To not see how the gov will make any money from taxing private schools?

[AngryHedgehog]

All the other threads seem to have descended into bunfighting over the ethics of the policy, yet I'm not really understanding how this stands to benefit the government as surely they'll be footing the bill for all the kids that move to state schools?

As a disclaimer, I don't have kids and wouldn't be able to afford to privately educate them even if I did, despite earning a half decent salary.

I'm reading that it costs around £7k per pupil per term, so it would take the VAT from around four families to fund each additional child moving to state education.

Given that this may be 4/10 kids in private education moving to state schooling, I don't see how this doesn't create a net loss as there will only be 50% more kids left in private education and there needs to be multiple times that for the VAT increase to foot the bill.

Surely I'm missing something here?

What monthly memberships?
We have 1 x holiday in UK per year
We are already in a much smaller house than many of our friends

At the end of the day everyone has a tipping point and 20% on top of fees is ours.

You're right about children in poverty - it's not right and nobody is disputing that. But the subject of this thread is whether the government will make any money from it and we're explaining to you why we don't believe that they will.

@Foodusername Putting right an outdated policy of PE being classed as a charity and not paying VAT is just one small step towards shifting the balance.

once again, vat has nothing to do with charitable status.

If this was about equality there are other ways to tax the rich, or wealthy mega corporations to raise the funds. After all why should childless couples not contribute more? Why do they get umpteen holidays a year, 16 cars and 12 houses? This is a tax to punish those who do not want to use the state education system to educate their child. The left have always been very keen on ensuring children could be indoctrinated within their own systems.

More evidence that this is not a well thought out, rational policy.

@TamD71

"You're right about children in poverty - it's not right and nobody is disputing that. But the subject of this thread is whether the government will make any money from it and we're explaining to you why we don't believe that they will."

The IFS estimate the net gain at between £1.3 and £1.5 billion.

Combining estimated tax revenues and extra public spending needs, our view is that it would be reasonable to assume a net gain to the public finances of £1.3–1.5 billion per year in the medium to long run as a result of removing tax exemptions from private schools. This would allow for about a 2% increase in state school spending in England, which Labour has proposed would be targeted at disadvantaged students.

IFS analysis assumes only 3-7% leaving private schools. Since that analysis, enrolment is already 3% lower, so seems pretty likely that this assumption is too low. Furthermore this analysis didn’t consider the exclusion of EHCPs; didn’t factor in Sen at all. There are other assumptions that are highly questionable, such as assuming 100% of any fees saved by leavers would be spent on vat-able goods.

here’s a more detailed analysis that suggests far lower figures, as well as the possibility that this is cash negative: https://www.adamsmith.org/research/short-term-thinking-analysing-the-effect-of-applying-vat-to-school-fees

@Labraradabrador

Yes I saw that report.

Who knows whether the IFS or Adams Institute is correct.

Anyway this sums up both opinions, posted after Thursdays Question Time.

Private school fees
The final section of the programme was dominated by a discussion of Labour’s plans to remove private schools’ charitable status and levy VAT on private school fees.
Piers Morgan claimed the policy would lead to “hundreds of kids” attending state schools who otherwise would have attended private schools, and that this would “swamp our system”.
Accommodating pupils who would otherwise have gone to private schools in state schools would require extra funding. But the Institute for Fiscal Studies (IFS) says that falls in private school numbers as a result of Labour’s policy are “likely to be small” in the short run.
The IFS estimates that Labour’s policy of levying VAT on private school fees could lead to a reduction in private school attendance of 3-7%, which it says “would likely generate a need for about £100–300 million in extra school spending per year in the medium to long run”.
However, it also estimates the policy would generate around £1.6 billion a year in revenue, meaning Labour’s policy could result in a net gain of £1.3-£1.5 billion a year in the medium- to long-run. Altogether it says this “would allow for about a 2% increase in state school spending in England”.
This analysis has been challenged by the Adam Smith Institute, which in its own report argued that it would be “reasonable and cautious”, to consider a “less optimistic” scenario of 10-15% of pupils migrating to state schools, under which it estimates the policy would generate no net revenue.
It’s also worth noting that the total number of pupils in state schools is expected to fall in the coming years (and is projected to have fallen this year compared to last year), so any influx of pupils from the private school system would take place in the context of otherwise decreasing demand for state school places.
The IFS says: “It is possible that the state sector could easily accommodate extra pupils given that overall pupil numbers across England are due to decline by at least 100,000 per year on average up to 2030.”

