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?

The private school parents takings kids out of private can easily spend their extra cash on tutors and / or housing near the best schools. It’s not rocket science. So kids who now miss out will go to the crap schools

But house prices near excellent state schools are already inflated & plenty of private & state school parents use tutors now.

I have never understood the rationale behind what is subject to VAT and what isn’t. It seems mad. I can only conclude that it exists mainly to create jobs for accountants and lawyers.

OP - obviously this policy will happen if Labour get in. But don’t worry! You can either scrimp and save and still send your kids to private school or send them to a great state school! Lucky you !

Some of it but by no means a large proportion. Many private school parents pay fees by direct debit, monthly.

But they aren't falling in the right places. It is highly unlikely that the falling birth rate and therefore places will magically be in the same catchments as the ex-private school DC needing a place.
Grammar Heads predicted this and are very concerned that this will put even more pressure on the grammar system and force out poorer but bright kids whose parents can't afford tutoring etc.

@Greengablesfables I was referring to my individual situation.

There will be all sorts of unintended consequences, higher earners have been disproportionately hit by tax since 2010 and many marginal tax traps created (this is fact, check the IFS), I’m sure that some will cut hours and switch out of private, clearly this won’t be the case for everyone.

the idea that labour will turn around the SEND crisis - err not unless they come up with better ideas than they’ve got so far.

This will inflate them even more. It is certainly what we will do if we have to pull DD out.

I hope it does but doubt it will

There’s a national teacher shortage so the qualified private school teachers won’t have a problem getting alternative jobs as long as they aren’t teaching subjects like PE. Teachers in subjects taught at private school but usually not state may have to teach alternative subjects.

blithely unaware of the fact that moving kids - especially kids with SN - is no picnic. total ableist privilege.

Considering that there are 95,000 SEN in the private sector, many of whom are without EHCPs then this will only put more pressure on the state. Labour say they will exempt VAT for DC with EHCP. The pnky think this will do is push private parents to get EHCPs ASAP in order to avoid paying VAT. The state pays for EHCPs and is already broken so how will this help?
The author of the IFS report now admits that they underestimated SEN factor and the behaviour changes that VAT would cause.

But they aren't falling in the right places.

They are falling all over London.

It is highly unlikely that the falling birth rate and therefore places will magically be in the same catchments as the ex-private school DC needing a place.

Im in London & don’t know anyone who lives in a “cheap” area with bad schools & choses private. And the grammar schools here are full of dc who went to preps & had tutoring or state dc who had tutoring. Obviously it’s area dependent but I can only speak about my area.

Why do you think private teachers will jump to teach at state schools? They would put themselves back under the scrutiny of Ofsted in an under resourced and funded sector.

So what do you want to earn money for that you will never need?

I can assure you that won’t be typical behaviour for most. I would definitely limit my post pension contribution income to 99.9k to avoid 62% marginal tax rate. I know plenty of others who would do likewise.

Most people won’t move their kids because they have known about this policy for a long while and already made plans, or reorganised their finances.

You have all had multiple years to plan for this. If private education is a priority for you, cut back on other luxuries. But you might want to investigate some of the outstanding state schools out there.

Everything she said with bells on. The smaller, cheaper schools which cater to kids who would struggle in huge mainstream state schools, with parents who make financial sacrifices to support those kids, are the schools most likely to close.
In your average independent school there are a lot more parents declining offers of places in Year7, saying they're going to take their chances with state for now until they see what happens.
The big expensive public schools, whose parents can easily pay more, are also the schools most able to absorb some of the increase. Those parents will stay in the sector, the gap will continue to widen, and we'll see another dozen generations of politicians who were all privately educated and don't have a grasp on most people's reality.

No. Next question.

Depends where. In inner London there are loads of schools with very low numbers and fears of shutting down because so few people are having children.
Also 2012 was a boom year (those kids went to secondary school this year) so now there is going to be a natural drop off of numbers so it won't be an issue.

VAT isn’t on school fees because education doesn’t have VAT added, or is ‘exempt’. Until now - if Labour get in. This means that any educational service could then have VAT added, the rules will have been changed by Labour.

@Greengablesfables I haven’t been following the proposed changes, but does this include tuition centres, and other educational settings as well? Holiday clubs and after school clubs?
And if they are in scope - given that there is a VAT threshold, would smaller providers potentially become cheaper than larger companies that do need to charge VAT?

But how are Labour planning to fund the state system for the % of pupils with special needs currently in independent schools (normally due to size) who will switch back to state schools. State schools are already struggling to support adequately. Impacts every other child.

I suspect that the effects will vary by region and the competition for established private schools will increase even more as they will be seen as financially secure.

This policy won’t help inequality as house prices in catchments of good state schools (comprehensive and grammar) will increase and poorer families will end up priced out.

Plenty of rural and semi-rural areas have poor state school provision. Many are much cheaper areas than big cities even though they are far more pleasant places to live.

I think it's more likely to lead to a partial collapse of the "state" education sector myself. The wealthiest won't be affected because they're so rich, if anything it's likely to lead to more inequality. I'd expect something similar in the "State" education to what has happened to the NHS post Covid if they press ahead with it. It's not a good idea at all and I don't think the tax revenue raised from it will cover the damage caused.

@twistyizzy yes two dc with three diagnoses so far between them here pulled out of state as abjectly miserable here too!