Spot the difference: pensions vs student loans

It's only OK to retroactively change a deal when it affects young people.

The Guardian's Aditya Chakrabortty and the False Economy network have a massive scoop this morning. A secret government report from 2011 proposes retroactively changing student loan agreements to force pre-2012 graduates to pay more for their education:

At the moment, the cap on student debt taken out before 2012 keeps repayment rates at 1.5%. Lifting it would mean a rate of 3.6%, in line with RPI in March 2012. One indicative calculation suggests that an employee on £25,000 a year, with £25,000 of undergraduate loans taken out before 2012, could work until retirement without ever paying off their debt if the interest rate cap were removed.

Somewhat astonishingly, the report also contains a "script" for ministers to push the policy:

"We all live in difficult times," they suggest ministers argue. "You have a deal which is so much better than your younger siblings (they will incur up to £9,000 tuition fees and up to RPI+3% interest rates)".

Needless to say, the report does not address the fact that the ministers' generation had a deal which is considerably better that either younger or older siblings.

There's an element of sleight of hand at play here. Since the actual fees are not retroactively raised, the government would be able to argue that it's not really changing all that much, just the terms of repayment. But student loans are already basically taxes in how they're repaid. What this will do in that assessment is extend the length of time which those taxes are paid – in some cases, right up until the 25-year cut-off, at which point the outstanding debt is wiped away.

The reason why the change is so remarkably unfair is because of its retroactive nature. A cohort of students decided to go to university based on the deal that they would repay loans at the lower of 1 per cent above the Bank of England base rate or RPI. If that weren't the deal at the time, it's a fair bet a number of people might not have decided to get themselves into around £20,000 of debt.

There's a certain amount of fun to be had comparing the proposals to the reaction to Labour's markedly less radical suggestion that pensions count as welfare spending, and might need to be capped if welfare spending as a whole grows too large.

That is not a particularly bold statement. As Ian Mulheirn of the Social Market Foundation has showed, given the rate at which pension liabilities are growing, just to keep total expenditure flat would require massive cuts to every other spending program. Nonetheless, it's led to comments like this, from the National Pensioners Convention:

Ed Balls has made a fundamental error of judgement in suggesting that state pensions are just another benefit in the general scheme of welfare spending.

Everyone knows that you only receive a state pension if you have paid national insurance for at least 30 years. This contributory principle means that it’s not a benefit, but an entitlement.

Interestingly, no-one brings up the same point when contributory JSA is cut, a benefit which also relies on NI contributions. But the larger point is that the contributory principle says nothing about the level of benefits.

It may well be a terrible idea to cut pensions, for exactly the same reason that it's a terrible idea to retroactively increase student loan payments: people make spending plans spanning decades based on these figures, and a cut can wreck those plans at a time when there's no chance to rescue them.

(Of course, that objection doesn't quite hold water in the case of pensions, which have, thanks to the Government's "triple lock", increased in present value significantly. Removing the triple lock could not irreparably damage anyone's long term plans)

But young people are easier to screw over than old people. And divide and rule – pitting one cohort of young people against another – makes it even easier still.

Here's a better idea for funding universities: don't scrap a tax which brings in billions of pounds from people who can overwhelmingly afford it, and then complain that the one generation which actually paid for their university education should pay more.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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For the first time in my life I have a sworn enemy – and I don’t even know her name

The cyclist, though, was enraged. “THAT’S CLEVER, ISN’T IT?” she yelled. “WALKING IN THE ROAD!”

Last month, I made an enemy. I do not say this lightly, and I certainly don’t say it with pride, as a more aggressive male might. Throughout my life I have avoided confrontation with a scrupulousness that an unkind observer would call out-and-out cowardice. A waiter could bring the wrong order, cold and crawling with maggots, and in response to “How is everything?” I’d still manage a grin and a “lovely, thanks”.

On the Underground, I’m so wary of being a bad citizen that I often give up my seat to people who aren’t pregnant, aren’t significantly older than me, and in some cases are far better equipped to stand than I am. If there’s one thing I am not, it’s any sort of provocateur. And yet now this: a feud.

And I don’t even know my enemy’s name.

She was on a bike when I accidentally entered her life. I was pushing a buggy and I wandered – rashly, in her view – into her path. There’s little doubt that I was to blame: walking on the road while in charge of a minor is not something encouraged by the Highway Code. In my defence, it was a quiet, suburban street; the cyclist was the only vehicle of any kind; and I was half a street’s length away from physically colliding with her. It was the misjudgment of a sleep-deprived parent rather than an act of malice.

The cyclist, though, was enraged. “THAT’S CLEVER, ISN’T IT?” she yelled. “WALKING IN THE ROAD!”

I was stung by what someone on The Apprentice might refer to as her negative feedback, and walked on with a redoubled sense of the parental inadequacy that is my default state even at the best of times.

A sad little incident, but a one-off, you would think. Only a week later, though, I was walking in a different part of town, this time without the toddler and engrossed in my phone. Again, I accept my culpability in crossing the road without paying due attention; again, I have to point out that it was only a “close shave” in the sense that meteorites are sometimes reported to have “narrowly missed crashing into the Earth” by 50,000 miles. It might have merited, at worst, a reproving ting of the bell. Instead came a familiar voice. “IT’S YOU AGAIN!” she yelled, wrathfully.

This time the shock brought a retort out of me, probably the harshest thing I have ever shouted at a stranger: “WHY ARE YOU SO UNPLEASANT?”

None of this is X-rated stuff, but it adds up to what I can only call a vendetta – something I never expected to pick up on the way to Waitrose. So I am writing this, as much as anything, in the spirit of rapprochement. I really believe that our third meeting, whenever it comes, can be a much happier affair. People can change. Who knows: maybe I’ll even be walking on the pavement

Mark Watson is a stand-up comedian and novelist. His most recent book, Crap at the Environment, follows his own efforts to halve his carbon footprint over one year.

This article first appeared in the 20 October 2016 issue of the New Statesman, Brothers in blood