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

[HooverIsAlwaysBroken]

https://www.telegraph.co.uk/money/jobs/schools-universities/eton-claim-48m-vat-clause-labour-private-school-tax-law/

i know that many people are fed up by this topic, so feel free to scroll by.

But for those who are supportive of the proposals, even though it has impact on children with SEN and military families…. Are you equally supportive of tax payer money funding swimming pools and boarding houses at the elite schools?

Am I being unreasonable in thinking that this policy should be properly looked into and assessed before implementation?

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/

Happy to disagree on this one. Maybe it is a great report. I personally believe that we should have a proper analysis, including a cost benefit analysis before any policy implementation. Indeed, Brexit should have been analysed.

my point was that the optics is terrible.

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.

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.

Good for them.

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.

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.

B

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?

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.