If you have kids in private education, what is your school planning to do re VAT?

[Ladychaise]

I have two kids at a London independent school and currently just about scrape the cost of fees. Labour’s intention to add 20percent on the fees would make it impossible to keep them there, if all that cost goes to us - it is a worrying time.

The school’s bursar is being lovely but it’s very much a ‘let’s cross that bridge when we come to it’ take on it! I get that we don’t know for certain if Labour will get in or how fast they will implement this - but surely schools should be planning for this and working out how much of the VAT, if any, will be ‘covered’ by the school?

Aware there is a lot of uncertainty but does anyone else’s school have a plan in place? Thanks so much

Yeah, I appreciate that getting an EHCP isn't always straightforward. Have a friend going through this at the moment, though definitely no lawyers involved - don't think that's really a thing in my area!

I kind of think it's fair enough though to say that VAT won't apply to children with an EHCP or something along those lines. There needs to be some sort of distinction, in any case, between those who are choosing private out of absolute necessity and those who are choosing it as a lifestyle preference, and it cannot simply be based on self declaration.

Perhaps some sort of process could be established to assess the needs of private school children without an EHCP to assess their needs and determine whether VAT should apply?

I do agree that the Labour Party are probably making things up as they go along. I am yet to hear a clear strategy from them with regard to their plans for state education. I am certainly not feeling inspired at present.

To be fair, over past decades there have been talking about VAT on school fees by different government but it was dropped after calculating finanical benefits and hassle incurred. Recent reserach also pointed out this policy will be a lose lose. Obviously it is purely for pleasing their voters. I would believe the chance of actual implementation of this policy will be varied along with more and more discussion down the road on SEN private school, taxing education, whether taxing uni fees, private tuition, music lessons, etc.

We had insurance in place that covered most eventualities, but I will admit that I really hated having a mortgage and we paid it off as quickly as we possibly could. Which was a good thing when a Brexit-related redundancy suddenly hit us out of the blue!

As for what contingency is appropriate, I can't put a sum on that for another family. We considered what might happen if we lost one or both incomes e.g. if one of us had become disabled and the other one had to become a carer etc, as well as likely fee increases etc. Ultimately, we concluded that we would need to set aside the full 7 years of tuition fees from the outset, including projected fee rises, in order to be confident that we could keep dd in the same school without having to put our home at risk etc. And of course, I realise that that would be unaffordable for a lot of people, but unfortunately it's just a fact of life that lots of people can't afford private education.

I don't understand why so many say it's a 'lose lose' option

Any tax reduces consumption to some extent, when people choose some other option that is not taxed, or consume less (when there is no other alternative).

The calculation on the government's part is that despite the reduced consumption, a tax policy will be revenue positive. If not, then it's not a good tax policy.

In case of VAT, there is a reasonable assumption that it will raise net £1 billion or so (after taking into account that some people will move out of independent sector)

£1 billion is not nothing. Sure, it's a small percentage of school budget, and I agree it will not make a dent in education inequality, but would you rather the government not raise that extra £1 billion? Should it borrow instead? Or raise tax somewhere else? Where?

From my point of view, that £1 billion is an easy win because on average, independent school parents (I am one) are price inelastic - they have swallowed year after year above inflation fees hike.

Last year, DD's school raise fees by 6.5% - no one left
Next year, school raising fees by 5.9% - I can bet no one will leave next year either.

This kind of fees rise has been going on for decades and number of children going to independent schools have remained unchanged.

Why would a VAT, raising schools fees by approx 15%, make much difference?

Sure, some people would be unable to afford and leave, but it's net revenue positive from the government's point of view. It raises about £1 billion without hurting too many people, affecting only the relatively well off.

It's of course negative for parents, but it's certainly not 'lose lose'

I agree.

I think some private school parents are eager to push the lose-lose narrative because they don't want to pay the extra fees, which is of course understandable. However, I think the threats of a massive influx of pupils from private to state are massively over exaggerated. There will be some children who move, I'm sure, but the majority of parents will probably suck up the extra cost, just as they have sucked up the other fee rises over the years. I guess we'll see.

I am travelling for work at the moment in Asia. Lots of profit driven education businesses will be buying up the bigger U.K. private school brands. Lots of smaller U.K. private schools are going to go bust in the next 5-10 years. It isn’t just the VAT but perfect storm of cost of living, maintenance and energy costs through the roof, teacher recruitment crisis and huge pension costs etc. If this comes in it is a 100 per cent certainty that a lot of these schools will go out of business. Labour really need to have a plan to deal with that. Otherwise you will end up with those run for profit being bought up for real estate/overseas educational businesses and the charitable ones just sitting there for years. There is already a problem with nurseries and care homes being bought up by overseas private equity.

