Even in his apology, Nick Clegg lied about student loans


8:53 am - September 21st 2012

by Richard Murphy    


      Share on Tumblr

In Nick Clegg’s apology to the public, he says he should not have made a commitment to block tuition fee increases because “there was just no money around”.

That’s not true for all sorts of reasons.

First, there was been money to pay for cuts in the 50p tax rate. That costs more than £100 million a year according to the government – I suggest it is massively more.

There were cuts to corporation tax rates costing £4.5 billion a year to date (taking into account decisions from 2010 to 2012). And changes in controlled foreign company rules costing about £1 billion a year.

In other words: there was money available. Student loans amount to about £3 billion a year.

The second problem is that the claim that student loans save the government money is just bogus. The loans students take out to pay their educational establishment are lent to them by the government. That’s because the loans are provided by the Student Loan Company.

The government lends the student loan company money it has borrowed from the markets so that the SLC can lend money to students, so that students can pay it to government owned universities for their education, to reduce the supposed cost of the government supplying those students with their education.

Basically, the government is paying for that education by borrowing. It’s just, potentially, making the students responsible for one day repaying that loan. Nothing avoids the fact that right now student’s aren’t paying for the education: the government is.

Therefore Clegg lied. Or is so daft he doesn’t realise the truth.

—-
A longer version of this blog post is here.

    Share on Tumblr   submit to reddit  


About the author
Richard is an occasional contributor. He is a chartered accountant and founder of the Tax Justice Network. He blogs at Tax Research UK
· Other posts by


Story Filed Under: Blog ,Education

Sorry, the comment form is closed at this time.


Reader comments


Well seems politicians have a habit of lying over fee’s, with Education Education Education meaning we will charge £3,000 and then £6,0000 and of course in the main telling fibs.

So for anyone to then moan about Cleggers telling porkies who the hell cares.

And since the £9000 fees come in this year, nothing will be repaid until 2015 and well after this coalition government comes to an end, giving the lie to his other argument that tripling fees was necessary for deficit reduction.

The government lends the student loan company money it has borrowed from the markets so that the SLC can lend money to students, so that students can pay it to government owned universities for their education, to reduce the supposed cost of the government supplying those students with their education.

Yes, there is rather a large role for government in this costly Ponzi scheme. If they’d just GTF out of education we’d have a much better system.

Nothing avoids the fact that right now student’s aren’t paying for the education: the government is.

It is not.

It can’t, because it hasn’t any money to pay for anything and that’s because it doesn’t earn anything. The SLC only represents a way of getting deficit off the balance sheet and an artificial segmentation of future taxation.

Government can reallocate our money that it has acquired through taxation but never forget that WE are paying for education (and everything else).

4. Chaise Guevara

@ 3 pagar

“If they’d just GTF out of education we’d have a much better system.”

I thought you wanted a voucher system?

“Therefore Clegg lied. Or is so daft he doesn’t realise the truth.”

Substitute Richard Murphy for Clegg and it’s a pretty good rule of thumb for dealing with the man and his emissions.

so that students can pay it to government owned universities for their education

Er, except that the government owns no universities. Universities in the UK are generally set up as non-profit educational charities.

Or is so daft he doesn’t realise the truth.

Given that he apparently believed, and the government budgeted on the basis, that no-one would notice the obvious economic incentives for almost every university to charge a flat £9k for every course, this really can’t be ruled out.

As it happens, the cost of subsidising HE will actually be increased as the universities are now able to claim (slightly) more money per student from the government than they were before, so Clegg’s argument doesn’t in fact work, but not quite for the reasons you suggest.

I thought you wanted a voucher system?

I do.

I meant higher education.

“cuts in the 50p tax rate. That costs more than £100 million a year according to the government – I suggest it is massively more.

There were cuts to corporation tax rates costing £4.5 billion a year to date (taking into account decisions from 2010 to 2012). And changes in controlled foreign company rules costing about £1 billion a year.”

More to the point, the Lib Dems themselves are pushing through c. £10bn of tax cuts for mid-to-high earners (plus c. £5bn for low-to-mid earners) by raising the personal allowance to £10,000. So clearly there was at least £15bn available to the Lib Dems to pursue whatever policy priorities they had. They just had the wrong priorities.

9. the a&e charge nurse

Integrity vs expedience – the universal dilemma for politicos.

Are there ANY deal breakers for Clegg?

Many years ago I was rummaging in what optimistically called itself an antiques shop when I found a I found a painting of such tackiness that it burned itself on my memory. A weeping Jesus with big sad puppy dog eyes painted on black velvet by someone who had only ever had the concepts of Jesus, sadness and what human beings actually look like explained to them at third hand. Every time I see Clegg I am reminded of that painting, in fact Clegg’s only hope of political survival is to immediately change his name to Sad Eyed Jesus in the hope of attracting a sliver of sympathy from those who wouldn’t like to boil him in radioactive pig urine for betraying his party and the country.

So Richard’s argument is that since the government is paying the university fees anyway why doesn’t it just pay them and not charge the students for the repayment of the loans?

OK, but that rather misses the point of having the fees and the loans in the first place.

We want potential students to understand the costs of what they are doing.

