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?

And today there is an article about strikes in a private school:
www.google.com/amp/s/amp.theguardian.com/education/article/2024/jul/14/cleaners-at-james-allens-girls-school-vote-to-strike-cut-in-hours

That's what cutting their cloth means ie reducing the wage bill. First by ancillary staff and then eventually teachers. Indy schools tend to be large local employers so when people say "cut their cloth", that translates into redundancies.

@OhCrumbsWhereNow ime private special schools require DC to have an EHCP as a strict entrance criteria. They will be VAT exempt.

That's part of the problem though - the fight parents of SEN kids are all fighting. I ended up out of work for 18 months, I did fight for 5 years across two children @PocketSand but I agree, I don't regret it but I wonder if in the end it will prove to have been wiser to have moved etc.

Overall, we need more diversity in schooling - i feel this much more strongly than the VAT thing. We just cannot expect all children to thrive in a large comprehensive school model much as in theory large schools with economies of scale sag they can differentiate to cater to all requirements.

Most definitely. We need more choice not less! 1 size fits all simply doesn't work

Indeed @twistyizzy
'The school, which boasts almost nine hectares (22 acres) of playing fields, a purpose-built theatre and ozone-filtered swimming pool..'
So, money to pay for all these marvellous things to attract custom from the area's most privileged families, but not ready to pay society's least privileged a decent wage. I'm glad some of the school's notable alumni are condemning the move.

@twistyizzy ,

Did you read the article?

It is shameful that JAGS are nickel and diming their cleaners rather than cutting their cloth elsewhere.

The head was paying himself in excess of 200k in 2022 and three other staff were paid in excess of £100k (two deputy heads and the bursar?). That is excluding pension contributions (from 2022 accounts).

The Guardian article in full:

https://www.theguardian.com/education/article/2024/jul/14/cleaners-at-james-allens-girls-school-vote-to-strike-cut-in-hours

Totally agree with bringing back the specialist schools, there is only so much inclusion that can help some of the children I work with in either the state or private school settings I attend, but they will thrive much better if there is a return to the specialist schools. We aren't hearing anything about that being proposed yet are we or have I missed something?

How do you know they’re not “cutting their cloth elsewhere?” Whilst this school has said that the change has nothing to do with VAT, most schools will be cutting costs wherever possible to minimise the impact of VAT. Lots of people have said on these threads “well private schools will just have to cut back on expenditure”. Now that they are doing precisely that, people are saying “well they shouldn’t cut expenditure on those things”. This is precisely the problem with VAT on education. It has unintended consequences.

I don’t understand why JAGS would ever have needed cleaners 43 weeks a year when even the summer hols in a private school would be like 8-9weeks alone?
They must have been giving the building out for free/heavily subsidised and cleaning it as well.
It is 39 weeks in state schools. They are not being unreasonable? Which state schools pay cleaners throughout the holidays?

It’s ridiculous (and embarrassing) to bring up this cleaning dispute on this thread. Seriously, it is totally shameless. From the article:

‘A Jags spokesperson said: “The disputed employment arrangements are directly between the employer, DB Services, and their staff. These developments have nothing to do with VAT on school fees but reflect a change to the school’s requirements during school holidays.”’

‘Former pupils have written to the headteacher, Alex Hutchinson, to complain, including the portrait painter Rebecca Cartwright, who said: “Shame on Jags. When companies contract work out they create the conditions of work for the employees who do the work for the contracting company through the terms of the contract itself.
“A privileged institution like Jags should be setting an example in their employment practices, to other institutions and to their pupils.”’

‘UVW said the savings made by the proposed cleaning cuts would amount to about £20,000 – less than the annual fees for a single student at the school. “Jags should be ashamed,” said Petros Elia, the UVW’s general secretary. “The savings they make are a drop in the ocean compared to the school’s immense income and wealth.”’

I think the above speak for themselves.

@Newbutoldfather - I don’t understand what you are implying?

Various Labour MPs have told private schools specifically to cut costs. And not to just pass them on blindly year on year to parents. So they are all going to have to cut costs anyway which will start with maintenance costs (less yearly painting), less cleaning, less sharing of facilities, selling off some land etc and hiring fewer PE type staff, cutting MML offerings as classes of 10 are not viable etc etc.

