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

You’re not comparing like with like. Most league tables are looking at overall score. There’s no point comparing a grammar with a comp on that basis. You need to look at value added or progress. What do similar pupils with the same attainment on entry achieve. And the answer for most pupils is better results in a comp. Obviously there might be other reasons for parents to choose a grammar over their comp.

The idea that heads are worried about poorer pupils being squeezed out now, when this has been an issue for over a decade is hilarious. They are largely squeezed out by sharp elbowed MC parents who tutor from year 3 or send private for primary and grammar for secondary. It is not the great social leveller it used to be.

Really? Aren't schools like Henrietta Barnett and QEB the top-performing state schools in the country? Dame Alice Owen was the no1 state school a few years ago, but again it's not really a state school but a highly selective school with a sibling policy.

I haven't looked at the data for these schools specifically, but one way it is possible for these schools to be both "top-performing" school and producing (relatively) worse outcome for students is if "top-performing" is measured by percentage of 8 and 9 grades in GCSE (or A-star, A I A level) while outcome for a student is measured by something else, say, progress 8 score (t.ly/dR9S6)

The schools could then be 'top-performing' because they are super selective - no matter where these children go, they would have done very well regardless. There is nothing magically more effective these schools are doing, except for selecting at entry point.

And they could simultaneously be underperforming by having below average progress 8.

That is, students with similar ability as those in "top-performing" grammars(measured by something like SAT when they were in year 6) did relatively better in some other non selective schools.

This is quite possible - many grammars have fairly low to average progress 8 scores whole having stellar overall GCSE or average. The schools with best progress 8 in England do not often hit "top performing" chart because they don't select.

Our school has said they will 'cushion' the VAT increase to parents I.e. introduce it over a year or two perhaps - they aren't explicit in the detail and cite a lot of other things impacting their finances like CoI, teachers pensions etc but also say they have built up cash reserves and have no debt - oh, and are embarking on an infrastructure improvement/ development of facilities over next year (started already!). And the increase for next year's fees, without the VAT, is 7.5%. I'm a little unimpressed that there is seemingly no creative thinking on their part on how NOT to pass on the full VAT increase to parents.

This is exactly our situation- I appreciate your frustration. I've been informed that SEN support has improved at local school but it is really the huge class sizes that can be difficult for a SEN child to navigate, regardless of the support. I realise DC has been very lucky to have gone to the lovely little independent for 3 years and I hope it has given them the confidence to flourish in the local, and I'll just have to be extra engaged on the SEN front at new school. DC has taken news very well, which is a relief.

I don't see how this policy makes things fairer either, it will just be the squeezed middle-classes and kids on bursaries who are affected, making private education even more elitist. I didn't have a private education, in fact I went to about 17 different state schools. I have worked extremely hard to be successful in my industry and chose to spend most of my salary to send DC to an independent because I felt they needed the extra support. While I appreciate I am in a privileged situation, I earned that privilege with my own hard graft. But that graft cant cope with another 20%!

Yes but the point is the kids who are pushed into e.g. Henrietta Barnett would do well - or even better - in a comp.

You're not comparing the schools, you're comparing the kids, their relative wealth and their parents' attitude to education.

Grammar schools are not adding much educationally, they add less than the best comps. What they give parents is a feeling of security and control, as well as social exclusivity.

Social exclusivity is very important to many parents, it is a big part of the appeal of both private and grammars.

Lol, social exclusivity was not why, and many many others, we were - forced - down the private route!

I do not know you so am just talking generally.

Social exclusivity is part of the appeal, it is often discussed amongst parents that they don't want their kids to mix with 'the wrong type' so choose a school which in their opinion excludes those people.

Labour's tax will push them towards a feudal structure where only the seriously minted will be able to afford them.

"Feudal" really does not mean what you think it means.

The concern that the UK is lapsing back to a feudal state has actually been fairly widely discussed. The point I was making is that the VAT on private schooling resulting in it escalating out of reach of ordinary families will contribute to this.

https://en.wikipedia.org/wiki/Neo-feudalism

https://www.theguardian.com/commentisfree/2022/jan/30/luxury-privation-britain-becoming-feudal-disparities

https://99-percent.org/is-the-uk-feudal-society/

Although that article does as ever pick unusual cases - someone so rich they through they could afford FOUR children - something most people don't and someone who says they have to live near family in a very very expensive part of London rather than eg moving to my native NE England which is much cheaper.

