Is anyone else worried about the effect of rising private school fees on state schools?

[BabyIcecream]

Where I live there already aren't enough school places. Three big state secondary's, one is catholic, they are all over subscribed and bursting at the seams using old buildings with not enough funding.

Ive seen reports that at some private schools upto a third of pupils might leave if the fees go up due to VAT.

I'm worried about all these extra pupils needing places, DS already finds his school overcrowded and whilst I don't agree with private education putting extra pupils into the state system is just going to further disadvantage our children.

Unless money raised by increasing private schools costs is going to be used to fund state education? Does anyone know?

If that’s the issue, why not get rid of private schools altogether, though, rather than making then inaccessible only to the families who have only just managed to afford the fees until now?

Well quite. Ensuring that only really rich people, instead of all rich people, can afford private education is a win for equality how, exactly?

@perkynuts - these ex private school parents are not going to leave at non transition points! They are going to move at 4 plus Reception and 11 plus Year 7 and at 16 plus into the top Sixth Forms - most of which are selective and will be welcoming private school kids with open arms at the expense of the kids who had previously attended state schools. Because most academies actually operate very similar to private schools.
For the remaining years, private school parents will remortgage etc - do anything to protect their offspring.

@perkynuts I don't mean an Ofsted rated Outstanding, I mean an outstanding in terms of progress, results and facilities.
We chose private because local state options are dire. If we pull DD out of private then we will use that money to move house even if that means moving out of our area to ensure she goes to an excellent state school. Multiply that by most private parents and you suddenly see the issue? No private parent is going to send their DC to underperforming state schools, you are naive if you think they will. These parents have the disposable income to move house etc which is a lot less hassle than having to navigate a school where there are significant behaviour issues and disruption in every lesson.

Forgot to say that some are also going to appeal for KS2 places into Year 3 and many excellent state schools will be welcoming them with open arms. 3 more bright kids into KS2 and extra funding, yes please.
Because they want kids and parents that are educationally motivated. I have seen it happen time and again. There are legal ways of getting the “right kind of kids” into state education.

100% this!! @perkynuts you really have a case of rose-tinted glasses.

We could have moved into catchment of an exceptional state primary or paid prep. We chose to pay prep in the end but this school has a very wealthy catchment area, less than 6% of pupils FSM, special needs diagnosed privately and funding secured, thriving PTA which raises funds for school so lots of enrichment. If my children were a few years younger, we would be moving into this area and avoiding the VAT on fees. Likely outcome is one of those (already very few) pupils on FSM from the estate outside catchment does not get the place. Staff retention excellent because the teachers enjoy teaching an engaged cohort of children with parental involvement.

We will keep our children where they are until 11 and then making a similar move for secondary education.
Cost to government - educating our children and loss of revenue in taxes when I reduce working hours.
Benefit to government - I can't see much as the school is already excellent and full of wealthy parents.

Anyone who thinks this policy is going to result in more money coming to their local state or a better education is seriously deluded. It takes an invested government to achieve that

There are ways to game the system already.

I'm sure plenty of people would disapprove of what we did. Live rurally with 1 dire and 2 so-so secondaries as the closest. So prepped DD as much as was possible for aptitude tests and sat for every top London comp that had entry via aptitude not tied to location.

Costs a couple of thousand a year in travel, but much cheaper than moving house.

So nope, you're not necessarily tied to accepting an underperforming school.

Plus at the end of your children's education you will have an asset that has increased in value due to the high quality of state schools available locally.

Ensuring that only really rich people, instead of all rich people, can afford private education is a win for equality how, exactly?

Well quite. If it was really about equality then they’d be banning private schools altogether. (As well as other inequities like grammars and faith or distance based catchments).

Instead they are imposing a tax which won’t stop the rich sending their kids private … in fact Labour’s own view is it won’t affect the number of children going private! (This is how they answer the question of how the state system will accommodate all the ex-private school kids whose parents can’t afford the hike - they say there won’t be any 🤔). It’s very clearly just a money raising exercise, which happens to line up with a party dog whistle.

@OhCrumbsWhereNow yep instead of paying fees and staying in our small house in catchment of poor schools to be able to afford them!

Totally correct @OhCrumbsWhereNow - we did the same plus grammar. The aptitude tests by the high achieving comps are expanding and I have recently noticed more and more criteria for admissions of the offspring of teaching staff so as to attract the best teachers too.

All the schools want the pushy middle class parent to send their DC there, whether state or private. As long as you judge schools on results, that is going to happen. Why lie about it?

There will be 700,000 fewer pupils in the state school sector between now and 2030 - roughly a drop of a hundred thousand a year. More than all private school pupils altogether.

According to the the IFS the VAT payment will raise 1.3-1.5bn - a 2% increase in day to day spending in education.

As I said before as numbers of private school pupils have remained steady throughout the last couple of decades DESPITE schools of their own volition increasing fees. I see no reason to believe that the hordes will suddenly bear down on state schools and neither does the report linked to below.

