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?

To be fair, the tax system only works like that because of income inequality and income is not directly related to social usefulness, it is related to the ability to be exploitative. We can see the harmful effects of over-exploitation , so it is more complicated than the better paid automatically being more useful.

Well if you can come up with a better system than capitalism you might be onto something. Good luck.

Good luck getting everyone on to the same salary without state mandates and consequences

Higher earners pay a lower proportion of their income in tax than for instance nurses do.

There is more than one version of capitalism. Few people would argue taxation is entirely unnecessary and anti-capitalist. Few people agree that massive inequality is particularly desirable. It’s time to stop pretending the choice is this or North Korea.

@jgw1

We are really not doing well with facts here:

So the average salary of a Band 5 nurse is £32k giving a take home of £26k or 81% or 19% going in tax.

Someone on £179k has a take home of £104k or 58% or 42% going in tax.

Ergo someone in the top 1% pays more in absolute and relative terms in tax than the average nurse.

@1dayatatime - someone earning in the top 1% is not very good with their money, then - there is plenty of scope for them to magnify their tax free wealth through ISAs, etc., and rapidly end up massively better off than the nurse whilst paying a lower proportion of their accumulated wealth in tax.

It's not a question of not being good with your money. If you are a salaried employee you don't get a choice of how much income tax you pay regardless of whether it's £18k or £180k.

ISAs are a completely different matter and deal with investments made with taxed income that then does not incur tax on any return. But it was made with taxed income in the first place.

I can only assume you deliberately missed the point. What relatively wealthy person only gains wealth through their salary? What inadequately paid person has the capacity to save and invest?

ISAs earn income on untaxed income. Year on year, through compound interest, you increase the wealth gain made from never-taxed income, without having to do any work to earn it. Over time you can significantly decrease the proportion of your income on which you pay tax, through basic tax free vehicles or more complicated schemes - and you are remarkably well protected from your investments and savings going down in value as well as up in the modern era, because national banks and governments will probably help bail you out in order to maintain confidence in the system they are now propping up. Nobody wants to discourage you from saving for your private pension or putting money in the bank, and then there are all the helpful tax advisers. You don’t have to be an elite to find people happy to be paid to advise you how best to preserve your wealth and minimise your tax bill.

It is not really surprising that the lower-paid majority, who actually have to live off their salary alone, scratch their heads a bit and wonder, when they are told the wealthy deserve and have earned all their wealth through hard work, taking risks and providing employment, whether it is really true that it was all gained this way.

@Walkaround

OK so it is tax free wealth you are referring to . In which case why bother with an ISA when the simpler example is buying a house, where if it is your principal residence then any increase in its value is tax free plus you get the added benefit of living in it (which you don't get from an ISA).

Secondly you presume that anyone on £180k automatically has surplus cash to invest. Well as per my previous post £180k gross equates to £105k net, which soon disappears if you have say a £1m mortgage, a couple children at private school and two holidays a year. The old adage is the definition of income being expenditure plus 10%.

@1dayatatime 10% of £105,000 is £10,500. 10% of £32,000 is unrealistic as surplus over expenditure anyway and is also only £3,200.

As you have pointed out, the £1million house is a significant asset. You have options. You can downsize if necessary. You can release equity. You can enjoy your asset. So, what is your point? You are wealthier in every way and still have a greater capacity to save, invest and grow your wealth without having to put much effort in to increase the wealth - a combination of the markets and governments cushioning you from full blown effects of capitalist boom and bust cycles makes you much more capable of withstanding a tax increase than someone less well off. But you haven’t really earned all of that through hard work.

Do you want better public infrastructure? Better essential services? Obviously they won’t be paid for through VAT on school fees or ever more swingeing taxes on salaried income - I made clear early on in this thread I thought that was a stupid idea, because it’s just more scrabbling about and looking for perceived easy targets that got fed up with this and felt overly squeezed some time ago - but how will it be paid? The UK put too many eggs in the financial markets basket. We are still counting the cost of having done that, because we didn’t want it to fail and pull everything else down around it. Now we are supposed to develop collective amnesia, or pretend it won’t happen again, even though our eggs remain largely in the same basket and our infrastructure and public services are underfunded and crumbling. A few private schools are not enough to hide that from foreign investors. And foreign investors do not want to be the ones investing in the failing infrastructure - they prefer stable, countries with working infrastructure paid for by taxpayers, but they do not want to be the taxpayers either.

Obviously they won’t be paid for through VAT on school fees or ever more swingeing taxes on salaried income - I made clear early on in this thread I thought that was a stupid idea, because it’s just more scrabbling about and looking for perceived easy targets that got fed up with this and felt overly squeezed some time ago

We agree on this, so that’s good

I also agree that we need to build up not just FS as we saw in last where that led us, over exposed to a crash

On this

they prefer stable, countries with working infrastructure paid for by taxpayers

We are stable, and FDI is good. We’re picking up from outside EU and the US is increasing. We’re in the top couple of spots in Europe. Although on paid for by taxpayers I do think state dependency is an issue maybe it’s not a factor for that

We’re actually comparable on the tax the rich stakes, hearing a good piece the other day. It’s the levels below that where EU countries tend to get more taxes. Most won’t be keen though

Maybe there is a way to extract more from somewhere, as long as people realise impact on behaviour - if they can get around driving people elsewhere etc then I’m up for suggestions

I don't know why some posters are finding the idea that those on high incomes pay a smaller proportion of their income in tax than those on lower incomes.
Helpfully the Prime Minister published how much income he got and how much tax he paid, and the proportion of tax paid was lower than that paid by a typical nurse or teacher.

