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Education

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To have though of a fairer way to fund state education than VAT on private?

605 replies

wlakaaf · 28/05/2024 17:33

State schools are in desperate need of funding.

Money needs raising.

Instead of sticking 20% onto private fees - when those people are already paying 100% of the costs for educating their child, how about this:

Parents of children currently in state schools ought to contribute to their education on a means tested basis. There would be no argument over means, it would be a simple reference to the council tax band of the house you live in. We have bands A-H. I would propose that people in band A-F pay nothing. People in band G pay a fixed charge per year and people in band H pay a higher fixed charge per year.

Keir Starmer has used money to buy a massively expensive house, worth in the region of £2m, in the very tight catchment of a lovely state primary. This is buying privilege, same as buying private education. So why does he get away without paying?

OP posts:
jannier · 30/05/2024 09:30

strawberrybubblegum · 30/05/2024 07:22

Economic change happens at the margins. Any policy you introduce will change the calculation people make about their own circumstances.

For most people, it doesn't make enough difference to change their behaviour. What they were previously going to do is still the best choice for them.

But for some people, an extra 20% changes the balance on what's the best thing for their family. So they obviously make the choice which is now in their families interest.

High nursery fees mean that a family weighs up how much money a 2nd salary will bring in + the advantage of staying in the workplace for future earnings versus the out of pocket nursery fees. If nursery fees go up by 20%, then some families will still go ahead, but other families who would have both gone back to work at the lower cost will decide that it just doesn't stack up, and one parent will SAH.

It's the same with private school. The family weighs up private fees and both working full time (with guaranteed wraparound and plenty of extracurriculars at school) versus the state-plus model of one parent working part time to support taking kids to lots of extracurriculars and tutoring to supplement state school. Like for nursery, if fees go up by 20% then some families will still go ahead, but other families who would have worked full time and gone private at the lower cost will decide that it just doesn't stack up, and one parent will go part time and do lots of extracurriculars and tutoring.

What's likely to happen is that the extra 20% will mean some families stay part time and choose state-plus over private for their child going into Reception, Year 7 or Year 12. A few will change for children already at school, but no one wants their kids disrupted - so this will mainly affect new choices, so will ramp up over the next 7 years.

Edited

Extra curriculars and tutoring is not a requirement of using state schools that's a luxury for most....most also work full time using paid for wrap around care including after school clubs that do the activities you describe for a few pounds then you take your children to activities early evening same as supporting homework. Paying for nursery is to work not luxury paying for private school is luxury. We have a vat system that conservatives generally support until it hits them but in effect poorer families pay a higher percentage of their income on VAT because they can't save nobody says that's unfair

RedToothBrush · 30/05/2024 09:38

Bigcoatlady · 30/05/2024 08:53

Whereas the lucrative parts of our Indy school sector are stuffed with private investment.. tragically the lucrative parts are not parts anyone is paying for upfront. They are highly specialist schools for children with significant MH, SEN and behavior support needs, often ASD being placed out of area by LEAs who do not have local provision for them in their area. Charging fees of up to £250k pa for the placement. Most of these aren't charities but backed by massive overseas private investors - if you want to spend some time usefully.looking up accounts look up something like SENAD group and ask yourself why our taxes are being used to pay dividends to Qatari investors when LEAs fail to provide appropriate education for children with SEN.

People on this thread are quite right. Mid ranking indys charging 20-30k in fees to parents which may or may not have private status are a v vulnerable market outside the SE and a lot have folded in the last two decades. They can't get private investment but most can't operate effectively as charities and adding VAT to their fees mean more will close. Leaving the large public schools with a lot of intl kida attending to survive. Whether you think that's good or not is a personal opinion. It's irrelevant to me, my kids are too.old and i.live in an area where the indies closed after the 2008 crash anyway.

