Will VAT on private school fees lead to a partial collapse of the sector?

[mids2019]

Will VAT on school fees coupled with cost of living drive a lot of parents from the private sector or will the majority absorb the cost? Are the numbers that potentially end up in the public sector going to offset any gains to the treasury through VAT?

Labour are working at about 4-5% transfer rate to the public sector but is this an underestimate?

It’s weird isn’t it. That people don’t view the education budget as something which can be apportioned in higher amounts to fewer pupils.

It’s frustrating though that Labour are using it as a differentiator I think it’s because there’s not much else. It’s a very poor policy with downsides

yes, I’ll probably still vote labour but honestly, their entire policy platform is ‘just slightly better than the tories in some respects’. Gloomy.

Does anyone actually think that?

Or rather, do they have a fairly large amount of certainty that this government won't change the funding formula, and there is no certainty that a future government wouldn't also take the windfall and spend it in a different area of pressing need?

Regardless I don't think "just reapportion the windfall in the stater budget" (which I hope happens) is going to fix the problem of rapidly contracting pupil rolls in some schools, particularly when it comes to what KS4 options they're able to offer. I think vocational subjects or less-popular GCSEs may become impossible for some schools to offer if they just don't have sufficient pupil numbers.

For absolute clarity, I'm not suggesting this VAT policy is the right response to the problem but the rapidly falling school population is more complicated than it's often portrayed.

I think there will be a partial collapse of the prep/private primary sector. Labour have to make sure more state primaries offer wrap around or it will cost the tax payer big time.

I think many people will still pay up for years 9-11 where private can make the most impact. Private schools may have to adapt quickly and make years 7&8 smaller and close prep parts of a school. No idea how this will be implemented and there may be redundancies/prep teachers expected to adapt to teach older years.

No idea what will happen at Sixth Form where up to 20 per cent are in the private sector. As state is selective at Sixth Form and that is perfectly allowed, I suspect academies will raise entry thresholds and kick more DCs out who are not quite up to the mark. I don’t think the general public have realised this yet.

The whole argument that state schools need the extra students displaced from private in order to maintain provision despite falling birth rates is completely illogical.

We're actually at the point China was after introducing the one-child policy. We have high tax income from a bulge of working age adults paying for a disproportionately low number of children who need education/investment. This boosts the economy for a few decades.

The problem is that those few children will be the tax payers when the current bulge of adults retire. That will hit the economy hard.

Do you remember how China invested like crazy in its economy - infrastructure, industry etc - to try to get rich before they (as a country) got old?

That's what we need to be doing. It feels like the country has no money, but we need to be investing now because we're actually getting an economic boost from our current low birth rates - and it will only last a few decades. Investing at least as much as we are currently in education for the reducing number of children we have would seem like a good start.

Well it’s an easy ask politically, a very easy fix

That’s what I prefer from a party to get my vote

It’s not hard. Unfortunately people are stuck on needing extra state students

As a state school user I’d love to see the falling rolls as political opportunity, it would be better for my dc.

I also know we have building issues within school stock which could be another bonus to falling rolls

I’m happy to see @strawberrybubblegum posts which clearly set out what I’ve been thinking

I'd think more around 10-15 percent. I worked in the independent sector for several years and many parents were struggling to afford fees before CoL crisis. In a class of 14, 3 parents were persistently late paying and asking for payment plans once fees were late.

Well it's totally the government's choice to reallocate existing education budget to other areas.

They could choose to keep the education budget the same, and give schools exactly as much money as they get now.

You keep saying that schools wouldn't be able to offer subjects if the numbers who wanted it were too low. Can't you see that if the school has the same amount of money then of course they can continue to offer exactly the same classes. Having fewer students isn't what makes a class unviable. It's not having money that does.

This is far more common than people realise.

Our class sizes are still too big, a private USP is smaller classes. What an easy way to improve state, merely due to falling birth rate and keeping funding budget as is.

It’s also the illogical element that gets to me

I think it will impact the private sector, yes. I think most families will struggle through until the next natural transition point, at which point they may switch to state which they had not planned. I think the biggest impacts will be at 4, 11 and 16. Anecdotally, our prep school has had more pupils switch to state when they left over the last couple of years. Some families would have chosen private at 11, but the threat of VAT is too great and they didn’t want 7 years of huge fees. The issue as well is that the VAT comes on top of a huge increase in the cost of living and some families just won’t be able to afford private education any longer.