Regarding foreign investors, the U.K. is seen as having some “political risk”. Things like Brexit and its unintended consequences and the sudden Energy Profits Levy (whilst it may look OK as a principle it can have unintended consequences on businesses that pour surplus moneys into very expensive exploration/r&d). The type of grandstanding U-turning, overreacting to media and perceived public opinion - it is observed by other countries from afar as almost satirical. The US also operates central government politics like a soap opera but the difference there is that the individual States are actual big money takers and decision makers. I would argue the English political system has actually broken down and the central power of it all and toxic interrelationship with media has failed its people.

We are already experiencing a significant brain and capital drain due to political risk.

Most people using private schools will be in the top 5 per cent of tax payers. That doesn’t make them “rich”. If they are mostly earning under 300k it is a sudden unfair tax and will have big unintended consequences as these things always do. It will also be a “cost” for businesses as they would need to keep those employees whole or they go elsewhere. It is just basics economics.

Direct Investment by Country and Industry, 2022

The U.S. direct investment abroad position, or cumulative level of investment, increased $212.2 billion to $6.58 trillion at the end of 2022 from $6.37 trillion at the end of 2021, according to statistics released today by the U.S. Bureau of Economic Analysis. The increase reflected a $172.8 billion increase in the position in Europe, primarily in the Netherlands and the United Kingdom.

Are people overstating political risk?

Business investment. Hit mostly by 2008 and pandemic is up still

Near where I am living, 2-3 state secondaries are closing because there are not enough pupils.
I went to school in a European country. While there were private schools (and I did attend a private boarding school - which was attached to a state - grammar type - secondary... not sure if this exists here), the state schools were seen to be the "better" schools. If you'd attend the two small private schools in my hometown, it was seen as "you didn't get into the state grammar school and you needed more help to achieve good grades".
When I first moved to the UK I was totally confused that going to private school was (and is still) seen as something desirable.

The fact that private schools have a charitable status is ridiculous. In my opinion it can't stop soon enough.
It would ultimately benefit all of us

If you'd attend the two small private schools in my hometown, it was seen as "you didn't get into the state grammar school and you needed more help to achieve good grades".

I’m in a grammar area in England and that’s exactly what people think about the local private schools here. I have heard one described locally as being for the ‘crème de la crème’ ie rich and thick.

A change in attitude would benefit our society. A new tax will not change British attitudes, it will just create more of the same toxic nastiness and deflection of blame onto others. Nobody wants to accept responsibility for anything. I really am beginning to think we are now stuck on a path to rapid self-destruction, not just in the UK but in the world, and all because nobody wanted to blink first.

And you are rich if you earn £250,000. The fact you can think of a lot of things you want to spend the money on and resent paying tax is irrelevant to the fact you are wealthy. The fact your quality of life could be better elsewhere is, however, relevant.

It’s ignorant to say rich and thick, we have Grammar schools and undoubtedly I know my niece could have got into the Grammar school (she’s an academic scholar at her Senior school and it’s confirmed she’s gifted). However the overall education on offer at the Independent school is unequivocally better than the Grammar. You can get a very good academic education at the Grammar school but the rest from co-curricular to sporting activities just doesn’t compare.

A friend of mine has 2 DDs one at the Grammar
one at my niece’s Independent and says you can’t compare but for her solely academic child the Grammar school suits, but she feels she is doing that child a disservice in comparison to her child at the Independent.

I think Grammar school parents like to say the schools are equivalent but they’re just not.

I think Grammar school parents like to say the schools are equivalent but they’re just not.

The results of our grammars and the local private schools are massively different.

If grammar's don't have the same co-curricular offering, then children have the opportunity to do activities outside of school, which might broaden their education further, rather than private school kids who only exist in their bubble and don't for example know anyone who is working class.

Thee are a lot of aspirational “working class” parents at private schools.

The problem with private education in the UK is the history of the UK - they hark back to our history of segregation, where the ruling classes, professional classes and the masses only mixed when the class above was telling the class below what to do. The class above set the terms of engagement. They did not educate their children together, a high proportion did not much care for or about the other classes, and they did not understand each other’s lives. The idea that the state should take responsibility for everyone, rather than leaving the ruling classes to decide on whom to extend their noblesse oblige, is a poor fit with our history. And there is no point pretending that charitable status doesn’t reflect the idea that it is the wealthy ruling class who should decide who to lift up to join them, not a democracy.

It is hardly surprising, therefore, that private education is not seen as democratic and benign by everyone in the UK - it helps to cement ideas of people’s station, of a certain type of education being necessary for leadership, of people having to know their place and not pretend their worth is based on their own merit, rather than lent to them by their employer and just as easily taken away. It is also not surprising that the visceral feelings private education can evoke in others can take by surprise those who think it’s just about how they choose to spend their cash (although it really isn’t, if you buy into the idea it is a charitable activity).