If labour win the election can they introduce VAT immediately?

[londonparent321]

(For school fees) Or do they need to go through the courts which could take years /never happen?

There is no VAT on foreign holidays. We will be in the ridiculous position of having VAT on education but not on luxurious 5* foreign holidays.

People are critiquing the IFS numbers

That’s because some of their assumptions are beyond ridiculous. For example, they are assuming that every parent who switches to state will spend every penny saved on school fees on goods & services subject to 20% VAT (not on savings/holidays/pensions etc).

You need to look at how Labours calc were put together.
Not in fact by expert economists.

Nothing more than 20% added to an average fee allowing only for a 3%drop in attendance. No allowances made for the tax claims private schools will be able to make either. In fact no detail at all.

Labours figures have, in fact, been heavily criticised by the expert economists that you speak of.

Yes, comparing labour participation rate for parents in private vs. State education would be very interesting! Just correlation wouldn't really tell you which direction the causation goes though.

If you could add a time element, eg looking for increasing working hours whilst having children in state vs private or just prior to starting private.. I think that would point more strongly to school choice being the cause.

Once again you only consider the few elite private schools. The majority of private schools do not offer boarding so do not attract overseas candidates. How much of an international reputation do you think Ipswich High School, Sherrardswood School, St Mary’s college in Merseyside or Thetford Grammer school have? Compare to say, Institute Le Rosey?

Even the elite schools like Eton have not been able to rely on offering contacts for the upper classes rather than education since the early last centuary.

For example, they are assuming that every parent who switches to state will spend every penny saved on school fees on goods & services subject to 20% VAT

Even this assumption ignore the fact that parents leaving private schools because the can’t afford VAT don’t magically find the amount of money they didn’t have for private school fees is suddenly available to spend on other things.

It’s a privilege tax essentially. It isn’t a normal VAT because it is internationally not the done thing, far from it. It is basically saying to the rest of the world we the U.K. have a problem with private schools and need a deterrent.
Bit like we tax fags a lot because we have an NHS and the NHS has to deal with the smokers for free (in private insurance you have to pay more if you are a smoker). So people stock up in duty free or across the border, if they can. Your child is labelled privileged/brandished essentially because apparently you tried to purchase privilege for them by sending them to a private school.

The IFS report is just a cover my arse piece of paper for the politicians who will levy the Vat and destroy loads of smaller players. I guess they should be forewarned and merging with bigger outfits left, right and centre. For example, maybe good old Eton will have to “merge” with a few preps and share its balance sheet. Instead of ploughing into state partnership, it will have to save its feeders instead.

That comparison with holidays is a strawman.

The marginal value to you of getting a slightly better holiday isn't all that high. Probably not high enough to be worth working extra days of work.

But private school is a large all-or-nothing expense, which people are very motivated by.

Private school also makes it easier to work full time. Better holidays don't.

We have had a meeting with our school. They assure us that the full amount would be added to fees. We have seen the accounts. It is a non profit making enterprise with very little cash reserves. Like may other independent schools.

The only positive from all this is that once forced out of the school, we could (and will if it happens) scale back on work. Our earnings cannot jump enough to cover the extra 20%, but if we are not covering private school for 2 dc, we will have a lot mire disposable income.

We are not spenders, we would prioritise family time and seek to reduce working hours. I would just do the minimum hours to stay professionally registered. I would probably lift myself out of income tax altogether!!

Economics is all about the choices people make, and the IFS have very obviously misunderstood (or not really thought about) what's driving people's choices. Especially the people who are at the boundary of affording private school, and so may be influenced to stop or else not to start. That means they are wildly off the mark on what they'll spend that money on instead.

Eg If you increased the cost of TVs, then buying the TV is now worth less to the buyer than the same cost of other consumer goods. For that higher price, they could buy a games console instead (and they prefer that) so that's the choice they make.

But people don't buy private education as one of many possible consumer goods. Because it isn't a consumer good.

Buying cars, bikes, clothes, furniture, electronics, sports equipment: it's simply not the same spending category.

The equivalent things people will choose are all ways of improving your family and personal life. You're not going to replace giving your kids the very best education you can with a games console or a car. You're going to replace it with dropping a day of work or retiring earlier.

Holidays and family outings and activities probably do fall in the 'improving family life' category for some families, but not to anything like the same amount of spending. (There's a concept called 'marginal value' in economics, which is the value buying a bit more of something has to you. You have to spend the full £20k on education if you want it at all, but you're not going to spend that much on holidays since at a certain point spending more in holidays is worth less to you than spending an extra day a week with your kids or retiring earlier)

It won't be obvious though, so I expect we'll never know. UK productivity (and hence everyones standard of living) will just continue to drop.

