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?

What do you mean? All private school parents are filthy rich bastards!

@Greengablesfables As I said at the beginning of this thread the stupid thing about the policy is that it’s not going to hit the ‘rich’ at the ‘expensive public schools’.

I was helping out at an open day at my 3 DC’s school at the beginning of term and this policy came up in conversation. No one is really going to leave because as the parents can pay those prices they currently pay they are more tied in, especially when they are boarding schools (like this is) which means it’s more of a family where personal investment is high, and these schools really are communities. However, this doesn’t represent most private school parents as much as you like to think it does.

The schools that will close are the small independent schools with a lot of children who need smaller classes and extra educational care but where parents don’t pay for the all extras outside this. They will be pushed into a system that already can’t cope and it will just mean everyone loses out. Apart from those at the top.

So, it’s tribalism at its worst. But tribalism as I say can work both ways. When it comes down to the bit we will be paying over £15k per term per child. To be honest, I won’t really want to subsidise other kids through bursaries at the risk of paying more than that given the choice and that’s what schools know, hence they will protect their own.

Probably not a collapse of the sector but we will see an effect across the local economy as parents reduce discretionary spending to focus on school fees. For example, we drive a 17-year old car that is beginning to have niggles but have decided not to replace it if it can last until the kids have finished school. Eating out has never been high on our list of priorities and is now even lower. Other parents have decided to change holidays so that they stay with family rather than in hotels or don't go away at all.

So actually what is already happening is that in preparation for this policy coming in, the local economy is beginning to suffer, but in a way that cannot demonstrably be ascribed to the likelihood of the policy coming in.

Then there are changes that will affect the broader economy such as diverting money that would normally have gone into a stocks and shares ISA to a cash ISA that will more safely provide for school fees in the immediate future. But again, the numbers are small and the effect difficult to link to the policy, other than anecdotally.

@BigBalloonsPop

I totally agree. My comment above about rich people was facetious. The properly wealthy won’t notice. Others will definitely notice but can afford it still, and others will have to move (affecting them and reducing available spaces in state schools). So making the equality divide greater. For What? Because the VAT treasure trove won’t go far if anywhere to improve failing state schools. Starmer knows that full well. But ‘penalising the rich’ is always going to be a vote winner for Labour.

Well I have to admit my parents do help with the fees for one child - but, they’re not retired at an age when most of their generation are, they don’t have wealth and are paying out of their paye income, in their 70s, because the children were so miserable and failing in state and, they’d already been through it with other family, siblings, and could understand the problems.

University and private school are completely incomparable. There is no alternative provision for university education. There is plentiful free education between 5 and 18.

They’re not incomparable, which is why school and university exempt status falls under the same part of the VAT legislation.

What on earth has that got to do with anything?

State education isn’t free. It is paid for via taxes. Why not levy VAT on state education instead? That makes more economic and ethical sense.

I know. It’s the VAT on education precedent. Once the box is open the box is open.

😂 A vote winner! Making sense is really the last of their priorities, it seems.

I was responding to the post about whether VAT would be added to university fees if it was added to private school fees.

Uni education is often funded with loans. Lending students more money to cover the VAT would be ridiculous when a lot of loans aren’t even paid back.
Have Labour even said that the VAT would be all invested into state education ?

I know. The loan system is crazy today - the added interest is unbelievable. 7%??

Once they’ve added VAT onto one form of education, it’s not inconceivable that they will add it onto other forms of education.

I hope that Labour Do invest in state education, it needs it as everyone knows.

But they haven’t made any commitment to doing that aside from vague assertions that the money raise from education VAT will go into helping state schools. There’s no formal analysis of how much, where, when etc. It’s some sort of ephemeral promise. The amount that reaches state schools, if any, will be negligible in the end.

All that will happen directly, I think we can see it already, is that there will be fewer desirable state school places available for people with less money.

Reading the teacher thread they may well crash the state sector too.

Well make it worse for everyone.

https://www.theguardian.com/commentisfree/article/2024/may/20/vat-private-schools-labour-low-income-kids-tax-bursaries

That is a very interesting idea - it’s almost like, they could’ve used bursaries to help children struggling with attendance, class sizes, other barriers, but no, we still can’t get beyond ideological battles on state vs private to what works.

Yep pitting 1 side against the other just detracts from having meaningful conversations.

Independent schooling is subject to free market dynamics, so nobody can know exactly how this will impact millions of individual decisions. Anyone claiming to know that all families that do, or will, send their kids to independent schools will simply absorb this cost is lying to you.

The education market I know best is Cambridge. Some very good independent schools, but equally some excellent states schools, Chesterton Community College and Hills Road Sixth form. There is already huge competition for places at both, and this will only get worse.

The only way the independent sector will be able to maintain numbers is by expanding their overseas student intake. The real elite are global. So overseas mega wealthy will benefit at the expense of the British middle class (so often the target of Labour policy).

This policy will make independent education more expensive, more exclusive, available to a smaller and wealthier elite, increasing the educational divide and making social mobility harder.

@twistyizzy Yes instead bursaries will just go down. As I say, we can be tribal too you know

@BigBalloonsPop - but private schools that have charitable status still need to meet charitable obligations. So do you think bursaries will go and there might just be more spending on local state schools instead? Perhaps also a bit more mixing between state and private schools? Let’s say more inviting them in for a Science day, talk, choir, orchestras, sports kind of thing?

Wow. This morning I heard that 10 families (from a friends kids private school), are moving to state next year. That’s 10 families in her year. How many children in the school, and in other schools across the country will be taking up tax paid state school places in desirable state schools, that weren’t doing so before? 🙈

It’s such a phenomenally bad idea from Labour. They may do a u turn, as this policy begins to look glaringly terrible.

Well not easy to do in Oxfordshire or Cambridge. Cambridgeshire (Fenland) currently have no available spaces in secondary schools.

@Araminta1003 i don’t know but all of this has opened a can of worms. I am sure that the school will do all it needs to protect its status but all of this doesn’t engender good will which, whilst not a nice reaction, is perfectly human

For some of the grammar schools we can already see the effect clearly. Go on the 11 plus forum and you will see that Newstead Wood in Orpington, for example, has the highest required score ever and the waiting list for September has hardly moved. In addition, Tonbridge Grammar for Girls in Tonbridge, for example, has an incredibly high score required to get in on second round - those are late applications. These are just 2 examples, there are many others for grammar schools. We will see catchments for the most desirable secondary schools shrink and required grammar scores increase. I suppose those schools will then have a richer catchment and if those parents contribute more financially those state schools may benefit.