So go ahead but the Government need to have a plan if this is implemented. Needless to say we are in the post Covid period and we are talking about children who have already had their education majorly disrupted so this is vindictive at this point for those children who have to be pulled out.
The future for private schooling in U.K. will be more like Switzerland. Playground of the super rich. Here is the big “but” though- U.K. education is a brand known worldwide which attracts talent into unis as well and attracts skilled people coming into the U.K. So doing this is risky, probably just another symptom of the further decline of U.K. plc. Other countries like Dubai will benefit and maybe even some other European countries were private education is cheaper like France/Spain, maybe even Germany. Whilst those countries seem Ok with having private schools Britain seems to view it as a problem.

Many private schools themselves should have done more to cut costs and not pass everything on to parents.
Fees for most private schools currently include extra curricular. They should look into charging this separately and open to all on school grounds and billed separately. Unfortunately some uni courses like MML and Classics will be further affected if private schools offer less of these in the future.

There have been a lot of reports in recent months predicting this policy will cost the government extra money, let alone raising net £1 billion or so. Who will win then?

Can you please share some of these reports?

The one I mentioned previously is this one from the Institute of Fiscal Studies :

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

Note that while I mentioned a net revenue gain of £1 billion, that IFS report estimates slightly higher gain of around £1.3 to £1.5 billion, taking into account some people moving out etc

There's some good points made about the playground for the super rich.

One thing talking to friends and being on Mumsnet has made me change my mind on is private schools. I was definitely guilty of living in an echo chamber on this issue.

The people who are very wealthy will not be affected by this sort of policy. They'll continue to be part of the super elite with their old boys networks, contacts and progression into top jobs.

It's the middle families who've made sacrifices elsewhere in their lives to pay private fees more comparable to their childcare bill when their child was under 3 that will be most affected, along with anyone on bursaries.

Does it really matter, though, if private schools become a playground for the "super rich" as opposed to being a playground for the "quite rich" as they are right now?

I mean, yes, it's bad luck for the people who will be priced out of the market, and I get that it's pretty shit from their perspective, but does it really matter at a societal level if some middle class kids have to go to state schools instead?

This is a genuine question, by the way, and I'm open to persuasion. But given what a small percentage of the population can access private education anyway, why would it actually matter if that percentage became somewhat smaller?

Does it really matter, though, if private schools become a playground for the "super rich" as opposed to being a playground for the "quite rich" as they are right now?

They're not just for the quite rich though.

A friend pointed out to me that she could send her child to their local prep school and it would be LESS than she was paying for her children's nursery places.

That was what opened my eyes and started my change of opinion.

Until then I'd assumed that it was only quite rich people who chose private education. Realising that for smaller day schools it's within reach of people who have previously paid full-time daycare fees shocked me. That's actually a lot of people.

Of people in that group who have choices, some might decide their local state schools are good. Others might choose independent as they feel it's better for their children (which isn't just about exam results). Others might look at their finances and understandably decide that they don't think the return on their money is worth it.

Most people in that situation don't choose private school, obviously as the figures are low for those who actually attend.

Making it more difficult for the middle isn't going to make the people at the top care. None of these policies will affect them at all, but it will make some voters feel happy that some other local families have been pulled down a peg or two.

I'm very wary of policies that put working class and middle class families against each other because it's a move to stop both groups looking at what's going on at the top.

I guess it depends on how you define "quite rich". The reality is, private education is objectively beyond the reach of most families in this country. Most families simply don't have that level of disposable income going spare, no matter how hard they try to cut down on other non-essential expenditure. And yes, there is a tiny number of full bursaries available for those on the lowest incomes, but the reality is that they are few and far between.

I do understand the reference to nursery costs as the cost of a full time nursery place is often broadly comparable to private school fees, but I don't think it's really the same. Firstly, families on all but the highest incomes get some help with nursery costs, so won't usually be paying the full whack. Secondly, kids only need nursery care for a few short years, and lots of people rely on savings or loans to pay for it, rather than funding it from income alone. And even then, lots of people report finding it a massive struggle, so I think you're wrong to assume that everyone who pays for full time nursery could just carry on paying private school fees until the child is 18.

I'm not speaking from a place of resentment. We could have afforded private education ourselves and would have done if we had felt that it was worth the investment. But I don't think we are typical and I don't think that anyone who isn't "quite rich" could even contemplate it. I get that the word "rich" means different things to different people, though, so replace it with affluent, comfortable or whatever term you prefer.

