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”

Yeah, this is an odd one.

Usually the idea is the well off should self-fund rather than sponge off of public benefits.

I understand all the reasons. I was thinking maybe it was secondary school kids whose parents had gone out to work very early. However, the fact still remains, that in the past people did manage to give their children breakfast. And in countries where the poverty is much greater than here and the state help much less, people don't sent their children to school without breakfast. I don't want to point fingers at individual people, but, as a society, where have we gone wrong? I just don't think this is sustainable. The free school lunch, I can understand better.

The next one is the breakfasts at schools are awful and Henrietta eats caviar at home on holidays. Children should have breakfasts extended on holidays. Bastards bla,bla.bla… there will never be enough. Entitled mentality knows no bounds.

I think you are right that it's more about societal changes than individuals. There are a lot more pressures and a lot less support. More likely to be a single parent or both parents working; less likely to have family near by; grandparents less likely to be helping out as they are still working; less likely that the local community is helping out or knows what is going on. More uncertainty, more of a sense of precariousness generally. It's very easy to get ground down and for things to slip. And it's cumulative - when things get difficult, they tend to keep getting difficult.

I don't know what the factors are behind a rise in things like children not having breakfast - I'm sure Joseph Rowntree or The Children's Society will have done some research. There will be families who are in temporary accommodation where access to breakfast may be problematic. Some days it might be oversleeping or the milk has gone off. But most parents want to do well.

@Meadowfinch

At the moment it is all headline & no detail, which makes them look utterly untrustworthy

Well why not wait until they publish their manifesto? Then you can make a judgement.

You can sign up here to get a copy when it's published.

There's some truth in that. Back in the 50s a lot of people where my mum grew up dropped their kids off at grandparents on their way to work. Granny couldn't read or write and there wasn't a lot of money around, but enough for breakfast.

Just out of interest why do you not agree with VAT? Would you prefer income tax is increased? Or have I misunderstood did you mean you don’t agree with it just on fees?

There is a theory, that I don’t agree with but some people believe is fairer, where income tax is scrapped and instead VAT increased on everything. If you spend money you get taxed but not when you earn it.

Which is a disproportionate way to tax people - lower earners will have even less disposable income.

VAT and other indirect taxes are inherently unfair. For the poorest fifth of the population, indirect taxes take 23% of disposable household income, but for the richest fifth the figure falls to just 9%.

^^

Yes, sorry, I mistyped that. I meant I don't agree with it on education. But, on that topic, I also don't agree with it on things like fuel that people need to heat their houses. Essentially, the government are double taxing people by taxing their income and then taxing them again on something very difficult to avoid. Paying VAT on home improvements (for instance) I agree with, as that's adding to the value of the property. Hope that makes it clearer what I meant!

The problem I think Labour have is that they have announced/leaked this and it does appear to be quite a popular policy, certainly more seem to strongly support than strongly oppose. Though it is hard to get reliable/unbias numbers at this stage, here's a poll The Rest is Politics ran. However, it would naturally upset the 5% of families with children in private schools (understandably).

So they've pissed off the 5% and even if they backtrack those 5% are unlikely to 'forgive them' - more over they will then piss of the people who it was popular with. So it becomes a case of both groups resenting them and they risk getting a reputation for turning.

I'll be glad when all manifestos are out, so we move away from the leaks and rumours and into a period of certainty about what all the parties say they will do.

Aren’t those 5% unlikely to be natural Labour Party voters in any case? Makes much more sense for Labour to appeal to the vast majority of parents whose children are in state schools. And I don’t see any reason for them to backtrack on this obviously popular policy.

It depends. Quite a lot of parents at our school work in healthcare, so are fuming at the Tory government at the moment. We're not all living in a bubble.

Yeah Labour are not changing this policy. Most people haven’t thought much about it and won’t unless it is dropped. They see the policy, think that sounds good and won’t cost them money and then think no more about it. But if Labour scrapped it they will think about it again and see it as equivalent to a tax cut for the rich because most people’s only experience of private schools is hearing about royalty or rich politicians going to Eton.

