To think good school places will be even harder to find next year because of the VAT on school fees

[Nesca1]

We are are looking at secondary schools for DS. We have our eye on a decent school bang in the middle of a solid middle class area . The school is always over subscribed; this year we would have gotten a place but last year we would have missed out because of how far we are from the school.
Usually, the school offers places to children living 1600m away, last year it was 1400m due to a large number of sibling applications.

Due to the whole VAT issue, i think more parents from the local area are going to be sending their kids to this school, rather than sending them to private schools.

Is this a reasonable assumption? I don't think parents will wait for the policy to be enacted, but they will move their year 6 children into this school.

No. I don't think so.

My kids are at state and my understanding is that state school kids are looked upon favourably as a result as having succeeded to obtain the same grades as private despite the alleged lack of exam cramming provided by the privates.

So quite the opposite.

No @Allnormalhere you've misunderstood the posts completely.

Do you agree that it is easy for a dual income family on household income earning (say) £100-150k to choose, instead (no longer requiring school fees) a life with income of (say) £60-80k and a considerable amount more leisure? Maybe 2nd earner quits; maybe both go from 5 days to 3, or something. If they do so, what do you think are the consequences for the public finances.

If you disagree, I'm interested to hear why?

What's it to do with being arrogant?

Don't think I've claimed "knowledge of how it will all pan out". I agree nobody knows. It's the advocates of the tax, starting with the IFS* that overstate their case.

*although if you read the IFS report you'll find they admit their evidence is "old" "thin" "sparse" and caveat their findings about 27 times. So those "health warnings" are there; the IFS of course do us no favours by omitting all health warnings from their press release and all subsequent discussion.

Two things I can absolutely assure you of:

• private schools are terrific for the public finances. If it was my job to improve state schools I'd start by encouraging the opening of as many private schools as possible
• state schools aren't free. The fact I've been criticised for saying this is bonkers

“Doubt it. Have you seen the cost of putting kids through uni?”

Yup and it is going to be no-where near the scale of fees and is for a much shorter time. My local day schools are all around £21k per child. Add on VAT and you’re at £25k plus inflationary rises and then the cost-benefit is being stretched all the time.

Someone could instead save £10k per child each year at a conservative 5% and have a lump sum of £96k which would be much more than needed for university. They could then be overpaying/putting in extra pension of £15k

Fees for two kids could easily be £350k exc inflation- the financial opportunity cost of private fees is massive and people will potentially make a different set of choices due to the vat.

That’s exactly what would happen.

I earn a decent salary however even with full pension contributions I can’t avoid the 62% tax trap.

If I decide to use state schools instead of private I’ll simply limit my earnings after pension contributions to 99.9k.

The amount of tax this loses the economy is huge. The 25k between 100-125k attracts 15.5k income tax on its own. If I no longer need the 20k fees every year then I could drop my salary after pension contributions by nearly 45k and still have the same amount of disposable income. The Treasury however then has 25k less from me. They also need to pay for my child’s state school place at 8k a year. So straight away that’s a 33k shortfall every year that other tax payers would have to fund.

I would still have exactly the same amount of disposable income and pension contributions as before but would be working fewer days each week while other taxpayers would have to pick up the slack this situation created.

If you think a policy which creates scenarios such as this is a sensible economic venture then I have some magic beans you might like to purchase.

I disagree. I think a lot of people can only just afford the school fees currently. I’m already seeing people moving their kids to alternative private schools because their current school has said they will pass the 20% VAT onto parents. This is is central London.

Yes all great in theory. In theory, never going to happen though is it?

The fact you consider earning less as "kicking back" shows you live in your own privileged bubble. Some of the lowest earners in society are working the hardest, but you don't even consider that. I get the feeling you would be rude to waiters.

Of course it will. Why would I pay marginal tax rates of 62% if I no longer have a need for the money. I’ll work a 4 day week instead and let others take their turn to pay more tax to compensate for the loss to the Treasury caused by me favouring additional leisure time over more work.

@MichaelFlatulence why are you so sure it wouldn’t happen? These are exactly the marginal decisions that I can see families making and have been making even before the vat rises. I am undecided about private school now but am absolutely weighing up the opportunity costs in coming to that decision.

Yes ok well come back when you’ve gone part time

I've never been rude to a waiter. What is rude is your assumption. You should apologise.

The lowest earners, and their workload, aren't (for better or worse) relevant to this discussion. Economics runs at the margin and on peer comparisons. It's not relevant that others earn much less, or that it's tough being a single mum, or that some people struggle with depression, or that there's a pollinator crisis.

The peer comparison is for a higher earner working flat out to pay school fees, or not needing to as @Charlie2121 describes. This is likely to happen in many cases and I don't know why @MichaelFlatulence claims to know better.

