Women already earn and save materially less than men – and a student loan system that, were it nay other credit product would amount to mis-selling, is making it worse, says Gina Miller

Britain’s student loan system is one of the most quietly distortionary fiscal instruments on the statute book. It applies a nine per cent charge on every pound graduates earn above a frozen threshold for up to 40 years, compounds interest at rates that would fail the FCA’s Consumer Duty test, and was sold on terms that, in any other credit product, would amount to mis-selling. This is not primarily a social issue, it is an economic one that has a direct drag on productivity, savings and long-run fiscal stability – and falls hardest on women.

Start with the marginal rate. A graduate earning above £50,270 pays 40 per cent income tax, two per cent National Insurance and nine per cent on every pound above the student loan threshold. That is a 51 per cent effective marginal rate – higher than the tax on dividends paid by a wealthy investor. A graduate earning £50,000 keeps just 49p of each additional pound. For any labour economist, this is a textbook disincentive to progression. Overtime, promotion, moving sectors: each is taxed at roughly double the rate of private equity carried interest. And the rate falls on precisely the cohort, graduates in their 20s and 30s, with the highest marginal productivity in the UK economy.