Vat Question????????

[Anoth]

Can I ask a silly question??
We have been given our school fees for 24/25 academic year now for the school my daughter attends.
My question is if labours policy comes in half way through an academic year will the schools be allowed to put the fees up for the remainder of that academic year? Eg if we start paying X amount on September and then labour get in and introduce the added vat in October. Will the fees go up in Jan of that academic year? Normally fees remain un changed for the whole of the academic year once fees have been published but I understand this is a strange situation!
Just wanted to know if I need to prepare to save more for 24/25 fees just in case or will these that are now published still remain until the end of July 25??.
Thanks!

The fact that schools are offering for parents to pay up front for for an entire education if they want just shows how wealthy most are.

You have a very distorted understanding of private school parents if you think anything more than a tiny percentage could afford fees up front. And the schools themselves if you think parents would handover that amount to institutions that may well fold if numbers drop by more than a few percent.

I guess you think ‘private schools’ just mean Eton, Harrow and Rodean. And ignore the provincial private schools in areas surrounded by failing state schools where even the private schools don’t have the resources or results of the fancy selective state schools in the south.

Of course they would. Just look to Wales to seem how petty and vindictive a Labour government can be.

Thanks for all these helpful messages! It truly is such a huge worry as when we set out to pay for private education it was a huge huge sacrifice to us as a family. State schools failed my child and we put all of our cash into private now so it’s by no means an easy decision to make! We forecast for the annual increase but no where near the scale of 20% vat on top!!
Yes I will get shouted at now saying we are wealthy blah blah blah to afford private ed but believe me it is a daily sacrifice we make as a family and one that I would not change for the world. Yes it’s our choice yes we could have left her in her previous state school bullied and afraid to go to school, but we chose to spend the money we earn each month in basic council jobs to send her somewhere which she now loves.
for labour to assume that all children at private schools wear straw hats and row along the river just isn’t the case for all private schools. Our daughter is at a lovely independent school which we love and the worry over finding another 20% for another 4 years is terrifying!

When people are going to food banks, using state schools regardless of how good or not they are, worried about the future of the NHS and their family’s health … no normal person is going to give a damn about whether or not you have to pay VAT on a service provided by a business you use.
Particularly when there is an alternative, the one that the other 94% of the population use.

They won't go through the faff of a mid-year price rise, they'll just whack it all on the next year.

Why would they delay the tax take?

Because unless they have prepared parents for it, it won't be hassle of dealing with the million complaints that they will get. they'll just put a bit more on the next term to make up for the delay.

I'm not sure what you mean by this.

If Labour won an election in October, and managed to implement VAT on private school fees within a month or so, then schools would have no choice but to add VAT on to the next invoice they send to parents, i.e. for the Spring term.

They couldn't say oh, we won't add VAT to the next two terms, don't worry. VAT doesn't work like that.

I suppose they could reduce their fee so that when they added VAT on, the amount paid by parents was the same. But this would leave a huge hole in their budgets, and if they tried to recoup it the next year then the fee hike they'd have to do would be horrendous (plus 20% VAT on top).

It has to go through Parliament and that takes times. Is it really going to be their highest priority for parliamentary time compared to NHS, welfare, pensions, defence? They also have a few issues to sort out such as VAT on fees for children with SEN/ASN as no uniform way to address this with devolved parliaments. If they charge VAT for those with SEN then local councils are going to cry foul as the money would be coming from them.

They have been planning for this for years and the rise would likely be <10% once they offset all the things they can claim back, including vat on building projects done in the last 5y.

the rise would likely be <10% once they offset all the things they can claim back

Schools do not spend much VAT they can claim back and most do not have building projects they can offset a portion to. They would be doing well to get it down to 15%

Looking for figures on amount spent by councils on independent SEN schools; in 2015/16 English councils spent £480 million on private SEND places, which would mean VAT would have added £96 million to council education budgets. Of course that was 2015/16 and as we know costs and demand for places have shot up since then so the cost of VAT in England could easily be more than £200 million - plus more for Scotland.

https://schoolsweek.co.uk/private-special-school-places-cost-480-million-per-year/

I think councils can claim VAT refunds on expenditure on their non-business activities. So I'm not actually sure that VAT on school fees would end up being an extra cost to councils.