Labour can't afford to backtrack on this policy because the seed has been sown in voters' heads that this is the sweet spot intersection between getting a <incomprehensibly large amount, could be £5/500/5000/500000/500000000000 as all large numbers are the same> of free money, fixing everything that is wrong with education with this massive bonanza, and best of all kicking some Bad People Who Are Not Like Us.

@BIWI

"VAT and other indirect taxes are inherently unfair. For the poorest fifth of the population, indirect taxes take 23% of disposable household income, but for the richest fifth the figure falls to just 9%."

But the vast majority of privately educating households are in the top income decile with the % of children educated in private education close to 0 in every other income decile.

Not going to impact the poor, but a good demonstration of why it should be enacted.

@LeakyRad

Well that was a badly thought out word salad bit of victim status seeking.

@Grace1980xxx

You are conflating two different issues.

Nursery education is not compulsory and the support for parents still requires most to pay some money towards it.

Primary and Secondary education is free at the point of use, you are not "saving" any money for the government even if you are a high earner because your tax contribution is almost certainly not large enough to cover a school place as a proportion of public spending. Let's do the maths, if the UK spends 4.4% of its total fiscal budget on schools, this means that your tax contribution has to be large enough so that your 4.4% of your contribution will cover the average of 6k spend per head on a school student ( this is a rough calcuation and actually generous to net contributors). So really, you have to have paid that you need to have paid about 136k in income tax ( excluding national insurance as this is different), means you need an income of about 335k a year, making 0 pension contributions and 0 student loan (unlikely).

(1) Education is a social benefit regardless who pays.

(2) Independent education saves taxpayers £8-12k per child.

Those are the two main reasons not to tax education. They are the two reasons no other country in the world taxes education. They are the two reasons why, when a Marxist government tried it in Greece, it caused (according to The Economist) "general mayhem".

Other reasons:

(3) families and children have different needs and independent education is a way to fulfil them, that is good for society. For example, every severely dyslexic child educated independently enables the state to focus its resources on other children
(4) if you're serious about raising money for education, you'd realise this policy distracts from any and all more constructive ways to do it. You could raise 5x the amount by increasing income tax a little for upper-quartile earners, ensuring, or 10x the amount by covering top-half earners. You'd still be "taxing the rich" and you'd be including those actually using the service in question.

(5) because of (4) this isn't a serious way to improve education, it's just a nasty way to hurt people using politics, and that's not a direction for society any of us should support.

Thank you for asking.

It goes in circles like this, because underpinning these "arguments" isn't any reasoned analysis of making the country work better, but just a desire to get one over "the rich".

"Tax the people who buy privilege! they should have the same as us"
[switches into state system]
"What's the state doing providing taxpayers' resources to rich people? Means-test it!"
[takes responsibility and leaves state system]
"tax the people who buy privilege!"

etc.

https://inews.co.uk/news/politics/voters-back-labours-private-school-tax-plan-despite-row-over-state-sector-impact-3102933

If every severely dyslexic child was able to access this kind of provision, that would be a better argument. But at the moment, children whose parents have more resources can access this. Children whose parents don't have those resources are sinking, and the impact of this on their families is usually to reduce capacity even further.

Any attempt to raise income tax to fund education would lead to an outcry. I think it would be less popular with better-off people than this policy as it would affect more people.

Another one is:
3) Any money 'saved' (if this is how you want to put it) by not having VAT on education is spent in the local economy.

I don't know about anybody else, but I'm not putting all my money on off-shore accounts!

A poster above made a valid point:-

Nursery education is not compulsory and the support for parents still requires most to pay some money towards it.

Only education from aged 5 is compulsory, a parent chooses to send their child to pre-school in their early years. In my immediate area, 4 out of 5 pre-schools are privately run, in village halls or part of a nursery etc, not connected to any school (state or private). It is the parents choice to send their child there so if VAT is to be applied to all private schools, what about pre-schools? It’s still private education as they are required to follow an early years curriculum.

@Wetellyourstory

These are easily exempted, one phrase which says something like "exempting non compulsary education" in the legislation will cover it.