I presume that most schools and most parents will have been planning for this for years, as it has been on the cards for a while. I would therefore assume that most parents will have probably made adequate provision to cover such eventualities before deciding to send their kids to fee-paying schools. Unless, of course, they're very chilled about kids moving schools midway through, which I wouldn't have been.

@Medschoolmum i still don’t know what the details of the policy are and therefore how it might affect us, so not sure how we were meant to plan for this years ago on the basis of a back and forth discussion (remember they have backtracked on this before) from a party not in power? In addition we would have needed to anticipate covid and the resulting economic fallout that resulted in higher than usual fee increases, skyrocketing mortgage rates and overall cost of living.

most of us anticipated rising costs of schooling over time, but I don’t know anyone who anticipated such steep increases coming in such a short span of time.

Fair enough if you didn't anticipate it. Most of the people I know who went private ensured that they had an adequate buffer to cover unexpected increases/loss of income etc, and they plan to use this buffer to cover the cost of the VAT if they need to. I also know some people who chose not to go private precisely because they didn't have that buffer, and of course, they are now very glad that they didn't.

I do get that some people plan ahead more than others, and that everyone has different appetites for risk etc. Either way, I'm sure that your kids will be fine if you end up having to move them... most kids are actually very adaptable and it sounds like they will have supportive parents to help them through any transition.

@Medschoolmum my point is that we DID plan with loads of contingency, but compounding factors will drive the cost past my worst case scenario for school fees while also constraining cushion within my broader financial planning, limiting our ability to adapt. We will probably be able to figure it out, but it is not surprising that many many parents will not. Blaming parents for not anticipating every possible scenario is a bit callous, as is suggesting that it’s no big deal for the kids affected. One of my dc has SEN, so no she would not be ‘just fine’ if we had to disrupt her schooling - not all kids are ‘very adaptable’ even with loads of parental support.

OK, I'm sorry if moving schools would be a big deal for your child.

But surely that is all the more reason why you should have had a bigger buffer from the outset. Private education is a long term financial commitment and it needs proper planning. Unfortunately, it sounds like your worst case scenario was far more optimistic than it should have been, but we have known for years that Labour was considering putting VAT on private education, so while you might not have known the detail, presumably you could have planned ahead for the extra 20% that it would add, in addition to all of the normal contingency planning around inflation, changes in income etc. If you have a child that doesn't cope with change easily, then surely you put more measures in place to protect them?

FWIW, I'm not suggesting that it's no big deal to move kids mid way through their education. While most kids are adaptable, I don't think it's ideal and I wouldn't have wanted to move my dc at that age. But the onus is on the parents to plan effectively to prevent such a move, rather than on the state promising never to change the tax regime.

You will probably say that there should be more warning, but it isn't reasonable to expect governments to delay policy implementation for 7 years or however long it would take for kids to finish school... they would never get anything done! And the risk of VAT being added to school fees hasn't come out of nowhere, it has been out there as a possibility for years. I'm sorry that you didn't take it into account when planning, but I know plenty of parents that did.

To be fair I don't think many people were thinking VAT would realistically be going on school fees until the last year or so. My eldest is 20 and youngest 14 and all were/are being privately educated since they were 3. When we did the sums back then we certainly didn't factor in VAT.

Luckily I will probably only have 3 years in total when paying VAT due to ages of my children but as others have said the fees have been going up an awful lot year on year for the last 10 years.

And I still speak to parents now who think the VAT increase won't happen which is crazy to me.

20% is a lot if you have children in boarding schools (obviously a choice) and I think a lot of people will notice what is an extra £10k pa on their fees - ok it may mean they drop a holiday (diamond shoes too tight I know) but still . . .

Personally I think it is going to be the preps and pre-preps that really suffer as people save their money for senior schools. I certainly now wouldn't be starting 3 children aged 3 in private education. Especially as university is proving to be pretty expensive too.