If you want to help the people you describe, and I am sure we would all like to, then you need sensible economics. If you want £1.5bn for schools, you want to raise it in the best way possible, and this isn't it.

You could get £1.5bn by increasing income tax revenue by 0.3pc, according to the Adam Smith paper. You don't need new legislation, you don't create a raft of avoidance and enforcement challenges. You (or rather HMT and HMRC) have detailed experience about how rates and thresholds and revenues work for lower, middle or higher earners, so we don’t need to debate whether it would actually raise any money (or disrupt kids' education or cause tens of thousands of job losses).

Speaking of higher earners, if indeed the point is to tax "the rich" who "buy better education" to "improve state schools". Can I ask if you think there are any of "the rich" who "buy better education" and use free taxpayer-funded schools today? Do you think it's OK for a family on 6-figure income that buys tutoring and a catchment area, enjoys skiing holidays and saves enough money for a house deposit per child, to contribute more to the state system also?

Because this policy groups those families with the ones you are worried about. There are many, many more affluent families in state schools than in private schools, and they have more money to spare for obvious reasons. If raising £1.5bn is the right thing to do, the best bet is to raise it more broadly.

Or is contributing more to the state system reserved for the people that don't use it?

state schools aren’t going t to be overwhelmed with new pupils, no-one believes that for a second.
The good news is the declining birth rate means that there are plenty of state school places coming up.
In our town the 3 best state schools are oversubscribed, but they don’t take ‘extra’ kids because they don’t have to. The 2 ‘okay’ schools have room as do the 3 not so good ones. Plenty of room in those.
I find it hilarious that private school parents think that they’re going to march their kids into the good oversubscribed ones, they won’t. They’ll be offered the spare places in the schools that have plenty of room.
perhaps the influx of all these ‘ right’ kids, if it happens, will help those schools improve.

As it is some of our primaries are closing because of lack of children, there aren’t viable to run with the declining birth rate.

The private school parents are likely to struggle through to natural transition points (4,11,16) and apply with everyone else. Those parents are likely to he wealthier and able to afford to use the system to their advantage (using tutors/buying or temporarily renting houses in good catchments etc). It’s ok though, because all those children that otherwise would have got places in those good schools still have places available at the awful schools.

I find it hilarious that private school parents think that they’re going to march their kids into the good oversubscribed ones, they won’t.

I find it equally hilarious that some people think private school parents are only going to end up taking spaces at underperforming schools, rather than places at the highly performing ones.

No, they won't be able to transfer in year to the best schools in most cases (though I've no doubt there will be increased pressure on the school appeals service, which will take up lots of council resource whether successful or not). But the impact on future (and current) applications will be significant. Anecdotally, the number of prep school Year 6 kids near us who are choosing to go for state selective or very good state comp options in September instead of private secondaries this year (ie before Labour has even been voted in) has increased massively. Those are all places at the best state schools that are now taken up by children who would otherwise have gone private.

The percentage goes up but there are much fewer children in Sixth Form than that are in Y7-11. So I imagine it's broadly the same people, many of whom vote Tory.

If we couldn't get into a good state school we will Home Ed. I will stop working in order to do this so that's less income tax AND no VAT on fees from our house.

Ditto. Definitely. It's an easy decision. We could and will easily get by on one income, the second income pays school fees and causes us stress.

Nobody knows when exactly and how at this point. Nobody knows if it will capture prepaid specific schemes either. I bet it won’t in many cases. Remember that the top lawyers in the country probably use private schools.

