UK universities in trouble - why not add VAT to tuition?

[80smonster]

UK universities are in trouble, apparently many could close, why not charge VAT on tuition fees (for those that are financially viable)? Bridget Phillipson says they are autonomous institutions and won’t be given a public bail out - they should rely on their own resources:
https://www.theguardian.com/education/article/2024/aug/09/english-universities-face-autumn-tipping-point-as-financial-crisis-looms

YABU - don’t add the VAT
YANBU - add the VAT

And the latter is also used by the racists and xenophobes as the reason the UK is 'failing' them hence the tightening up of international student visa. Those students are now taking their funds elsewhere. Go where you are celebrated

I should also say the latter does fund local students - since the funding from international students like me funds alot of uni infrastructure, which enables home students to have relatively low fees. In my time, we paid £30k per year for medical school versus £1k or so for the home students

You clearly thought this was a "gotcha" analogy to the impending VAT levied on private schools.

You've been shown that it's not and are digging in with your "recharge" nonsense.

Accept that you didn't think it through and admit as such.

So where are universities going to get their funding from? Either the students themselves need to pay more, the government needs to increase funding, or the universities need to increase the proportion of international students. The latter, favoured by the government, isn’t going to help poorer home students access higher education.

Firstly, government policy does not seem to indicate that there is a desire to increase the number of international students. This may change going forward but at the moment it is a challenging landscape.
Secondly, all students benefit from increased international students due to the increased revenue.

80smonster

Surely that is because our schools are failing and have been for sometime?

Its always someone else's fault isn't it.

Maybe its because having a university education isn't seen as the positive that it was pushed to be and many people are feeling that you don't get your monies worth from these institutions?
People are paying more but universities have not changed how they work, Link that to the overall debt to those paying for this education, to many people its not worth the cost.

And many companies are going back to training their own employees, so not only do these people get an education they get paid and get a guaranteed job out of it.

You really should stop posting about things which you clearly don't understand. I'd have stopped after the first page.

“Bridget Phillipson indicates government will support international student recruitment to put universities on “sustainable footing”
“Bridget Phillipson has signalled that the Labour government is not planning to ease universities’ funding fears with an increase in tuition fees or public funding, but will back international student recruitment to help put institutions “on a more sustainable footing”.

https://www.researchprofessionalnews.com/rr-news-uk-politics-2024-7-labour-has-no-plans-to-raise-university-fees-or-funding/

I agree that international students bring increased revenue which is a good thing. However, unless universities increase the number of places available overall, increased international numbers mean fewer home places. That’s not necessarily a bad thing.

However, unless universities increase the number of places available overall, increased international numbers mean fewer home places. That’s not necessarily a bad thing.

There are no restrictions on the number of home students a university can take ( there are restrictions on international students though).
Universities aren't full - just look at Clearing, pretty much every university goes into Clearing now.
We are not at a stage where International students are taking the places from home students and given the current demographics we are unlikely to get to that stage any time soon.

Because that would make it even more expensive to go to university, and so way less people would go. It'd only be an option for the wealthy rather than the academically talented. How is that going to help the universities when the reason they're struggling is because less people going already?

The problem is much deeper and long term than you seem to understand. What needs to happen is that a lot of sit courses/universities need to close down and other, better value, vocational training routes created.

No, but they are 20% better off on every purchase they make because they can claim the VAT back. I bet the universities are 100% behind the proposal to add VAT to fees. It will, in effect, increase their profits by 20%.

Err, that’s not how vat works.

it’s offset. You don’t just get the entire 20% you’ve charged.

and our biggest costs are not vatable

If universities thought it a good idea they would say so.

No, but they are 20% better off on every purchase they make because they can claim the VAT back.

We already can

You can claim back VAT even though you don’t charge it? How?

I’m really interested in the answer, by the way. I am obviously missing a trick.

No, the staff costs aren’t. Well, unless you get them from an agency.

But all the services - accountancy, etc - can be outsourced, enabling you to claim back the 20%.

And of course you don’t just get it back. But if you buy a computer for 300 quid including VAT, you will pay 240 quid. Multiply that by 1000 computers and that is an enormous saving.

Because unis are registered charities. If they are charged VAT for the provision of goods or services directly related to the provision of their primary activity (ie teaching or research) then VAT is reclaimable.

I didn’t know they were all registered charities, but it makes sense.

I expect the private schools that aren’t registered charities are delighted to be charging VAT. The ones that don’t have to worry about getting kids that is.

It would cost a lot more than 20% extra to outsource the finance and other professional services than to do the work in house.

Well if you are already claiming back the 20%, it won’t make any difference anyway, will it? You won’t be any better off, but nor will you be any worse off. It’s only the students who will be disadvantaged.

I said it would cost a lot more than 20% to outsource not that it would be the same. If it costs 80% more but they could only claim back 20% they would be worse off.

I know. I used to freelance, and several of my clients just couldn't grasp it. They'd complain about having to pay tax twice. Once with Corporation tax and then again with the VAT. You could go through it with them till the cows come home, but it was like banging your head against a brick wall.

Private schools are businesses that aim to make money for the owners/shareholders. Universities are non profit making.

No, most private schools are not for profit . The ones which are charities are most certainly not making money for anyone

Yes, I get that. I would have thought the costs were comparable, but obviously not if you are already claiming back VAT, as you would already be doing it.