Ed Miliband’s plans to raid pensions to fund a one-third reduction in the university tuition fees cap leaves the industry baffled

It’s a tiring business, this pre-election posturing lark. A senior Labour aide moaned that he was “still snowed under with fees stuff” on Saturday, a day after Ed Miliband had finally announced he was going to raid pensions to fund a one-third reduction in the university tuition fees cap to £6,000.

Miliband sees this as a vote-winner, possibly even an election decider. Shadow chancellor Ed Balls denied a rift with his leader over the policy - but hinted at a heated internal debate when he made the point that his job was to “make the sums add up”.

Ed-Miliband

Source: Flickr

As shadow business secretary Chuka Umunna has pointed out, Labour wants to avoid repeating the Liberal Democrats’ greatest mistake, dropping their opposition to tuition fees as the price for coalition. The LibDems have tanked in the polls: their MPs fear losing about half of the 57-seat haul from 2010, with leader Nick Clegg even at risk.

Labour would pay for the policy through a range of pension changes, such as cutting the lifetime allowance before punitive tax hits from £1.25m to £1m and halving tax relief on those savers with incomes over £150,000.

Many pension experts are aghast at Labour’s ideas. For example, Towers Watson senior consultant Stephen Green warned that reducing the lifetime allowance is a “real concern” for well-paid people in their fifties, while others argue that pensions risk becoming an unattractive form of saving.

After what Mr Umunna has admitted was the “tortuous and difficult” process of developing an affordable plan, don’t expect any of the shadow cabinet to want to revisit their solution should they win power in May.

Hope has emerged in the form of those LibDems left standing, however, as it appears highly unlikely that Labour or the Tories will snaffle the 326 seats they need for an overall majority. Even with only, say, 30 seats, the LibDems might have a sufficient band of MPs to prop up Labour, which Miliband would probably find preferable to doing business with the Scottish National Party.

Energy secretary Ed Davey dismissed the pension and tuition fees plan as “stupid”. The suggestion is that the LibDems would force Labour to withdraw the policy as part of a coalition deal.

But ignore that. There is no way the LibDems will want to be seen to have now blocked a reduction in the fees cap after suffering so badly for agreeing to the Tories’ trebling of them.

Besides, foreign affairs spokesman Tim Farron could well be leading the LibDems by then – and he’s far too politically astute to risk future votes in opposing a policy to which he is probably naturally sympathetic.

Mark Leftly is political correspondent at The Independent on Sunday