What's wrong with describing "taking more leisure" as "kicking back"? Tell me you don't seriously think all £60-80k state school households work dual income full-time? Is that allowed? Should they at all times be considering the lowest earners too?

Separately since you are, like me, deeply concerned about the lowest earners, it's about time we talked about the ~80k support staff, the vast majority on low pay, whose jobs are at risk if/when schools contract or close. I'm considering them alright, are you?

the lure of private education is strong. It will put some off (like me who’d rather save in my pension and spend the money on holidays), but plenty will continue to buy what they see as advantage and a desirable product.

People mortgage their houses to keep their kids in, I’m not convinced that many will withdraw. Perhaps less will start.

However it will happen.
If you know enough people in the private sector this is exactly what many are planning.
Step back and have a rest.

I think most people just don't care that much if private school fees increase. Why should they? The VAT will be extra money that could be used elsewhere and I doubt there will be a negative impact overall. I think they should initially charge 5% and see what happens.

There won’t be any extra money though.
Thats been discussed to death already.
Not by Labour, of course 🤣🤣🤣🤣

The school itself is irrelevant

Not necessarily.

Durham (beloved by so many MN parents) specifically counts attendance at a state school as one of its contextual criteria. You need to fulfil a second criteria (home postcode, being a young carer, FSM, refugee status etc) in addition to be eligible.

Almost all my clients pay fees, not ONE is planning to withdraw. Not one. All moaning, plenty prepaying fees, but nobody is talking about stopping.

Those that genuinely can’t afford it, may indeed have to stop but I wager it’ll be less than those ‘threatening’

Reasons to care:

• You assume "extra money" but that's contentious. The taxes on every set of private school fees pay for 3-4x state school places; it doesn't take many people withdrawing (or not starting) before this policy makes for zero or negative tax revenue
• If it's about raising money, there are many better ways to raise money, such as taxing other higher earners getting education free paid-for by taxpayers. We'd be using predictable, existing taxes, without messing up children's education in either state or private sector, without messing up a positive externality, and without colossal implementation and enforcement issues
• We'll be the only country in the world taxing education; everyone else sticks to what's taught to every A-level economist, ever: private education is terrific for society and the public finances
• This policy will be wretchedly difficult to design and implement, and will distract from much bigger problems that our policymakers ought to deal with, in education and elsewhere

I'm also not comfortable with "not caring" just because harms are being done to others. People on these threads are literally gloating about the possibility that private school kids get forced out and into special measures state schools. It's very evident that the harm to others isn't an unfortunate side-effect, it's (for some readers on here) the whole point. If that's the sort of society you're happy to build, you should beware the pitchforks, they'll come for you next.

How many clients, and how representative are they...not of private school families, but of those at the margin of affordability and willingness to pay? If they were struggling to pay, would they tell you?

Even if you're right...assume your experience is perfectly representative and few people leave immediately...what about exit at the next application window? And what about the next cohort that follows behind e.g., parents of toddlers looking at where to move house to / how hard to work / what schools to apply to?

Once all that shakes out, can you justify your earlier assertion that tens of thousands of families in those cohorts, not needing fees, will work as hard as if they did need fees?

To be clear I'm not claiming I know what will happen. I'm saying nobody knows, the risks are strongly on the downside, and aren't being debated.

We were discussing those leaving the private sector reducing their working hours

Not whether they will leave or not.

Figures on potential numbers leaving has already been discussed as well

All these rich parents saying everything will be worse if VAT is added aren’t fooling anyone. It’s all about maintaining the privilege and advantage you unfairly buy your children. There’s no point pretending it’s anything else.
Its purely concern that they might loose their unfair advantage and have to compete on a more level playing field. It will be a great life experience for these privileged children to be in school with non- privileged children - both sides will benefit by experiencing the same standards of education and facilities.

And that's what listening to years of Labour rhetoric has done for you.

I just want good schools. I don't see anyone even trying to explain how harming good schools helps make for more good schools.

And what you say is "unfair" pays for (yet again) 3-4 state school places with the taxes paid by private school fees. Alternatively, every school bill generates tax that covers the imaginary value of the tax exemption by 10x. It's the golden goose for state schools.

It will be a great life experience for these privileged children to be in school with non- privileged children - both sides will benefit by experiencing the same standards of education and facilities. Your opinion, without evidence, which others obviously don't agree with. I've no objection to a good state school, but I don't have access to one (we missed our chance to apply to the grammar, leaving that place for somebody else); I don't agree it's a good experience for anyone to go to a rubbish school, and the fewer children do so the better.

if the tax is being introduced to reduce unfair advantage Labour would be looking at
private one to one tuition
private health care
abolishing the ability to inherit
abolishing the ability to give your kids a leg up financially

etc etc etc
All of these and many more give one an advantage over another.

Will they all be looked at next if that’s the purpose!