But the other chunk of the indy market that the state uses heavily is specialist schools which prob only account for 0.1% of kids but enormous amount of SEN budgets, and whacking 20% on that will be catastrophic. At the same time there is no good reason anyone should be profiting in that sector so forcing it's collapse may be desirable. But it's hard to see how that can be done without severely disrupting the education of extremely vulnerable children.

Add to that the crash in the birth rate.

As I say my affluent area has seen a massive decline in children taking state school places in 5 years. And I do mean massive.

To the point that the schools are loosing multiple classes in a small community. Permanently.

Anyone under 40 can't afford to move here. House prices have skyrocketed that much in recent years. Those that do manage it have smaller homes and this is encouraging less children.

So the really good state high school which is fed by the local primaries (the entry criteria has being at the local primary BEFORE distance to the high school) will really change and meanwhile the local primary are shrinking in size. Not just one school either.

Meanwhile just down the road a couple of the private schools have already closed.

In a few years time getting a place at the good high school will be pretty easy and being in the good area irrelevant. You just have to be able to get to the school daily and that's what will drive the size of the school.

Private schools are facing this demographic timebomb as well as the prospect of VAT. The demographic shift alone will kill off a great many of these schools.

Its not really a great source of future tax revenue for this reason either.

strawberrybubblegum · 30/05/2024 09:42

jannier · 30/05/2024 09:30

Extra curriculars and tutoring is not a requirement of using state schools that's a luxury for most....most also work full time using paid for wrap around care including after school clubs that do the activities you describe for a few pounds then you take your children to activities early evening same as supporting homework. Paying for nursery is to work not luxury paying for private school is luxury. We have a vat system that conservatives generally support until it hits them but in effect poorer families pay a higher percentage of their income on VAT because they can't save nobody says that's unfair

People make choices based on what options are available to them.

For many parents at the margins of private school affordability, those are the 2 options they're choosing between: work full time and private versus work part time and state+. The cost is fairly similar at the level of income where private school is possible but a push.

I'm just pointing out that this is the consequence of the tax. People will make choices that suit their families best, as we all do. And that will have consequences for the income generated by this tax. Best estimate seems to be that there will be zero net income at 10% reduction of private school kids and then it starts costing the state if more move.

taxguru · 30/05/2024 09:48

FlawlessSquid · 30/05/2024 08:05

It is a much better idea. Everyone contribute little bit to their school so it can be better. Like prescription fees.

The majority of people are exempt from prescription fees due to age, unemployment, serious health conditions, etc., so your comparison doesn't really work. Prescription charges are really just another tax on workers!

RainbowColouredRainbows · 30/05/2024 10:01

wlakaaf · 28/05/2024 18:15

Who cares? His kids are getting educated for free. And loads of rich people like him. Why can't they be asked for money?

Having taught at a leafy, London school very similar to the one KS is in catchment for, I can tell you now they get no more money than a poorer school. What makes the difference is the high expectations of the parents, supporting teachers and valuing education. My current school is a decent school in a leafy area in a different part of the UK and there's a lot more entitlement and less value placed on subjects besides English, maths and science. Parents who just want their kids to work on their farm so don't care about any qualifications, but then also don't care if their kid disrupts the learning of others (and will actively challenge the school for giving detentions etc).
Money from the VAT pledge won't change this.

Potentially what we need is an Average Grade system like on the continent so students can't opt out of subjects as they'll all have equal weighting.

Or maybe we can just start billing parents of disruptive kids, those that haven't done their homework etc for the extra workload 😅

Nellodee · 30/05/2024 10:03

How about we tax wealth at the same rates as income?

strawberrybubblegum · 30/05/2024 10:09

Nellodee · 30/05/2024 10:03

How about we tax wealth at the same rates as income?

France tried that. It reduced tax income by €7bn a year and reduced GDP growth by an estimated 0.2 per cent a year... so they repealed it.

https://www.investorschronicle.co.uk/education/2021/02/11/lessons-from-history-france-s-wealth-tax-did-more-harm-than-good/

taxguru · 30/05/2024 10:13

Nellodee · 30/05/2024 10:03

How about we tax wealth at the same rates as income?