What is clear to me though is that this policy would cost state finances money not the opposite. People with kids who would have paid for private primary will go state now and into the best catchments at that. If your catchment for an outstanding school was 0.5 miles it is about to shrink again. The lowering birth rate is irrelevant when it comes to the most sought after schools, they are always oversubscribed especially at secondary level.
There might be some cash generated via relocations and stamp duty. Politicians love any policy that may ignite the stagnant housing market…

Parents will move their DC at 11 plus and 16 plus into top state schools. Parents who thus far self funded more severe SEN will employ lawyers to get EHC in place.
Some private school teachers will lose their jobs.

Private tutoring and after school learning will boom - some provided by companies from other jurisdictions paying tax there. Parents and companies will invent tech to create the same advantage.

Overall most likely outcome will be an even bigger difference between top state and worst state schools and more and selection at 11 plus via the back door through academies (music, sport, language aptitude places etc). Academies are essentially private schools but funded by the state and just have to follow a few more laws than private schools eg Admissions and Exclusions.

In the shorter term, professional women will cut their hours to navigate the new landscape.

There will be a negative impact on the mental health of children, their parents and teachers and staff. As a society we should know by now that mental health impact costs productivity long term. This will include children in the state sector who don’t make their GCSE grades to stay on at Sixth Form because the places will go to ex private school kids (or those tutored online/with supportive apps).

In a system where you can already buy advantage via catchment or grammar tutoring or just tutoring prep for top set, which most privileged parents do anyway, scratching at the fringes and attacking some private school teachers and maintenance staff is dumb at best. So it is either sheer stupidity or a deliberate culture war.
They don’t have the budget to actually make the state sector more equal so they have chosen a policy to pretend they are doing something that tricks the everyday voter into believing something will change. The fact that it will have the opposite effect and they must know that deep down is neither here nor there. Welcome to a deja vu of 21st century British politics. Ineffective disingenuous liars.

In any event, given the geopolitical situation with Russia and Israel and the US election etc and ours shortly after who knows what is actually going to happen in the next 12 months. We are meant to go into a more hopeful prosperous post Covid era but it seems the powers to be across the world have chaos in mind.
This is small scale chaos bomb aimed at the private school sector. How dare the teachers there have continued teaching online during Covid. Time to pay for promoting excellence and setting standards that the state cannot match. if you cannot afford to bring the state sector up, you aim to bring the private sector down. Nevermind a few casualties of some kids with minor SEN, stressed out parents, those who paid who wanted better for their DC than what they had, numerous teachers, ground staff, local smaller communities in more remote areas.

It is conceptually different if private schools price themselves out vs a deliberate targeted attack by a government which is an anomaly worldwide, the latter is personal. When things are personal the fall out is inevitably unpredictable and creates a lot of hate. They will just be creating a generation of families who will never ever vote Labour due to personal experience. I don’t think making politics this personal is a good idea.

Looking forward to your thoughts on my post at 09:48, where I had a couple of questions for you. @Quatty . And here's another few questions:

"perhaps the influx of all these ‘ right’ kids, if it happens, will help those schools improve."

Perhaps it will. Or not. It's certainly a theory that people bandy about. The IFS refers to it "One could imagine that..." as though what "one could imagine" is a reasonable basis to advise policymakers. There's certainly no evidence that forcing a bunch of hacked-off disrupted children and parents into any setting is good for that setting.

There IS evidence that affluent families in the state sector buy catchment areas and tutoring; there's no evidence they otherwise enhance their school or the state sector generally. Can you explain why you think new (hacked-off) arrivals will act differently? Or should we all rely on the "imagination" of some 12-year-old at the IFS?

In the cases of "sink" special measures schools, let's go further. Let's ask you HOW you think new arrivals will help the schools improve, given their challenges are often down to a minority of severely-disruptive ill-raised children? More generally, do you think it's better, or worse, for society to put more children into failing education settings?

**

Two bursars that I have spoken to reckon it'll be about 10%.

@letsgoskiing - in the first year? Because they can claim back VAT on capex for a number of years. In the 2nd year surely it will be much closer to 20%?

Which school that takes let’s say 20 million in school fees annually would ever also spend capex at that level?
The vast amount of expenditure by private schools has always been on teacher salaries and other staff.