Eton in line for £4.8m in windfall from VAT recovery

The purpose of the article is to highlight the disparities between different private schools and how the policy will affect them differently. The wealthier schools with higher fees and capital expenditure will be able to reclaim proportionally more input VAT. The poorer schools, with much lower fees and minimal capital expenditure will be able to reclaim very little input VAT. They will be hit harder. That’s fact.

Why are we criticising an article mentioning Eton, saying it isn’t typical of private schools, but yet Phillipson can justify the policy by suggesting in Saturday evening ramblings on social media that private schools all have Astro pitches and embossed stationery?

We’ve ended up with journalists writing these articles to try to highlight the problems with this policy. It should never have come to this. The government should have realised the pitfalls and unintended consequences.

The entire policy is an absolute shambles. Even Labour MPs and the trade unions are warning of the problems. I have no doubt, however, that Phillipson will plough on regardless, such is her hatred of the whole sector. It has nothing to do with economic reasons; anyone with even the slightest grasp of tax law and basic maths can see that it doesn’t make sense.

For several reasons.

1. It singles out Eton, a school at the extreme end of the scale, rather than offering a more balanced view.

2. The use of loaded terms like "windfall," "tax raid," and "handout" to create a sense of injustice.

3. The use of words like "analysis" to suggest a methodical, objective review when, in reality, it's a selective presentation of information (focusing on 4 years of accounts, instead of the 10 talked about elsewhere for some reason).*

4. The inclusion of a fictitious example to illustrate the point, which assumes the entirety of a £5m build would be subject to 20% VAT (not how such projects typically work).*

5. It prominently features multiple sources of criticism, all using emotive language, without presenting any alternative perspective.

And just because it includes a factual explanation of how VAT legislation works doesn’t mean it’s not an opinion piece pushing a certain narrative.

*I'm including these two as you've criticised the IFS report for using assumptions and estimates but don't seem to be doing the same for this article. Why is that btw?

B

I didn’t comment on the IFS report.

My comment was on Guido etc using the friendship between Sibieta and Pennycook as some kind of evidence of underhand goings on.

Especially since it refers to the element of the Labour policy of removing business rates relief from private schools - yet this has already happened in Scotland, and predates the IFS report.

The claim of being “independent” has been thrown into doubt where this policy is concerned. It was written by, apparently, a close friend of a minister who is in charge of implementing part of this policy.

See previous post for my response on this point.

You clearly haven’t read the report. It’s full of ridiculous assumptions. A GCSE student could have had a bash at writing similar.

All pre-implementation policy research is based on assumptions, that's the nature of the beast.
But the IFS reports will follow established standards in economic research, with any assumptions based on accepted methodologies and models.

Why are supporters of this policy so keen on shutting down any comment which shows that the policy is based on miscalculations?

Doesn't the policy predate the report? In any case, policy decisions aren't based solely on calculations. While Labour has mentioned tax revenue as one reason for it, it's not the only factor driving it.

Not every policy is implemented based purely on quantifiable outcomes—social, ethical, and political considerations also come into it.

Also why do you think I'm a supporter of the policy? I've not stated a position on it.

Good for them.

How is it misleading? It says that Eton can reclaim VAT on capital expenditure. It also says that smaller independents without such capital expenditure won’t have the same ability to reclaim. That’s fact.

It quotes a Labour MP
Labour MP Rachael Maskell accused her own party of creating further inequalities.
She said: “Schools who have the most resources are going to be able to cushion the blow. [Eton] is getting a huge handout from the Government. It is just wrong and it needs to be addressed.”

It’s an article setting out the facts concerning the Capital Goods Scheme. That’s not an opinion; it’s a statement of fact about how the VAT legislation works.

The article includes facts which many of us have been pointing out for a long time. I don’t know why it’s come as such a surprise to some that the wealthier schools will not be hit as hard as the smaller, cheaper schools.

Eton won’t be paying £13m in VAT. 20% of them receive some sort of fee reduction via bursaries/scholarships. They have 100 on full bursaries so no VAT to pay on those, so just those 100 boys knock £1m of VAT off their total payable.

