John McDonnell has rowed back slightly on Jeremy Corbyn’s pre-election suggestion that Labour could wipe out existing student debt, saying this was “an ambition” for the party in power but would not necessarily happen.
It did not seem fair that those who “had the historical misfortune to be at university” during the period of £9,000-plus annual tuition fees should be burdened with such debts, Corbyn had argued.
He said Labour would look at “ways that we could reduce that, ameliorate that, lengthen the period of paying it off, or some other means of reducing that debt burden”.
But McDonnell, the shadow chancellor, said that while Labour remained committed to abolishing tuition fees, the debt wipeout idea – which was not in the manifesto – would have to be closely looked at.
“What we’ll be doing is inviting people to come and advise us: we’ll try and ensure we use economists as well as educators,” McDonnell told BBC1’s Andrew Marr Show, saying enacting the pledge would cost about £100bn.
“The problem that we’ve got is the system is imploding. Half of the student debt, we now know, is not going to be paid back.”
Asked if the policy would happen, McDonnell said: “We’ll look at what we can do. It’s a real ambition. What Jeremy said is we recognise young people are coming out of college now with debts of £50,000. They cannot even think about buying a house or getting on the property ladder. So we’ve got to tackle that. But the issue is, the system’s got to be tackled anyway, because it’s falling apart.”
McDonnell said Corbyn’s pre-election interview “wasn’t a promise”. He said: “We’re going to try to. It’s a real ambition of ours. I don’t want to promise something we can’t deliver, I want to be straight.
“Let us just be clear. What we said in our manifesto was we’ll scrap tuition fees. We will scrap tuition fees. If we can help deal with the debt we certainly will. And because the system is collapsing, to be frank whoever is in government is going to have to deal with this.”
Debate over the scale of student debt has been heightened by an analysis published this month which said students from the poorest 40% of families entering university in England for the first time this September would emerge with an average debt of about £57,000.
The Institute of Fiscal Studies said the abolition of the last maintenance grants in 2015 had disproportionately affected the poorest, while students from the richest 30% of households would run up lower average borrowings of £43,000.
Repayments on tuition fee loans begin when graduates earn more than £21,000, and they are obliged to repay 9% of any salary above this level. However, after 30 years, any outstanding student debt is written off.
With the total debt now above £100bn, it is estimated that many loans will never be repaid. In 2014, a government forecast said write-off costs of 45% on loans was negating any savings to public finances from the loan system.
This article was written by Peter Walker Political correspondent, for theguardian.com on Sunday 16th July 2017 11.17 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010
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