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”

How about, parents who can afford it pay for their own children to educated, so that the state can focus on those whose basic needs aren't being met. 🤔

Yes, paid for by your taxes - not my personal income. Can you really not see the difference?!

@MyNameIsFine I am excited to hear from these posts how many of those parents are going to be giving up their jobs as they wiil have lots more time to get involved in PTA / volunteering / fundraising when they move their children to state schools, and then the children whose basic needs aren't going to be met as per your post are going to helped as the schools that need improvement are transformed by a small army of middle class engaged parents with time and cash to spare.

"You most definitely have spoken in absolutes and black/white language in every post ie emphatically stating that this/that will/will not happen."

No, what I've said is that the massive migration predicted by some on here is what will not happen, and it won't. People are more likely to get angry and threaten things rather than change their behaviour due to the effort of the changes ( or do you not remember this from behavioural econ?).

"You aren't paid as an economist though are you?"

I have been, how do you think I know the people at the Adam Smith ( even the current younger staff) and the founder?

"Surprising that an undergrad teacher isn't prepared to acknowledge any other point of view or opinion"

I have acknowledged other view points, even going as far to explain in detail why I think they are incorrect. Almost all of what I've said has been in reaction to the people who are stating emphatically that this is a terrible policy.

In reality, because so few will change, even if we go with the IFS worst case figure, this will make the exchequer money. It is a stealth tax, but one which is quite popular, and one which won't raise too many heckles from the voter. It even avoids the "temporarily embarrassed millionaire" effect on lower income voters when proposals to higher earners marginal rates/wealth taxes are proposed.

Making state education means tested would be a terrible, terrible idea.

I've always thought an interesting way to do this would be to say, if you opted out, you stay out.

Therefore private school kids pay international fees at university and get none of the state subsidy.

I mean this really would have massive unintended consequences but it is interesting to see what people think,

Goodness me, you have a massive hatred of private schools and wealthy people don't you? Having read your posts, I do not believe for one minute that you are an economist as you show a basic lack of understanding about what those wealthy individuals contribute to our economy. It sounds like you'd rather drive them from this country.

But it's definitely not about kicking the Bad People, no, absolutely not

Everybody pays tax including you. And I am absolutely fine with it paying for education for all. I think everybody should have access to free good education in this country and taxes should pay for that. I am also absolutely fine with my taxes going up to fund this VAT rise. I don’t think that will happen but if it did I am ok with it.

I was merely pointing out that jobs will still be available after the poster above said kids switching from private to state education will cause job losses. Again I think so few will switch it will not make a difference. But who knows it works the other way. My local outstanding rated primary state school just had to make a teacher redundant because so many kids switch to private schools in Y5 because the entrance exams are easier than in Y7 that they lose a whole class of kids.

@Grace1980xxx

See this? I have no hatred of private schools, or wealthy people at all.

I said this was interesting, not recommended.

Oh and studies show that people rarely actually leave.

I’m not sure you’ve thought this through. Firstly, it’s already around the same cost for a UK student to study at some European universities as a UK university, so we will just push more students down that route. Secondly, where do you draw the line? What if a child has attended a private pre-school or nursery. Do we charge them “international” fees? What about children who have been bullied or have been otherwise failed by the state system and who have moved to private? Should they pay more? Bursary students where their school fees are 100% covered? Should they pay more? So a child who has saved the state over a £100k by not using the state system should be penalised for that at university level?

I'm going to move DC to grammar (one of the best one in the UK) and retire. No, I'm not going to do anything in terms of PTA/volunteering/fundraising, only supporting my own DC in my now free time.
My job will move oversees when I retire (my company wanted to do this earlier but kept the role here because of my skills).

So net loss of this policy in not only taxpayers cost to educate my child for a number of years but also my taxes for the same number of year. Believe me it's significant.
And at least 25% of parents in my DC class are doing the same or leaving UK

@nearlylovemyusername ok but hopefully there are some more community minded souls than you out there than you amongst those who are currently handing in their notice and filling out state application forms. The truth is making the school a wonderful environment for everyone helps every child even yours who clearly gets gold star support at home.
Enjoy your retirement and good luck to your DC, sounds like they have a great school to move to.

@Aladdinzane

“Forgive me if I don't take you seriously based on fantasy families, you simply can't know what your situation would be like if you had four children, or if you would have afforded private school for the first two in the first place.”