I find those assumptions strange too

Especially since the report gets cited so often

It doesn’t sound correct

@EasternStandard and @strawberrybubblegum ,

I find your arguments a little strange. If you put £20k In someone’s pocket, they will likely spend at least some of it, regardless of where it is coming from.

Anecdotally , my friends who put three boys through private school and often went without holidays abroad etc, are now spending a lot more on luxuries since their children are adults.

Assumptions are assumptions and, of course they can be questioned, but the IFS is independent and employs a lot of respected senior economists. Maybe you should e mail them and ask them why they used the assumptions they did, if you are sceptical.

Ha no I prefer to use a chat forum to discuss with other posters over email to get some bumpf but thanks for the suggestion 😬

Economics and behaviour often changes outcomes, even with more scrutiny than an IFS report

You’ll always get economists with different takes on stuff - whatever it is

It is official and in DD’s grammar school the pass rate is much higher than ever recorded previously on 1 March, so we are starting to see the effects.

Private school for marginal rate tax payers between 100-130k is already highly tax inefficient. So these people are already altering their behaviour based on this.

If you couple these threads with the laments on the state of some state schools it is very obvious what is going to happen.

It's possible some anecdotes on a Mumsnet thread will prove to be more accurate than professional economists of course, but I think it's more likely that people who are hit in the wallet by this are going to find reasons to argue it's a bad policy.

Case in point - why put the pass rate at a local grammar down to a policy that hasn't even been put into place rather than, say, a lot of people coming to the end of low rate mortgage deals?

@Araminta1003 ,

‘It is official and in DD’s grammar school the pass rate is much higher than ever recorded previously on 1 March, so we are starting to see the effects.’

I don’t get this at all! If you see a mass move from private to grammar, you would probably see pass rates falling, not rising, as, on average, grammar school pupils have the higher cognitive scores.

The private moving to grammar will be the most tutored and least able to perform at higher levels (again, on average, as obviously both schools have their share of stellar performers).

The good results in one cohort is more likely to be due to random factors.

It is also possible @spriots that some people on MN are also economists, lawyers, financial advisors, tax specialists, not everyone is a SAHM with kids in private schools.

Of course no doubt there are some great economists on Mumsnet but on this thread, it's primarily been a lot of anecdote.

No it isn’t random where I live in London at all. Some of the brightest kids are being moved from preps to grammars when previously they would have gone to supserselective independents. My DD’s class had a few private kids in it and they all said this cognitive ability in their preps was very high - thinks lots of 135-140. Lots got into grammars as a back up. Massive shift the other way now.

Yes it’s odd when people assume mothers primarily are not educated or informed just because it’s mn

Case in point - why put the pass rate at a local grammar down to a policy that hasn't even been put into place rather than, say, a lot of people coming to the end of low rate mortgage deals?

This one’s an easy one. Labour will introduce it and look likely to get in. Anyone looking at private v state at this stage will factor in the increase if they can’t stretch to all years

Once you’re in private it’s hard to get out, especially if the alternative is a highly competitive grammar

Having read some of the posts I would think the opposite is true in fact! I am in one of these professions and I'm the main earner in my house....I just like to read MN on my morning commute!

She means the exam rate needed to get into grammar @Newbutoldfather : state school allocations for next year came out a few days ago.

@spriots - yes I expect that cost of living is certainly affecting demand as well as the proposed 20% VAT increase. But those factors were already in place a year ago: in fact new mortgage rate fixes are (slowly!) coming down. Whereas it was only really last year that Labour confirmed they were going ahead with this (and polls showed Labour very likely to get in).

I certainly know people who decided to go for grammar this year because of the proposal.

I think the likelihood is that it's this choice not to start private that we'll see trickling through over the next 7 years that will make the biggest difference to numbers, rather than people already there pulling out.

So people won't have £20k in their pocket @Newbutoldfather , they just won't make the decisions for a SAHM to go back to work or a part-time working one to increase days, or else will just keep putting more in their pension.

Your friends who are spending more now that their kids are grown - do you think they're spending £60k per year more on luxuries?

The grammar pass rate is an interesting one

I wonder how many parents who would have got in are now bumped out

And if they are for this policy

I’d argue that the gap between grammar and other state is wider than grammar and private. The policy is likely doing their dc a disservice in terms of outcome

”Case in point - why put the pass rate at a local grammar down to a policy that hasn't even been put into place rather than, say, a lot of people coming to the end of low rate mortgage deals?”

Given the head teachers of grammars have been warning about this and the heads of private schools have highlighted the “storm” (combo of inflation, cost of living squeeze and threat of VAT)- it is all entirely foreseeable and predicted by those who know as they work in the field. Those are the experts. Not some politicians or even economists.

Please note that I deliberately use the term “threat” as that can be enough to alter people’s behaviour/impact their choices.