I still don't understand why it really matters, at a societal level, if some middle class kids go to state schools instead of private schools. It has always been the case that private school is beyond the reach of those who can't afford it, and that won't change... it's simply that a few more people will be tipped into the "can't afford" category, and while that's a shame for them, I'm not getting why it matters for our society as a whole?

I'm not being bolshy here, I am genuinely trying to understand your point of view. Of course, you're right that this policy won't affect the super rich or make them care, but neither does the status quo - we need other policies to tackle the elitism in our society. In the meantime, if this policy raises some extra revenue for state education by taxing something as a luxury which, in my view, should be treated as a luxury, that seems pretty reasonable to me. I don't really understand why the argument that it won't affect the super rich means that it isn't worth bothering with it at all.

As I've said above, I do have sympathy with those who have opted out of state education because of SEN that aren't being properly met, and I think we should seek ways of mitigating the impact on this policy on those families.

Reducing access to good education is a problem for society because it means fewer children are achieving their potential. At a societal level it doesn’t matter who those children belong to, more and better education = good for future work force. First and foremost we should be addressing issues in education and raising the bar on our expectations for state schools, but squeezing people out of private isn’t going to touch that.

Well, of course I agree that reducing access to good education would be bad for society, but I don't personally buy into the assumption that private schools necessarily offer a better education, nor do I believe that they produce a "better" workforce. Based on what I have observed, that is not the case.

But even if we accept the premise that private schools do offer a better education, we'd be talking about too small a section of the population for it to really make much difference. Only a small percentage of kids go to private schools as things stand, and an even tinier percentage would be squeezed out as a result of this policy. I can't see that it would make much difference to the big picture, even if private schools were somehow producing kids who were "better" for the future of the country. Which they're not.

If we are really interested in the value of education for society, it would make much more sense to invest heavily in the state system, and especially in helping to boost the life chances of the most deprived pupils. If taxing private schools enables us to invest even a little more in supporting those pupils, I welcome that personally.

While I agree that many already committed to private schools will find a way to stick it out, and above all else avoida poorly timed precipitous move, I do expect to see a decline in private school enrolment over time if this policy is introduced. We are already seeing it at our school where for the last two years they haven’t been able to fill reception. We are also already seeing families for whom it was more of a stretch quietly time departures around normal transition points , who otherwise would have stayed on. Agree with @Araminta1003 that it will be junior school that see the greatest impact, alongside the less prestigious day schools.

our school is an all through boarding school. Overall it isnt likely to close but potentially will see a shift towards more international boarders, and I do worry about sustainability of the junior school as local parents become less confident about the commitment/ try to delay entry and prioritise secondary.

I think it matters if only top 3% of the population can afford private schools vs top 10% as it is now (numbers are just to make the point, not meant to be precise). That simply means greater inequality as the very very top would have access. An analogy would be the Gini coefficient which the extreme case of inequality would be only the top 1 person having all the income to himself.

In practical terms, if we think that ultimately it’s the private schools that build networks to the top jobs in this country, I do think it is better if those jobs select people from the pool of top 10% than top 3%. Of course it shouldn’t be like this at all, but I think this is what might happen.

Thanks for contributing to the conversation in a positive and polite manner.

Thanks for answering. The thing is, I'm not at all sure if it is better for the top jobs to select people from the richest 10% rather than the richest 3% . In many ways, I think that this perhaps helps to perpetuate the inequality in the system.

If only the top 3% were going to private schools and building those networks, the talent pool would be extremely limited and employers might be forced to try and recruit more widely. Plus the people in the 90th to 97th percentiles would be far more motivated to agitate for change, and they might prove to be a relatively powerful lobby.

I get that you aren't arguing that the status quo is acceptable, but I guess I am not happy with policies that aim to keep the top 10% in with a chance of getting the top jobs. I'm much more interested in what happens to the 90%, and particularly in what happens to the bottom 20%.

If there is a problem in society around privately educated people taking all of the top jobs, the solution isn't to ensure that a marginally higher percentage of kids are privately educated. We need to dismantle the systems that create that unfairness in the first place. And while I don't for a moment think that putting VAT on private schools is going to fix this, I do think it's a tiny step in the right direction.

I agree with this. Particularly as I don't think making private schools more expensive will do anything for equality. Where we live house prices have shot up over the years. Part of the reason for this is we have two excellent state schools in this area. Families who can no longer afford to live here get stuck with the schools with terrible reputation and poor results in another part of town that's cheaper.

I think this issue hit the headlines a few years ago in Keir Starmer's own constituency actually. Parents had been registering their kids address at grandparents or were renting small flats so they could get into the better state schools. The kids lost their school place if found out which although understandable was awful for a child already settled in school.