Providing a university education costs real money. We want those deciding whether to go or not to face that cost: include it in their calculations of whether they should go or not, which degree they should do if they do.

That’s actually what it is all about.

Looking at Student loans that way, you could argue that the Government should just borrow the money, and give it to the universities directly, cutting out the middleman.

It could, then merely charge the students interest on the loan itself upon graduation. This could be, say a small % on income above £21,000 – similar to the current repayments.

You could even call it a graduate tax.

Tim: We want those deciding whether to go or not to face that cost

I’m not sure the current arrangement (or the similar one it replaced) actually succeeds on that basis, though.

The amount you actually pay (as opposed to the nominal size of the student loan taken) almost entirely depends on your salary curve over the next 30 years – something which for the average school leaver is completely unpredictable at a personal level. So we’re not asking (most) students to pay based on the cost of providing the education, but instead to pay a proportion of any financial benefits that they receive from it towards an indeterminate fraction of those costs.

14. the a&e charge nurse

Anyway, I though Clegg said he wasn’t going to apologies?
http://www.youtube.com/watch?v=88fQ2RIoqQA&feature=related

Why all the surprise because you have to hide a lie with even more lies.

Also Nick Clegg has surrounded himself with outright pathological liars by joining the Tories when forming this Evil Tory Led Coalition. So he is now one of them using their deceitful lying ways.

If there was no money about (in the pot)how is it they was financial able to embark on joining in with the Libyan Civil War that cost billions of pounds.

This is really all about dumbing down the lower classes and filling our universities with overseas students. When David Cameron was in China on an official visit last year he was even promoting British Universities to get more Chinese students interested whilst on that trip. It is all about money from overseas. There is always some deep dark conspiracy with the Tories.

Absolutely right. Students are not paying tuition fees. Graduates are asked to make a payment if, and only if, they are earning a salary.

The last government froze the repayment threshold at £15,000 so that you had to pay 9 per cent of your salary above £15,000 – a massive £900 a year on a salary of £25,000, until you’d paid off the whole £10k.

The new system means you don’t have to pay anything until your salary is £21,000, at 9%. So if you earn £22k that’s £90 a year, up to a maximum of 30 years, making £2,700 in total (not £27k as the Tories claim!! It’s not even as much as under Labour’s scheme, which would charge graduates £630 a year on a salary of £22,000, and make them pay £9,870 in total).

At a salary of £25,000 you are paying £360 a year for a maximum of 30 years, a total of £10,800.

The only people who are going to pay anything like £27,000 are those graduates on salaries significantly above what most people earn (median gross annual earnings for full-time employees in the UK is about £26,200).

This policy has been widely misrepresented, not least by the media, probably due to Murdoch’s influence. At ;ast, someone is telling the truth!

“Basically, the government is paying for that education by borrowing. It’s just, potentially, making the students responsible for one day repaying that loan. Nothing avoids the fact that right now student’s aren’t paying for the education: the government is.”

YES! And congratulations on putting in that word “potentially”. The fact is that students won’t necessarily pay anything! And graduates on low incomes will pay much much less than they would have done under Labour’s scheme.


Reactions: Twitter, blogs
  1. Jason Brickley

    Even in his apology, Nick Clegg lied about student loans http://t.co/zrQVj2AT

  2. Richard Garside

    Even in his apology, Nick Clegg lied about student loans http://t.co/6CgCRhSp

  3. Sandy Lay

    “@RichardJGarside: Even in his apology, Nick Clegg lied about student loans http://t.co/0Y9kMFwG”. I expect better from you Richard

  4. Jim Smith

    @ciderwith_rosie a little something to whet the appetite before conference http://t.co/dxWrbnyB

  5. leftlinks

    Liberal Conspiracy – Even in his apology, Nick Clegg lied about student loans http://t.co/qC7a5BUK

  6. jenemm

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/3ozNBtCy

  7. spencer bungard

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/3ozNBtCy

  8. Alex Braithwaite

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/dwqdpH4W via @libcon

  9. lewis wilde

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/dwqdpH4W via @libcon

  10. pissedatgov

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/dwqdpH4W via @libcon

  11. Carl G

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/3ozNBtCy

  12. NORBET

    RT @libcon: Even in his apology, Nick #Clegg lied about student loans http://t.co/Zd1bfnV7 #LIBDEMS #COALITION

  13. William Hill

    RT @libcon Even in his apology, Nick Clegg lied about student loans http://t.co/yhaDZscb

  14. Barry Cusack

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/3ozNBtCy

  15. Nick Clegg: A Poor Apology For A Party Leader « Nathaniel Tapley

    […] shabby, if not an outright falsehood. You say that there was no money available, but there was money to cut the top rate of income tax, to cut to corporation tax, to send a Gove Bible to every school […]

  16. Tony Braisby

    “@libcon: Even in his apology, Nick Clegg lied about student loans http://t.co/Sg1n5KVi” – The estimable Mr Murphy tackles tuition fees

  17. Clive Lewis

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/3ozNBtCy

  18. UEA Labour Society

    Even in his apology, Nick Clegg lied about student loans | Liberal Conspiracy http://t.co/3ozNBtCy





Sorry, the comment form is closed at this time.