𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Rachel Reeves has sparked fury among Labour MPs after she admitted student debt was being used as a way of funding the NHS. Colleagues said she was unfairly picking on younger people – and encouraging them to vote for Reform UK and Nigel Farage. The Chancellor has frozen the amount graduates will need to earn before they start repaying tuition fee debt, rather than increasing it with inflation. This means payments will increase.

The decision has been condemned by personal finance campaigner Martin Lewis. But Ms Reeves justified it on Friday by saying that improvements to the NHS “required putting money in”. It suggests that rather than just paying for university tuition, the system of tuition fees and loans is being used as a form of tax to fund public services in general. But it’s a tax only paid by younger people, as tuition fees did not exist in the UK until they were introduced by a Labour government in 1998. They were then increased significantly by the Conservative-led coalition in 2012.

One Labour MP, Rachel Maskell, told the Times: “We know the student loan book is a completely broken system and that students are having to pay a huge amount of money and it is a huge burden. We’re also hearing about significant redundancies across the sector.

“It’s not working for students, and it’s not working for universities either. All the people making the decision probably had their university paid for and with a maintenance grant. I think we should see education not as a commodity but as an investment in our future economy. And we need to pay for that through progressive taxation.”

A second Labour MP told the Times: “The student loan generation are rightly frustrated by high interest rates and the amount they are being asked to repay for their tuition fees.

“If the chancellor keeps brushing off these concerns and piling ever more financial pressure on to younger people, we risk driving them into the hands of Nigel Farage.”

And a third said: “Effectively she is saying ‘you young people will subsidise the NHS for the rest of the community’. No one thinks that’s fair.”

Martin Lewis issued a brutal verdict last week when the personal finance expert, founder of the Money Saving Expert website, said: “I do not think it is a moral thing for you to do.”

Mr Lewis made the comments about the Chancellor’s decision to increase student loan repayments. Ms Reeves has frozen the the amount graduates need to earn before they need to start repaying their loans for three years. It means the threshold will start to fall in real terms from April 2027, because of the impact of inflation.

As a result, more people will become eligible to repay the loans, and repayments will be higher.

Interviewed by BBC Two’s Newsnight, Mr Lewis looked into the camera and said: “Chancellor You know that you are doing this as fiscal drag, as if student loans were a tax.

“But it’s not a tax. It’s a contract that the government signed with young people who have not been getting any education on these loans.

“I do not think it is a moral thing for you to do, to be freezing the repayment threshold in his way.

“It’s not like tax that we know is variable. You didn’t say the terms are variable.

“This isn’t right. Please have a rethink.”

Defending the policy on Friday evening, Reeves told BBC Newsnight that the measures were “fair and proportionate” for getting “the balance right between tax and spending”.

She said: “There are two different student repayment plans and we’re bringing one in line with the other. So you’ll start paying back at the same income level.

“I think that is fair and reasonable, in freezing that rate for a couple of years. The truth is that to be able to bring down NHS waiting lists — and NHS waiting lists fell I think by about their greatest amount in 15 years last month — that does require putting money in.”

Ms Reeves announced in her Budget last year that the salary at which graduates must begin to repay their student debt will be frozen at £29,385 for three years, from April 2027. Graduates make payments of 9% of their salary above this level, until their loan, plus interest, is paid off.

The freeze applies to graduates who started courses in England and Wales between September 2012 and July 2023.

The National Union of Students says this means students who barely earn more than the National Living Wage could soon be forced to pay off loan debt. Loans are used partly to pay for university tuition fees, and when these were first introduced they were presented as a way of making graduates share the cost of higher education courses that would give them above-average salaries.

Currently almost £21 billion per year is loaned to around 1.5 million higher education students in England. The value of outstanding loans at the end of March 2025 reached £267 billion. The Government forecasts the value of outstanding loans to reach around £500 billion by the late-2040s.

The average debt among borrowers who finished their course in 2024 was £53,000 when they first became liable to repay this debt.

Freezing the threshold will means graduates will pay an extra £90 million each year in total by 2030/31.

Questioned in Parliament about the loans policy, Education Minister Josh MacAlister said: “It is important that we have a sustainable student finance system, fair to students and the taxpayer. We will continue to keep the terms of the system under review to ensure this remains the case.”