Parents with more money might not send their kids private but they'll buy a home in a 'good' area near the 'better' state school. Fewer sending their kids private will make this issue even more of a thing

On average, independent schools spend around 90% higher per pupuil than state. So for a given level of ability, they should produce better outcome than state sector and probably do.

But I am not at all sure that this advantage persists later on, even in university, let alone in the job market.

On the contrary, number of studies show that for a given A-level grade outcomes, state school students outperform their independent school peers in university. For example, take a look at https://www.bbc.co.uk/news/education-26773830 or https://www.cambridgeassessment.org.uk/news/state-school-pupils-do-better-at-university-cambridge-assessment-research-confirms/

Whatever advantage a private sector educaton confers does not seem to endure in universities. Or at least it is not visible in their former students' academic achievements later in life.

Additonally, the extra net £1,300 million or so raised, if spent well, can raise eudcational outcome in some of the most deprived areas of the country. The gains from this can easily be larger than the loss from some people leaving private sector.

I think many people who use private schools don’t expect higher grades or better unis. First time buyers might but others are more pragmatic. For some it’s a way of life. For others it affirms their status in society. For dc it brings a less factory life approach and a broader education.

I actually think that the breadth of recruitment in many sectors is widening. What employment stats look like will change. I also think those who are the best rise to the top and that state dc can do this. What they also need to do is grasp opportunities. They have to want it.

@justanotherdaduser the interplay between education, family and individual potential is complex and it’s impossible to isolate the role of school, especially when there is so much diversity within the independent sector. We could trade datapoints all evening and interpret them to suit our narrative (private school students are more likely to go to uni and earn more in later life), and debate the usefulness of common metrics for evaluating a school (do a-level outcomes really tell you all you need to know about educational attainment?). But if private school confers no enduring advantage then why do we need to level the playing field between state and private?

And I know it has been beaten to death on a number of boards, but there is no way the actual income generated from this policy approaches £1.3bn. The IFS estimate is acknowledged within its own analysis as being a very rough estimate intended as a first effort at quantifying potential impact based on lots of untested assumptions and with very little policy detail to inform it. Since the IFS report Labour have made several tweaks (such as SEN exclusion) that would reduce potential revenue while increasing administrative costs. £1.3bn is the high water mark of policy potential - if it achieves half of that I would be impressed, and I wouldn’t be surprised if it ended up costing more to implement and administer than it collected in revenue.

Medschoolmum
What is 'best' educationally will differ family to family. Some people will want intense academic schools, some know their children will thrive in a smaller environment, some will have religious or philosophical reasons (such as preferring a particular education philosophy) to pick a school, some will want a school that is excellent at supporting children who don't have SEN needs great enough for an EHCP but who will get overlooked in a mainstream, some parents will pick a school they think their child will thrive rather than risk their child being unhappy whilst they wait 5 years on waiting lists for assessments and diagnosis, some will think the best education priorities sport or music, others might think the best education centres outdoor education. When people are thinking about what's best for their children it's often about more than exams.

I look at most of our options for secondary and I'm worried. We aren't a family who are likely to afford to go private and we're also not a family who will be able to move into the few areas with astronomical house prices to get the decent state schools. I don't think this policy is the right move though. A lot of the problems in schools aren't educational. They're schools dealing with a lot of social issues that other services should be dealing with.

What I find frustrating is that people often have very little issues buying houses or renting houses with schools in mind, very little objections to parents paying for tutors to paper over the problems in the state system, very little objections to parents topping up education in many other ways but then they're happy to try and pull other families down a peg or two because of how they've chosen to educate.

I don't think this policy is the right policy because it's playing into divisive politics. It also leaves the top untouched whilst putting many middle families in a difficult position because they think it makes a good headline. There are relying on the public thinking "private school= Eton" and not "private school=a small day school that's got families similar to them".

I'd have a lot more respect for Labour if they wanted to tax wealth in the way PAYE and earnings are taxed.

Expect to see more research being done on this as the lobbying against the policy continues behind the scenes. The IFS paper is being scrutinised and challenged and MPs/Labour candidates are starting to be made aware of the consequences of the policy. I don't believe Labour will completely u-turn (they can't as it is practically one of their only policies for raising extra money) but there is a hell of a lot activity going on at the moment around this issue.

But if private school confers no enduring advantage then why do we need to level the playing field between state and private?

Personally, I don't think we do need to level the playing field between state and private, @Labraradabrador, because I think there is actually very little difference between middle class kids with wealthy, supportive parents in either sector. The kids who need "levelling up" are the ones from disadvantaged backgrounds who are already far behind even by the time they start school. The odds are massively stacked against them, through no fault of their own. I want more investment in those children to enhance their life chances.