Except I do actually have 4 DC and work part time as a lawyer and absolutely made decisions like this based on my own personal circumstances.

We moved to an area of London with outstanding state schools and I went part time.
I could have stayed in Central London, had 2 DC only and earned significant sums and sent them to a top boarding school or a top day school.
Instead I have fully funded their ISAs, got them 2 additional passports and they have the choice to do as they like.
I fully expect others in my office to go down my route now. It’s either work all
out until 50-55 and retire early (after having 0 life for 25 years) vs my path.

It’s very different for a school to say to its families we have to raise fees 5 per cent this year to cover teacher pensions and cost of gas/electricity and increased maintenance which will go on your own DC
vs
a change of Government now penalising those parents 20 per cent and none of that going on their own DC after they have already paid 40/45 per tax. If you are in the marginal top rated x 2 plus this privilege penalty then for those at 120k plus Vat- you must be looking into 75 per cent plus marginal tax rates if they have several kids.

And the biggest faux pas in all of this educationally speaking is that these are precisely the demographic of people we want to have 2-4DC!

Can any journos on here do some FOI's on schools to see if 25% percent as per @nearlylovemyusername 's school is happening across all schools. Guessing she must be near Pates or Colyton so might be different in city areas with less leaving? If it is 25% per class that is quite worrying.

Really? What studies?

When France introduced a wealth tax which contributed to a net outflow of more than 60,000 millionaires between 2000 and 2016. They estimated that the tax caused an annual fiscal shortfall of €7bn and had probably reduced gross domestic product (GDP) growth by 0.2 per cent a year.

So they repealed it in 2017.

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

"I’m not sure you’ve thought this through"

I said there were unintended consequences.

"Firstly, it’s already around the same cost for a UK student to study at some European universities as a UK university, so we will just push more students down that route"

Students can't borrow student loans to go to EU universities for fees or living costs, also as non-EU students the costs are higher than previously. This would exclude a huge number of UK students from applying.

"really, what studies?"

I'll try to find it, but it did address the HNWI issue, there are some that will move but not all. However, those threatening to move who are high earners, rather than HNWIs are significantly less likely to move.

HNWIs are already leaving the UK following brexit anyway.

This is already happening - there's been such a strong push to reduce proportion of private schools kids in top unis, that a lot of them now don't even apply and move to US Ivy instead. The issue is that at 6th form there are 20% of kids educated privately and statistically these aren't the lowest levels of academic abilities we're talking about. Don't you think it's a real loss for the country to drive this cohort out? Given current climate and hatred these kids face they are unlikely to return and they could be high tax contributors.

Incidentally
More than half of British universities slip down global rankings

@Araminta1003

You shouldn't extrapolate your own choices and then apply them to everyone else.

On average in the UK people who have higher incomes have fewer children than those on lower ( although this stat may be changing).

My children have already said they’re going to look at overseas universities. It’s certainly an option we will be looking into. Their school, along with many others, is very supportive with overseas applications.

The next few years will be interesting. Cambridge has recently dropped its state school admission targets and I read this about Oxford yesterday

Share of state school pupils going to Oxford University falls https://www.bbc.com/news/articles/cz99q8nvyy7o

I'm in London

"Exponential means an extremely rapid increase, and there has been :)"

No it doesn't. Seriously, please, for all our sakes, stop.

@nearlylovemyusername

"This is already happening - there's been such a strong push to reduce proportion of private schools kids in top unis, that a lot of them now don't even apply and move to US Ivy instead."

What a lot of rot. Private school students are still majorly over represented at all of the top unis in the UK. What has happened is that Oxbridge and others have got better at peeling away the polish provided by private schools.

Its much harder to get into Ivies than it is for top UK universities, even more so for foreign applicants. Then the cost is stratospheric, Colombia is now over 100 dollars a year with living costs. Funding for international students is also few and far between and ALWAYS has a need base, private school parents will find themselves either forking out for the lot or re-mortaging to pay.

The slipping down the QS university rankings is nothing to do with private school students, nice try.

It is however entirely linked to the loss of academics, grant research and collaborative work since brexit.

Exponential means an extremely rapid increase

Either you don't know the mathematical definition of 'exponential', or you are being deliberately difficult and patronising in misusing it here.

I've taught economics at A level and undergraduate level at RG insititutions.

That might explain something about the state of education in this country.