them?

Experts - including Professors David Bell and David Eiser of the University of Stirling; the Resolution Foundation; and IPPR Scotland - have said our plan is fair because the wealthiest few would pay the most. Trade unions have backed our proposal, because they recognise the damage hundreds of millions of pounds of cuts will do to our schools and the jobs it will cost.

Council leaders have said our plan to pay £100 cashback to low income taxpayers - including pensioners - to ensure they benefit from this plan is workable.

The silliest of all the SNP's objections is that they won't back our plan because the poorest shouldn't have to pay the price of Tory austerity. The idea that imposing hundreds of millions of pounds of spending cuts on our schools and public services won't make the poorest pay is risible. It's not just the poorest who will lose out from cuts to education. Every single family and business in Scotland would benefit from having a world class education system that gives our young the skills they need to make their way in the world.

The next time we hear Nicola Sturgeon talk up her anti-austerity credentials, people should remember how she did nothing when she had the chance to end austerity. Until now it may have been acceptable to say you are opposed to spending cuts but doing nothing to stop them. Those days are rapidly coming to a close. It makes for the most important, and most interesting, election we’ve had in Scotland.

Kezia Dugdale is leader of Scottish Labour.