Yep, I've no problem with that, in fact, I'd suggest higher tax rates for capital gains and other unearned income such as property letting, dividends, and pensions. I've always thought that the different rates of tax for different kinds of income we used to have was a much better system - of course, some of the rates were stupidly insanely high (again, politics of envy), but rather than scrapping the different rates, we should have made them more realistic and appropriate.

At the moment, we have a stupid system where it's workers (the people we actually need) who are penalised by having to pay higher rates of tax (due to NIC which is a tax on wages!). It's the wrong way around. If anything, workers should pay a reduced tax rate because we need them to work and should incentivise working.

SerendipityJane · 30/05/2024 10:42

Nellodee · 30/05/2024 10:03

How about we tax wealth at the same rates as income?

Define "wealth"

Charlie2121 · 30/05/2024 11:47

FFSNorman · 30/05/2024 00:56

State education isn’t free. It comes from the working population. Those choosing to go private and pay are paying for a luxury, so VAT it is. Charity doesn’t mean allowing the peasant children to use your pool once a week, it means raising money for something, by doing something, like, I dunno, state schools do.

VAT isn’t a tax on luxury goods and services so your comment makes no sense.

Charlie2121 · 30/05/2024 11:51

CurlewKate · 30/05/2024 08:24

I've got an idea! We could all contribute some of the money we earn to a common fund to provide services we all need. We could call it...oh, I don't know....income tax? The amount we pay could depend on how much we earn.

We don't all need the same things, of course, but it'd all even out.

It’s great idea however we are in the position whereby only 20% of households are net contributors. Unfortunately the bulk of the 80% who are being subsidised believe they’re somehow getting a raw deal and demand that the 20% keep paying more and more. It’s simply not sustainable in the long run. More people need to contribute.

crumblingschools · 30/05/2024 11:54

@Charlie2121 I wonder if many people realise how few people are actually net contributors. I wonder how many sit there saying I pay my taxes, without realising they are taking much more out of the state than they put in.

ExasperatedManager · 30/05/2024 11:56

Charlie2121 · 30/05/2024 11:51

It’s great idea however we are in the position whereby only 20% of households are net contributors. Unfortunately the bulk of the 80% who are being subsidised believe they’re somehow getting a raw deal and demand that the 20% keep paying more and more. It’s simply not sustainable in the long run. More people need to contribute.

There are many different ways of contributing to society. Paying tax is just one of many.

How do you think the 20% would manage if the 80% weren't doing any of their lower paid jobs?

Ted27 · 30/05/2024 12:11

@Charlie2121

Also remember that people contribute more or less and 'take out' more or less at different times during their lifetime.
I worked from 21 to 47, never needed benefits, very healthy so did not draw on the NHS services, no children so did not draw on education, mat leave etc.
At 47 I adopted a child with additional needs, went part time and for the first time claimed some benefits. 10 years later, I am back to working full time and do not claim any benefits and don't anticipate I would need to in the future as I have an ok pension, not luxury cruise territory, but enough

SavingTheBestTillLast · 30/05/2024 12:40

Charlie2121 · 30/05/2024 11:51

It’s great idea however we are in the position whereby only 20% of households are net contributors. Unfortunately the bulk of the 80% who are being subsidised believe they’re somehow getting a raw deal and demand that the 20% keep paying more and more. It’s simply not sustainable in the long run. More people need to contribute.

Whilst I understood the % of net providers is 30% I agree in principle with this post.
should a tax on education be introduced

  • the number in state education will increase ( figures vary between 5% proposed by Labour and 21% proposed by the Independent Schools Council. Taking the middle road that 13% of the private school sector ) x £8000/pupil and an extra £6000 / sen pupil [ private schools don’t receive this, only in very rare circumstances ]
  • added to that the reduced tax and ni paid by those who will reduce their hours ( anyone thinking this won’t happen, doesn’t know many private school parents )

There will need to be even more money pumped into the state system than is currently needed now. The country, as we know, is currently underfunding the state school system as it is.