Private schools will stagger price changes depending upon the sort of parent that they currently attract. Class sizes might increase. Maybe fewer activities. Some will dip in to reserves.

https://ifs.org.uk/publications/tax-private-school-fees-and-state-school-spending

Well quite. Ensuring that only really rich people, instead of all rich people, can afford private education is a win for equality how, exactly.

Lookong forward to hearing the answer to this.

As I said before as numbers of private school pupils have remained steady throughout the last couple of decades DESPITE schools of their own volition increasing fees. I see no reason to believe that the hordes will suddenly bear down on state schools and neither does the report linked to below.

I will read the full report but I would point out that fee increases in the last couple of decades have been against a backdrop of low mortgage rates, increasing house prices and low inflation of other costs. In that context, yes many people have been able to afford small year on year school fee increases. That does not mean they will be able to afford a large increase in today’s very different economic environment.

Numbers of private school pupils have remained steady or rising since the 1960s. I believe there have been points of financial crisis since then.

Slow increases are different to a 20% jump

And schools will take action - stagger increases, pay increases, larger classes etc. They are not compelled to apply the increase in one go - nor in my opinion are they likely to.

What is the rationale for not paying VAT?

@Notonthestairs slow yearly increases of 5% are different to a massive 15-20% hike in addition to yearly rise which could take the actual rise to between 20-25%.

I thought this was an interesting assumption in the IFS research:

If demand for private schooling reduces as a result of increases in post-tax fees, the additional tax revenue raised would likely be unaffected. This is because any reduced revenue from VAT on private school fees will likely be made up for by higher VAT revenues on other goods and services, holding overall consumer spending constant. If parents decided to stop paying for private school fees as a result of the extra VAT, this would release spending on fees that would likely be spent on other goods and services, thereby generating extra VAT revenues.

I confess not to have read the detail of the full report but it looks as if they've assumed that people who leave will spend the money on VATable goods instead so they don't need to account for the lost VAT if numbers at private schools shrink (they'll get it anyway).

I would have thought that's a questionable assumption, especially as people will already have shown themselves to be happy to adopt a lower standard of living for long term goals. As lots of people have said here my guess is that it's much more likely that parents (mothers) will drop hours to support children, especially as the income lost is already likely to be very highly taxed. Otherwise, increasing pension contributions and retiring earlier.

I also can't see whether they have made the converse assumption on goods and services for the parents who ARE paying VAT. If these parents are collectively paying £1.7bn in tax, then the mirror assumption would be that a lot of that is going to come from cutting back on goods and services i.e. (you pay the VAT on the school fees rather than on goods) which will reduce the net gain in VAT. Plus it would presuambly be a £1.7 bn loss to lots of small businesses, cleaners etc.

I really hope they are going to do some detailed work on this.

Also- if 10% of private school pupils transfer to state that'll amount to 1 extra pupil for every 3 state schools. A very crude calculation, but hardly a tidal wave......

Schools do not charge VAT on their fees because education is an exempt supply. This also applies to music lessons , nursery fees, language classes, tutoring, university fees etc . Education has never attracted VAT .

as a result than cannot reclaim the VAT they suffer either because they do not make vatable supplies. If education is deemed standard rated as proposed then schools will ge able to offset the VAT they pay against the VAT they charge . The richest schools are perversely quite looking forward to this as it will help them to build more shiny facilities. The smaller schools will have fewer vatable costs and are more likely to lose parents who cannot afford the tax charge.

It’s not evenly spread though . In Edinburgh for example 25% of school age children are privately educated. I would say in the rural village I live roughly 1/4 of primary age are privately educated and 50% at senior level , we have a lot of private schools here.

Thanks cyclamen. Food for thought.

@BitOutOfPractice

“They said this would happen in the global crash. Did it?”

Not sure if you remember 2008, there was a bailout of the banks, there was also a 10 year money printing splurge that propped up financial services. The Crash didn’t have many of the effects it could have because government policy propped up banks.

“tbh if you believe MN every parent who sends their dc to private school is on the bones of their arse to scrape the money together to send them. I’m not sure I either a. buy that or b. think that’s the case for most fee-paying parents.”

It doesn’t need “most” parents for the policy to fail. 1/3 are on financial assistance and the policy turn net negative before 1/3 of parents switch (excluding capital expenditure requirements or teacher recruitment issues). A small change in number can have a severely detrimental effect. Eaton, Harrow, Winchester, Westminster etc. can continue to be stuffed to the gills and over subscribed and there can be serious issues caused.

@cyclamenqueen As I said, mine was a very crude calculation. But I wanted to mitigate the scare tactics often deployed by the "state schools will be over run" tendency. Like inheritance tax, it's something which will affect very few people indeed. And which will provide significant benefits for far more, although you wouldn't think so if you listen to/read the right leaning media!

So @Thisistyresome they speculated that this might happen in 2008. It didn't. Now you're all speculating it might happen again. With no idea of whether it will again.