fullfact.org/news/question-time-30-may-fact-checked/

The IFS assumptions are flawed. For example it assumes a low number of pupils leaving the private sector. The pupil numbers have already fallen almost 3% this year and that’s before the policy is introduced. In addition, it assumes that every penny not spent on private education when parents switch to state will be spent on goods and services subject to 20% VAT. It won’t. A fair chunk will be spent on foreign holidays, savings and pension contributions. None of these are subject to VAT and pension contributions would result in a net loss to the taxpayer because of tax relief due.

The Director of the IFS has also said “It's not going to raise a very large amount of money. Now one and a half billion isn't nothing but in the context of the overall national budget, in the context of how much we raise from taxes in general, which is more like a trillion, this is a tiny, tiny amount of money. So you might want to do this for reasons of social justice or equity, or because you think it's appropriate to charge VAT but don't be fooled into thinking this is going to make any real difference to the amount of money available for public services.”

But…. If the state school numbers are going to fall anyway, funding per pupil would increase naturally- unless I am missing something?

And unless of course more ex private schools are flooding the system?

and unless of course many of the students moving over are SEN ?

Some people work additional hours / more than they would like in order to pay school fees as well.

what is some decides to go part time once private schools are unattainable anyway?

But you are not the norm. I’ve used PE. I have friends that use many different PE.

And by smaller house than your friends, what do you mean? Do you have a spare bedroom? More than one reception room? Big garden? Is there a less nice, cheaper area you could move to?

And whilst I would be sorry if your children had to move school. I am more sad about the kids I meet at work who are destined for really difficult lives. Your kids will be fine.

I guess time will tell what financial benefits or losses it has. Regardless, it’s an unfair legacy law and policy that isn’t fair and needs correcting.

Both are wrong. Charity status is law and so more complex to change.

But you are not the norm.

@twistyizzy isn’t that unaligned to the norm. People will move, even if you personally don’t know many that would.

yes. This is just one small step.

I am the norm where we live ie NE England.
Rural area so no oligarchs etc. The odd 1 pr 2 parents who are based in Scotland for oil but mainly people the same as us.
Just because you have used PE please don't assume that we are all like you/your school. It is in incredibly diverse sector.

Losses and still ok?

So no to funding those extra 6500 teachers

"The pupil numbers have already fallen almost 3% this year and that’s before the policy is introduced."

Fees have increased by 8% this year, almost double inflation.

Nothing to do with Labour.

Maybe ask the school to justify this increase.

Of course behaviour will change before a very likely policy with extra tax is brought in

You can see that?

Many schools haven’t increased their fees by 8% this year. Many are in line with inflation and have been for the last 3/4 years. In fact, the example given on Question Time this week by the Labour politician who said that fees had increased by more than inflation showed this. He tried to say that the fee increase was greater than inflation. The example he gave was a fee increase less than inflation.

@EasternStandard

Sure I can. Although there are widely differing views about the overall impact.

For the wealthy, zero impact.

For those where affordability is marginal, probably.

But surely the schools themselves have options to mitigate against this.

If we were talking about the low paid, folks would be all too willing to offer ideas about how to cut their cloth.

Schools will try but they’ve had a tough time already and 20% tax will impact any sector whether it’s education or other

It’ll damage the sector and jobs will go. Students will move and if there’s a loss no extra teachers

Sounds bad all round.

But…. If the state school numbers are going to fall anyway, funding per pupil would increase naturally- unless I am missing something?

Only if the government/councils decide to allocate more money per child rather than use saving to eg support social care, reduce potholes, provide extra police or keep local libraries open.

The fact that pupil numbers may drop overall in the state sector does not negate the fact that if private pupils move across to state it will cost the state more than if they didn’t.

The more Labour is questioned about this policy, the more holes emerge.
Will they exempt faith schools? As an example: they could be on dodgy ground taxing Jewish schools when they can't offer a state alternative.