Business Matters maybe picked up on an article published by Guido Fawkes te previous day, so not exactly an impartial or reliable source.

order-order.com/2024/10/07/independent-labour-supporting-private-school-report-written-by-ministers-close-friend/

Because what's the difference? So Labour can do it but noone else?

Again, what does any of this have to do with newspapers publishing misleading stories?

If you take a step back for a second, you might realise I've made no comment about this policy whatsoever, merely commented on people's failure to challenge their own or assess the information they're consuming.

no evidence of wrongdoing or issues with the author's methods or findings

As one example, the report assumes that parents who withdraw from the private sector will spend every single penny of the money saved on fees on other goods and services taxed at 20% VAT. This simply will not happen. No one with even a tiny bit of economic understanding could think that this will happen. At least part of that money will be put into savings, pensions or spent on foreign holidays, none of which will attract VAT. The methods and assumptions are clearly flawed.

IFS, an independent research institute specialising in UK taxation and public policy

The claim of being “independent” has been thrown into doubt where this policy is concerned. It was written by, apparently, a close friend of a minister who is in charge of implementing part of this policy.

You clearly haven’t read the report. It’s full of ridiculous assumptions. A GCSE student could have had a bash at writing similar.

Why are supporters of this policy so keen on shutting down any comment which shows that the policy is based on miscalculations?

It has been 50 years since Labour first announced they wanted to tax indy schools. The current mess just proves why, as yet, it hasn't been done. Every time Labour looked into it they realised: 1) couldn't be done while we were in the EU or 2) it was too complex and would end up costing more than it brought in.

Interesting. So Business Matters, owned by Capital Business Media and Richard Alvin—who has ties to Conservative governments, including advisory roles under both Thatcher and Cameron—runs a headline that implies impartiality in the IFS's work.

Yet, when you read the article, there's no evidence of wrongdoing or issues with the author's methods or findings. And those raising these concerns have also nothing to back them up, other than the fact the author and a government minister are friends.

Frankly, accusing a professional researcher of unethical behaviour based on nothing more than a government connection is a bit of a leap and a serious red flag. You have to wonder what the real motivation is to make such claims, especially when there appears to be no plan to take things further.

One sentence did stand out to me though:

"The Conservative Party is expected to use an Opposition Day debate to call for a deferral of the VAT policy until 2028 in areas where state schools are already nearing capacity."

So despite everything, it sounds like not even the Tories actually opposed the policy.

That’s a bit desperate.

Pennycook is the minister responsible for the business rates relief issue for private schools, not the VAT on fees.

Is the relationship between Sibieta and Pennycook also being blamed for the Scottish Government removing business rates relief for private schools in 2022?

...should we just do a proper impact study and cost-benefit-analysis of this before implementing it?

Heaven forbid Government would do something quite so sensible. One of the reasons the country is a shitshow is the failure to do a cost-benefit analysis that allowed the disinformation enabling Brexit.

@Sailonsilverrgirl

Agree, they kicked away grammar and school for children in non academic areas, leaving that for the wealthy and low doing same kicking low level private schools out of reach.

They should just use ‘we can be pragmatic’ line as they have for other failed policies and drop it

Phillipson is a spiteful liability not fit for the role

I mean, this just drives the point home, doesn’t it?

The work from the IFS, an independent research institute specialising in UK taxation and public policy, is 'full of inaccuracies and ridiculous assumptions.' Yet, Telegraph journalist Pieter Snepvangers, with a degree in politics, and looking at the Companies House fillings for one school, is apparently the gold standard for understanding the tax revenue implications of a national policy.

Funny how parties and commentators from across the political spectrum cite the IFS when its findings support their views, but denounce it when they don't. It's almost as if people can't bear to challenge the narrative they want to push....

Avoid challenging the narrative sums up Labour well. They refuse to engage, discuss or debate.
We (and many others including MPs, Lords, charities etc) have tried engaging with them. They refuse.
They have dug themselves into a massive hole whereby a policy which is supremely flawed (admitted by the people who wrote it) and will ultimately most likely end up costing the taxpayer money whilst raining zero for state schools is a headline manifesto policy.
Phillipson is pushing it through to save her job, not because it is a sensible policy.