Ok, but how much is enough contingency? I assumed fees for the final year would be 2x what they were when we started, and now it is looking more like 3x once you factor in exceptional increases + VAT. when you layer in extraordinary inflation and interest rate rises, what was a very comfortable position is now looking fraught.

we weren’t expecting to pay for private education when our children were born, but SEN + state schools are not a great mix. There are many parents at our school who have similarly moved from state because dc were being failed, who are doing their best to cope with the rapidly evolving financial picture, and these parents feel doubly betrayed by a system that can’t give our children what they need but also wants to tax it as a ‘luxury’ when we self fund. You talk about private school like it is purely a lifestyle choice, but for many of us it is a critical component of our child’s health and wellbeing.

and though Labour have discussed this on and off for years, they have also repeatedly rejected it on the basis that education shouldn’t be taxed. I DO think they have an obligation to phase this in gradually (if they insist on it), and if this was really about raising revenue that is what they would do, as it would allow more people to adjust planning and adapt. But it isn’t about raising revenue so much as political messaging

I think it was in the Labour Party manifesto in 2017, wasn't it? And even Michael Gove was talking about it at one point. So people have been aware of the possibility for a long time, even if they have chosen to bury their heads in the sand and hope that it doesn't happen.Personally, I don't think VAT should be applied to private SEN schools. Then again, I believe that special schools should be properly funded by the state in any case. For me, the solution to that is to fix the problems in the state system by putting more funding in to support children with SEN effectively - otherwise, what about the ones who aren't lucky enough to have parents who can pay for private education?

Whilst many parents would have planned for fee increases, it’s only in the last 3 or 4 years where the possibility of VAT has been a real likelihood. Previously, it has always been rather vague.

What a lot of people won’t have planned for is Covid (which impacted family finances in many cases), the huge fee increases because of high inflation, combined with large cost of living increases (mortgages, energy bills, food etc). The VAT will come on top of those large increases.

The attitude that “well you should have planned better” is just as ridiculous as saying to every family in the country that they should have planned better for huge increases in housing and living costs.

I had family who lost most of what they had as a result of revolution and had all their bank accounts frozen. I guess they should have planned better too.

Yes, but again it was quite vague and the chances of Labour actually implementing the plan wasn’t as high as now. In any case, school fees were much lower in real terms then than now. It was only in 2019 that the Labour Party conference voted to ban private schools, which was always going to be tricky to say the least. Their plans for private schools have always been muddled.

Not all families have the luxury of planning to avoid increases in housing and living costs... their every penny is spent on essentials and they have very little if any discretionary income that would allow them to plan ahead, so no I certainly wouldn't say that to every family in the country.

But for better off families who do have some discretion about how they spend, yes, I absolutely think that people should plan for contingencies. I'm often amazed by people taking out big mortgages without thinking about how they will manage them when interest rates go up etc... surely people are aware that this is a possibility?

Maybe I'm just more risk averse than most, but I wouldn't personally enter into a significant financial commitment without thinking through all the

Muddled, yes, I agree. I think they're still pretty muddled about it tbh.

But given that the idea was certainly out there, I am still surprised that people didn't factor it into their calculations of the "worst case scenario". Wishful thinking, I suppose. Or blind optimism? Or a greater tolerance for risk than I have?

I realise I may not be typical. We chose to buy a smaller house with a smaller mortgage so that we didn't have that fear of interest rates hanging over us. I tend to go for belts and braces in my financial decision-making.

We did look at private for dd when she was moving from primary to secondary, as we weren't sure that she would get into our preferred state school. In the end, we didn't feel that the offer from the local private schools was worth it in any case, but we did go through the calculations about affordability, and we factored in all sorts of extreme scenarios. I just assumed that this is what most financially savvy people would do.

I am not holding my breath for state SEN provision to improve, not that Labour have any real plans to tackle this. Labour seem to be making it up as they go wrt what will / will not be affected by VAT, and the most recent suggestion is that all schools would be VATable but SEN children with EHCPs would not. How they plan to make that work, I haven’t a clue. It takes a lot of years and/or a lot of lawyers to get an EHCP in my area, and most SEN children in private don’t have one. Labour’s suggestion that having one might affect VAT has made several parents in my support group take a sudden interest in getting one, though - either to avoid VAT or just to be prepared if they have to revert to state. It will just further gum up SEN provision and make things even slower for families who don’t have the resources for private assessments, lawyers and education consultants that help expedite the process.

@Medschoolmum you haven’t answered my question about what contingency is sufficient for a ‘financially savvy’ parent? Our cost base has more or less doubled in the span of 3 years, while income is flat or slightly down - we are exceedingly fortunate to be able to make it work, but I don’t know too many people that reserve a full half of their income ‘just in case’.

surely if you were that cautious about all the imaginable ‘what ifs’ you wouldn’t have mortgaged at all. A mortgage indicates that you expect to make more money in the future, which in itself is a bit of a gamble