Labour confused and arguing among themselves over VAT on school fees

[Another76543]

This policy is getting more ridiculous by the day.

We have the shadow Attorney General who doesn’t understand the basic concept that the VAT position and charitable status are entirely separate issues. She also doesn’t understand that it’s parents and not schools who will pay the charge.

“the question is, is it appropriate in these circumstances for schools, such as in Eton or Winchester or whatever, to be seen as a charity and that, therefore, they should not be paying VAT on the huge fees”

This statement is factually incorrect on two things.

She also seems to think that any money raised will be spent on breakfast for children. The potential money has already been allocated to new teachers. They seem to think they can spend the same money twice.

https://www.independent.co.uk/news/uk/emily-thornberry-labour-institute-for-fiscal-studies-education-secretary-winchester-b2559439.html

The Party are also now fighting among themselves over this proposal.

https://www.independent.co.uk/news/uk/emily-thornberry-bridget-phillipson-labour-david-lynch-london-b2559684.html#

“sign of divisions within Sir Keir Starmer’s party over the policy”

Well it’s better than handing out child benefit to really high earning couple so that they can holiday in the Seychelles.

@Oakandashsplash have I missed the Lib Dems saying they are removing charitable status?

Many people will spend it on an extra foreign holiday or savings, neither of which attracts UK VAT. Some will increase pension contributions which means they would actually be due tax relief.

Thank you! I can imagine and is ugly. Poor kids.

We plan to downsize when our kids are ready to buy a home. Therefore no inheritance tax and they get a helping hand on to a ladder and the security of home ownership. Plus we have a house that is easier to manage so that we can enjoy time out of it once we have more time to do so. So our care fees won't impact our children. Granted anything can happen in life but that is the plan and why we chose not to go private - also because our local private school gets awful results; it is a lovely nurturing place but not a place to get solid A levels.

Shovel it into our pensions. We sure as hell wouldn't buy "stuff"

Even though education is a charitable aim in its own right, It is arguable how much public benefit there is from private schools.

Yes, education benefits society as a whole but the private education of 7% perhaps might not be of that much general public benefit. Is it worth billions in tax cuts...? Possibly not.

I agree that Labour isn't actually proposing to remove the charitable status but I think that would be preferable to removing the VAT exemption.

@crumblingschools It's on another one of these VAt threads - "Will Vat on Private Schools fees lead to a partial collapse of the sector" I can't link the article but it is near the end

The town Keir Starmer grew up in (Oxted, Surrey) only has one secondary school. Rated 'good' now, I can see that the school has had variable ratings in the past, including 'satisfactory' and 'requires improvement'.

How much is your house worth now?

The whole idea of making education taxable is crazy, out of line with other countries, and I think people should be really careful about crossing that line.

Once that principle is no longer in force, there is really nothing to stop any government from making other types of classes, lessons, or tuition taxable.

Currently, these things are not taxed because of the general principle that we don't tax educational endeavours.

The very same kind of class hatred that makes some want to punish those with children in private education could easily be leveraged towards upper middle and middle class people who have their kids in music lessons or private tutoring etc. After all - those kinds of extra lessons give those children advantages over kids who can't take anything like that.

And they are luxuries, after all.

The ideology is so troubling, and it’s even more troubling that other people are oblivious to it!

I am actually fine with putting VAT on tutoring and music tuition etc. basically if it is not available to all it feels like a luxury so it feels fine to tax it. So many things which most people think of as essentials are already taxed but extra tuition and private music lessons are not essential.

But what would you do with your £15000 a year fees you save if you send your child to a state school? Would you spend it? Then you would be paying VAT on those purchases and they would get more money?

I’m used to spending it on my DC so I’d put it away to help with Uni, and a deposit for a flat.

We are looking at state 6th form now. That’ll save me around 36K. I’ll invest it.

Lots of families will do this. None of your plans will be subject to VAT which is why the IFS estimates are inaccurate; they assume that families like yours will spend every penny of that £36k saved on items subject to 20% VAT.

@TakeAnOldBagShopping same here. We might spend a bit of it on a foreign holiday (we currently camp for our hols so would be lovely to be in a hotel) but vast majority of it will go into a house deposit.

Most of the people I know will be reducing hours at work or giving up the second jobs they do to pay fees. So actually, no extra vat and a drop in income tax.

We live in East Anglia and only have one state secondary in our town , the next nearest is about 5miles in one direction or 10 in the other . Most of the market towns around here have just the one , children are bussed quite long distances . Realistically parents have no choice because most schools are full and no transport other than to your nearest school so it’s local school or nothing .

Both local towns also have an independent . The one in our local town has close links with the state secondary , shared language exchanges , shared sports, shared extra curriculars , many families with children in both schools and children often move in either direction for sixth form especially.

I spent 30 years at the grittiest end of the public sector, earning a decent but not spectacular salary, DH 25 years in the military. We lived in army quarters and used boarding school to provide continuity of education while DH was moved frequently around the country and overseas. The Military pay an allowance that meets most but not all of the cost- my salary enabled us to top this up. When DH retired, that allowance stopped and we needed to buy a hoùse. We opted to keep the DC in their current independent school and move to a rural area where houses would be relatively cheap, so our savings could be dedicated to completing the DC's education. The state schools in this area don't benefit from Teach First and are a million miles from the high performing Goods and Outstandings in leafy towns and cities. We still have a mortgage long after the age where most have it paid off, no family money, no savings beyond our school fees account. I've left the public sector to boost our ability to keep going with the education. I won't be alone in that- and public services will lose lots of people like me who feel that's a necessary choice.

I don't write any of this as a 'pity me' exercise- I know I'm better off than most. I'm happy in my choices and proud of my DC, who are absolutely justifying our decision to prioritise their education over everything else. What I really object to is the dog-whistle vitriol, the aggression, the bating; the suggestion that I should 'pay up' as if our family and others like us are somehow over-priviledged freeloaders taking bread from the mouths of the poor.

We have lived in it for 12 years and it has almost doubled in value as we have done lots of work on it ourselves in our 'free' time. So we can easily downsize in 5 years or so and still be comfortable. We have saved up for University so that is covered.
We all make choices and that was ours. School's here are good enough, we have put in lots at home around work, and that is how we felt comfortable - stretching to fees felt too scary for us and we just weren't sure that it would be worth it (for us) compared to helping them buy houses.
But life can do all sorts so who knows what will really happen but that is the plan - everyone makes a different plan and no gone gets it all right!

Also, have more kids. If the state is paying, why not? Well off families who use the state education do it because they have more children. Posters pop up on mumsnet to say 'I chose state because I had four kids and I needed the money for my mortgage'. So that's 3% stamp duty to offset £28000 per year per child that it will cost the State to educate the children. Doesn't seem like a great deal for the State to me.

Why? That work still needs to be done. If it frees up jobs for other people, the Exchequer will still be receiving income tax and the VAT on what they spend their earnings on.

That's still going to result in a revenue benefit. Stamp duty, VAT on solicitors and estate agents' fees, VAT on work done on the house and stuff bought for it, tax your child pays while going through university, tax on higher earning power with a degree, etc.

What I really object to is the dog-whistle vitriol, the aggression, the bating; the suggestion that I should 'pay up' as if our family and others like us are somehow over-priviledged freeloaders taking bread from the mouths of the poor.

👏 That is so true. The hatred being spouted on the various threads about this topic I find appalling, even as a non-private school parent. People don’t look at the bigger picture and just think it’s wealthy kids at Eton etc.

@Wetellyourstory and that is what the Labour Party want us to think about, not the smaller private schools