So where does it all come from
reducing the cost of management and red tape
outsourcing better sen provision ( who pays ?)
raising taxes for everyone
lowering the tax threshold so more people pay into the system
raising the UC threshold
overhauling how adult ( 18yrs +) social care is paid

etc etc etc
It’s a lottery in terms of who pays and how but very difficult to juggle. Any extra taxes will have knock on effects.

However I agree with a PP noting whilst larger properties pay vastly more in council tax they don’t actually receive more in services.
Lets just look at bins as an easy example. A two bedroom property in our area is allowed I bin a week, a five bedroom property that can accommodate many more people and pays nearly 3x the council tax is allowed one bin. So to propose a further increase in council tax even more for people who receive less in terms of per person is just wrong.

SerendipityJane · 30/05/2024 12:43

So where does it all come from

If education is the investment that people paying for it claim it is, then from the future enhanced profits and taxes of those who benefit from it ?

Again, can't see it catching on.

SavingTheBestTillLast · 30/05/2024 12:47

SerendipityJane · 30/05/2024 12:43

So where does it all come from

If education is the investment that people paying for it claim it is, then from the future enhanced profits and taxes of those who benefit from it ?

Again, can't see it catching on.

Agree.
Higher taxes on everyone or lowering tax etc thresholds is never going to be a vote winner and usually something that happens after a Party gets into power.

No Party is going to announce that at this stage.

SavingTheBestTillLast · 30/05/2024 12:54

As a thought @wlakaaf perhaps, if some of the burden did rest on council taxes, getting rid of the reduced rate for one person occupancy might help.

DorsetCafes · 30/05/2024 13:37

Tristar15 · 28/05/2024 18:15

I don’t really know what all the fuss is about. The proposal is that private schools will lose their charitable status and therefore not be exempt from VAT. Private schools are not charities so it is about time they lost this privilege.
A private school near me has just announced that is changing their teacher’s pension contribution to only 3% while simultaneously showing off their grand plans to expand their facilities which are going to cost hundreds of thousands. Private schools have plenty of money. They don’t have to pass the VAT onto parents.

Edited

That is not the proposal. Many private schools ARE charities and many charities are involved with various types of educational services. Labour was given advice that arbitrarily removing charitable status from educational service providers it didn’t like the look of would be subject to lengthy legal challenge and might well fail.

Therefore the new proposal is to levy VAT on educational services instead, which previously have always been exempt. This is also not straightforward for obvious reasons - the private schools that offend Labour’s left wing are not the only providers of these services. However it is less inviting to legal challenge than removing charitable status.

RedToothBrush · 30/05/2024 13:48

Charlie2121 · 30/05/2024 11:51

It’s great idea however we are in the position whereby only 20% of households are net contributors. Unfortunately the bulk of the 80% who are being subsidised believe they’re somehow getting a raw deal and demand that the 20% keep paying more and more. It’s simply not sustainable in the long run. More people need to contribute.

Boomers will be net beneficiaries over the course of their life.
Gen Z will be net contributers over the course of their life.

Why? Because ultimately we have an issue that pension contributions and tax contributions for boomers weren't high enough when they were working and because of demographic quirks the boomer generation has dominated the electoral outcome for decades.

This also has implications when we do get to the generational tipping point. It is likely that we will start to see pensions taxed more heavily and we will see policies such as assisted dying creeping in for cost reasons.

Far from the younger generations being more kind and less prejudice than older ones, we will just see a change in self interest and different prejudices.

Which will also come with shooting yourself in the foot in the long run due to the fact we all get older.

And with the demographic shift I really don't see the numbers stacking up as a windfall for the state education. Not when schools are going to be facing smaller class sizes and the issues with finances surrounding classes not being full and economies of scale. State schools will be facing mergers and closures - THAT'S the educational conversation we should be having for the next electoral term and the one beyond it. Not wittering on about private schools and VAT.