There are already reports that private school numbers are down almost 3%, and state grammar heads are warning of increasing numbers from the private sector pushing out other pupils who would otherwise have got in.

Those private schools affected the most will be the smaller, cheaper schools. It won’t affect the more expensive public schools anywhere as much (because the families tend be better off and those schools have a larger proportion of input VAT they’ll be able to reclaim). It’ll make the private sector even more elite.

You know and the impact on women…again…we all know disruptions to childcare affect women disproportionately, still, and the pandemic regressed our options, but here we have another anti women policy.

Yes - I agree.
The result will be a far larger shift from private to state in primary and lower secondary than Labour have anticipated, as a result of which the policy will likely raise nothing at all and may actually cost money. It will, however, be hugely disruptive at all levels. So, many kids will have their lives disrupted, some teachers will be made redundant and their families left financially insecure, just because Labour need a soundbite and they haven't got any better ideas.

You seem to think that given a choice between, say, extra SEN provision or two extra TAs or even extra sports provision for a large number of pupils, and keeping a specialist GCSE open for a very small number of pupils, a school would be able to justify the latter, and that "more money" is the same as "enough money".

If you're a school head, and you have to choose between having smaller GCSE Chemistry classes and continuing to offer German at all, you may well see better value in smaller Chemistry classes.

And remember we're not talking about huge, transformative sums of money here - losing about half a million kids from the state sector is equivalent to just over £1bn in per pupil funding per year. And as I've said repeatedly upthread, I desperately hope the new education secretary is able to resist the Treasury and maintain current levels but even then it's nowhere near matching the loss in school spending power since 2010.

Like I say, this is more complicated than it's often portrayed.

Yep

Regarding not offering all subjects etc and the cost, for starters, it would be good if we had an online task force offering online versions of all possible GCSE courses to all children. They have just spent billions on tech in the NHS and it is definitely filtering through in London and making a difference now, at least at patient level. I do not know a single person who works for the NHS and I know many, who does not complain about its inefficiencies.
State schools that do have severe behaviour problems - the Government should at least offer all those children who want to learn a free online version to catch up if they miss out due to disrupted classes or staff shortages.

It’s annoying as from this point there’s a clear path to better state, more funding pp based. I would feel pretty good about that for my dc.

And yet people are clamouring over VAT. It’s Labour obviously seeing a political chance for power. It’s probably not even necessary to achieve it, overall it’s as @Lebr says.

@JassyRadlett - I disagree with some of your thinking. There are more “jobs” that will go in the private education sector with this policy than the state education sector due to falling birth rates. Why should the jobs of state school teachers and small primary schools (opened and continued due to the baby boom) end up trumping the jobs of private school teachers when the latter as a group contribute more taxes into the economy? It does not make sense. Especially if the state is struggling with recruitment anyway.
Surely the main thing is keeping jobs safe, regardless of sector, and as disrupting as few children as possible. Regardless of who their parents are. Rich kids, SEN kids etc, they are all just children. We cannot start passing moral judgement on children, it is wrong on so many levels.

Encouraging a mass exodus out of state schools at Year 9 level into private schools will also cause funding issues for state schools.

Can you point to anywhere I've suggested this policy is a good response to falling pupil numbers in the state sector?

I thought I was pretty clear by setting out the below...

For absolute clarity, I'm not suggesting this VAT policy is the right response to the problem but the rapidly falling school population is more complicated than it's often portrayed.

Where have I passed moral judgement on children?

Yes, in every case I've seen so far where families are discussing if they can keep the child in private it is the mother who is automatically expected to give up her job if they can't. They suddenly are expected to keep up the same amount of clubs and extras the school offered by ferrying them about after school. Most of the dads work away for long periods but they are almost always the higher earner. Maybe the gov has factored in women losing high flying jobs...<cough cough>

State schools should learn from private - small class sizes, better discipline and longer days, more clubs and longer lunch breaks. Until they can offer what the worst privates can (which are being phased out with this policy) we are simply beating a downwards trajectory.

The whole lack of modern language provision in the state sector is frankly massively embarrassing on a political level and internationally so. Look at the Brits, too arrogant to fund language learning properly because other countries do not matter.

It's probably worth raising the question about how private schools are planning to deal with the drop in the student population - it was the oddity of the Times article's analysis that drew me into the thread in the first place.

Unless there is evidence that the private sector won't be affected by a decrease in the number of school-age children? I've not seen any but always happy to be better informed!

Isn't this where you suggested it would help?

That and computer science. People who can teach comp sci do not want to do it for a state teacher wage.