Unless local state schools pay their own cleaners more and for longer every year what exactly are they doing wrong? I can’t see it? Genuinely so.

Private schools are inefficient charities that create a ton of probably sometimes superfluous employment and have expensive luxury building to maintain.

This is where private schools can make a lot of savings.

Where my children are at school (state) in a similarly affluent outer London suburb, the MAT has had 2,800 pupils on role over 4 sites (2 secondaries, 2 primaries). The CEO is paid about £125k and there are 37 staff on over £60k.

Jags, where the cleaning dispute is over £20k, has 1,200 pupils on role, the Head Teacher pays is paid about £215,000 and 43 staff are paid over £60k.

All the above exclude pension provisions, which are proportionate to salary.

(I don’t think JAGS are particularly bad, by the way. In fact I believe that they are an excellent school. I am just using them as an example to contrast SLT pay in the two sectors).

Summer school. Lots of indies do it.

https://inews.co.uk/inews-lifestyle/finland-abolished-private-schools-happened-next-3164823

Apologies for grammatical errors, didn’t proof read carefully enough…but the meaning is clear.

It if was a VAT things JAGS wouldn't have denied it, schools are very happy to talk about the VAT implications to the press, there have been many articles with heads quoted. Here they specifically say not a VAT thing. Why would they lie?

https://schoolsweek.co.uk/rise-in-200k-academy-trust-ceos-as-pay-stagnation-ends/

There are many (state) academy trust leaders on over £200k. Some are on over £300k. In addition to those costs, the individual schools have SLTs on hefty salaries. There are layers of management.

If state schools are struggling so much, why are these salaries still being paid? Why are state schools apparently struggling to buy Pritt Stick but can happily find £300k for an academy trust head, plus hefty salaries for headteachers?

Finland didn’t abolish private schools though. What they did stop was the ability for private schools to make a profit from the basic element of education. The state subsidises that element. There are fee paying private schools in Finland which are subsidised by the taxpayer.

I have no idea whether JAGS is lying or not. But a top London school can't give the impression of struggling financially or being uncertain about whether parents will stay with them at fees+20%. That's a certain route to loss of popularity for the school.

Effortlessly excellent is what they're trying to portray. Their projections may however be more worrying, and they may be trying to put themselves into as good a position as possible financially without making that obvious.

This. Why is 1.5% of Surrey private school parents making an enquiry about spaces in their state schools even a story?!? Unless it's to point out that what we've been saying all along is starting to happen.

1.5% is far less than even the lowest estimates of expected migration. I expect there are still plenty more parents who haven't asked yet but will genuinely want to know what their options are. I'd guesstimate maybe twice as many as eventually migrate will want to explore options? Probably more. So we should expect at least 5000 enquiries, not 582.

If the state system can't cope with the volumes, then that's a problem with the planning for the VAT policy. Parents behaving responsibly to ensure their children's education - including considering the state education they are entitled to if they're worried about paying the extra 20% tax - isn't remotely unexpected.

Bring back state funded special schools
yes definitely but I fear even if under Labour funds were finally committed in that way (which the indications are they won’t be) this is years away from where we are now. We still have to muddle through with DC in schools now and the SEND system is still going to be broken for many years.

@Oakandashsplash no, there is no plan at all to increase places in special units housed in mainstream, or places in special schools.

What is definitely happening is tweets about 'making inclusion work' - and at the council level, cut SEN spending and we'll bail you out of your crisis deal.

Because there's no money you have to look at the council level too for the SN picture.

There is absolutely no reason to assume JAGS is lying. The school is very sought after and if some parents can't pay, they will easily find ones who can. I know a number of parents with children in that school and in their circles VAT seems to be nothing more than a minor irritation.

Enquiries about state spaces is presumably just for spaces in year groups outside the usual change points of reception, year 7 and year 12. Since wouldn’t need to make enquiries to apply for state schools at the usual entry points. Most people seek to avoid moving DC outside of the usual points. So that number of enquiries actually seems quite high IMO.

You think 1.5% is quite high to even want to look into the options? 1 child out of a year of 60?

How many would you expect?