We are firmly in a race to the bottom because that's ultimately what populism does. Politicians are more interested in their own careers and being elected/reelected than what's best for the country.

This policy isn't about equality at all. It's red meat for red rosette wearers. It won't solve problems within education because it's not focused on problems. It's focused on punishing more wealthy workers out of jealously. There's no interest in looking at the difficult issues within our society due - things like abdication of parental responsibility and a distain for others and an active rejection of community.

I look at the red meat thrown at blue rosette wears with equal despair. The national service bollocks. I saw a great thread about this on twitter. It pointed out that people who like the policy tend to say it works well in places like Denmark. This thread talked about what they also don't talk about is how young people feel that national service is in their interests because the state looks out for them in other ways. The state is community because it provides for them and it invests in them and understands things like people need decent childcare at a reasonable cost.

Here the concept of national service is about taking from young people without those people actively feeling like they gain or feeling like this helps community and is a collective gain. It's seen almost a punishment for being spoilt and pampered by society.

We do have this enormous gap between kids who haven't been taught responsibility by parents and a culture which doesn't actively work as a 'village raising kids' when are then thrown into an adult world which is ever harsher as financial conditions worsen. Yet no one is really addressing this gap. It's just a blame game and one where we discuss how much more we can talk from a working population without much thought to the concept of selfishness.

The UK is selfish. Selfish in a way that's not paralleled anywhere else in Europe. That's our problem. That's why we elect fuckwitted politicians with shallow policies and no desire to get to grips with the heart of problems. Everyone is out for themselves. No one asks how we can change this. We have a new generation who see themselves as more kind and it's just utterly bullshit.

It's just 'if I can't have that no one else should have it' rather changing the question to 'how can we expand opportunities and lessen inequality in a meaningful way'. This difference in mentality might seem minor but it's hugely important.

There are so many poster on this thread who can't see the wood for the trees because they are being spoon fed this utter shite and haven't got their eyes on the issues that are incoming and will have a much bigger impact than private schooling.

taxguru · 30/05/2024 14:01

@RedToothBrush

We are firmly in a race to the bottom because that's ultimately what populism does. Politicians are more interested in their own careers and being elected/reelected than what's best for the country.

I agree with everything in your post and especially the bit I've quoted.

Most Western countries, including the UK, are now in managed decline due to the rise of the Eastern economies. It's how it's been since the dawn of civilisation with empires rising and falling. Our politicians (ALL major parties) are re-arranging the deckchairs on the Titanic and completely ignoring the icebergs heading our way.

Farting around with VAT on private school fees is a pointless distraction, just politics of envy to occupy the media and voters. The REAL issues are being completely ignored and deliberately hidden. The politicians don't want the voters to understand what's coming and probably don't have a clue how to deal with it themselves, just obsessing about trivia to keep them in jobs (and backhanders) for the next 5 years.

SavingTheBestTillLast · 30/05/2024 14:12

RedToothBrush · 30/05/2024 13:48

Boomers will be net beneficiaries over the course of their life.
Gen Z will be net contributers over the course of their life.

Why? Because ultimately we have an issue that pension contributions and tax contributions for boomers weren't high enough when they were working and because of demographic quirks the boomer generation has dominated the electoral outcome for decades.

This also has implications when we do get to the generational tipping point. It is likely that we will start to see pensions taxed more heavily and we will see policies such as assisted dying creeping in for cost reasons.

Far from the younger generations being more kind and less prejudice than older ones, we will just see a change in self interest and different prejudices.

Which will also come with shooting yourself in the foot in the long run due to the fact we all get older.

And with the demographic shift I really don't see the numbers stacking up as a windfall for the state education. Not when schools are going to be facing smaller class sizes and the issues with finances surrounding classes not being full and economies of scale. State schools will be facing mergers and closures - THAT'S the educational conversation we should be having for the next electoral term and the one beyond it. Not wittering on about private schools and VAT.

