Tax relief on pensions to be cut to fund Labour tuition fee pledge

Labour has announced that it will fund a cut in university tuition fees through reducing the tax relief on pension contributions for the highest-earners. Ed Miliband made the policy pledge this afternoon, saying those earning more than £150,000 a year will get the same relief as basic-rate taxpayers in future, rather than the 40% they enjoy at the moment.Labour said the pledge will also be funded by:- Capping the total eligible for tax relief in a lifetime at £1m.- Limiting the annual sum eligible for tax relief at £30,000 but with greater protection for those in defined benefit schemes.The leader of the opposition has promised to slash tuition fees by £3,000. They would go from £9,000 to £6,000 if Labour wins power in May, he revealed today.Mr Miliband is quoted by the BBC as saying the current tuition fees system is leading to "more debt for students and more debt for the taxpayer", with an estimated £16bn more than predicted to be added to the public debt by 2020.{desktop}{/desktop}{mobile}{/mobile}He said that "if left unchanged, the whole system will have added £281bn of debt by 2030" and claimed, "the scourge of debt from tuition fees is not only holding back our young people, it is a burden on our country".The pledge has been fully funded, the Labour leaded insisted, and he wants to make it easier for students of all backgrounds to be able to attend.Business secretary Vince Cable has criticised Labour for what he called the party's "financially illiterate" policy on funding universities.Mark Littlewood, director general at the Institute of Economic Affairs, said: "Reducing the ceiling for tuition fees down to £6,000 would make universities increasingly dependent on the public purse. This is a bad policy at a time when reductions in government spending are still necessary and will lead to yet more government interference in how universities are run."Most of this extended taxpayer subsidy will go to those who earn the most after graduation and is likely to be funded by an horrendously complex and damaging change to the way pensions are taxed."

Tax relief on pensions to be cut to fund Labour tuition fee pledge

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