We are firmly in a race to the bottom because that's ultimately what populism does. Politicians are more interested in their own careers and being elected/reelected than what's best for the country.

This policy isn't about equality at all. It's red meat for red rosette wearers. It won't solve problems within education because it's not focused on problems. It's focused on punishing more wealthy workers out of jealously. There's no interest in looking at the difficult issues within our society due - things like abdication of parental responsibility and a distain for others and an active rejection of community.

I look at the red meat thrown at blue rosette wears with equal despair. The national service bollocks. I saw a great thread about this on twitter. It pointed out that people who like the policy tend to say it works well in places like Denmark. This thread talked about what they also don't talk about is how young people feel that national service is in their interests because the state looks out for them in other ways. The state is community because it provides for them and it invests in them and understands things like people need decent childcare at a reasonable cost.

Here the concept of national service is about taking from young people without those people actively feeling like they gain or feeling like this helps community and is a collective gain. It's seen almost a punishment for being spoilt and pampered by society.

We do have this enormous gap between kids who haven't been taught responsibility by parents and a culture which doesn't actively work as a 'village raising kids' when are then thrown into an adult world which is ever harsher as financial conditions worsen. Yet no one is really addressing this gap. It's just a blame game and one where we discuss how much more we can talk from a working population without much thought to the concept of selfishness.

The UK is selfish. Selfish in a way that's not paralleled anywhere else in Europe. That's our problem. That's why we elect fuckwitted politicians with shallow policies and no desire to get to grips with the heart of problems. Everyone is out for themselves. No one asks how we can change this. We have a new generation who see themselves as more kind and it's just utterly bullshit.

It's just 'if I can't have that no one else should have it' rather changing the question to 'how can we expand opportunities and lessen inequality in a meaningful way'. This difference in mentality might seem minor but it's hugely important.

There are so many poster on this thread who can't see the wood for the trees because they are being spoon fed this utter shite and haven't got their eyes on the issues that are incoming and will have a much bigger impact than private schooling.

Why would you think all boomers will be net beneficiaries.
That takes no account of the fact there were no top ups ie UC or any benefits to subsidise wages during most of their working lives.
If unemployed there was the dole and child benefit. That’s it
If working there was nothing other than disability benefit and child benefit.

There are a wealth of benefits available these days that did not exist for most boomers and these benefit payments far outstrip anything being paid in. Hence the very low % of net contributors.

as an aside i am not saying people don’t need support here, just the attack on boomers.

Ppejfhfhrhhfhf · 30/05/2024 14:13

SchoolQuestionnaire · 29/05/2024 20:15

No they are not, but they are already forking out huge sums on privately educating their dc saving the state purse in the process. Parents will be paying the VAT not the schools. Why should they then be expected to contribute even more?

However given the perfectly valid argument that you have made I’m sure you’ll agree that university students should also be subject to VAT payments. After all, universities are not charities, and should be taxed accordingly. Many make huge profits so the money is clearly there (unlike a number of struggling independent schools that will be finished by VAT on school fees).

Personally I’d have no objection to this as it would feel much fairer and it could potentially raise more money. And I say this knowing my own two kids would be affected. It doesn’t seem quite so pointed when everyone is contributing rather than the same few.

There is no free alternative to university.

RedToothBrush · 30/05/2024 14:15

SavingTheBestTillLast · 30/05/2024 14:12

Why would you think all boomers will be net beneficiaries.
That takes no account of the fact there were no top ups ie UC or any benefits to subsidise wages during most of their working lives.
If unemployed there was the dole and child benefit. That’s it
If working there was nothing other than disability benefit and child benefit.

There are a wealth of benefits available these days that did not exist for most boomers and these benefit payments far outstrip anything being paid in. Hence the very low % of net contributors.

as an aside i am not saying people don’t need support here, just the attack on boomers.

Edited

Because there is actual research into this.

It's not me making this up and spouting bollocks.

Go look up the data on this.