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”

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

Its in the dictionary :)

Please explain more though, interested.

oh, and to add - of those on the same path are several NHS consultants who were doing both NHS and private practice. They are retiring as well - can't afford VAT, expected taxation of pensions etc doesn't make sense to them anymore

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

Yes the students I've sent to study econ at Yale, LSE, Oxford etc all complained.

It CAN be used in the way I have, which is " an increase becoming more and more rapid" which fees have as they have increased above inflation every year, or in a mathematical sense, which I didn't intend.

Or does a word having two uses confuse you?

there are 2 million kids from upper-quartile incomes in state schools. You're expecting 40-135k new arrivals (depending who you listen to).

Can you please tell me how the 2 million kids' families ensure terrific state education today without using the words "catchment area" or "tutoring"? Then tell me how the new arrivals are going to "transform" them.

Bright kids shouldn't be expected to help bad schools (substack.com)

Reality: there is no theory or evidence that this will happen. It's just something people read in the Guardian and recite. Much more reasonable to expect the new arrivals will behave exactly as the existing families do.

What will therefore happen:

• more competition for preferred schools, thus some other families displaced
• growth in private tutoring
• what's left of private education will be even more exclusive and have fewer bursaries

indeed!
well said

You claim to be an academic economist, invoking your authority here. Are there two uses of the term in economics?

US universities often offer generous scholarships, and the admissions criteria is more holistic, which suits those with wide extra curricular interests and experience.

With regard to Oxbridge, Cambridge have recently dropped their state admissions targets and Oxford state school admissions have fallen for the 3rd year running.

Lack of loans wouldn't exclude most ex-private-school kids (who are the ones you're charging the extra fees to), since fees+living costs aren't dissimilar to private school fees which parents are already paying. In most of Europe, both fees and living costs are lower than in the UK.

Paying up front means no student loans to pay back. (I wonder how that would affect the lifetime repayment rate on loans? Whether there's any correlation between children who would do that and probability of earning well enough to pay loans back fully?)

It would be a shame if UK university education was damaged in that way. It's a valuable UK export.

It would be an even bigger shame if we lost our future engineers, lawyers, entrepreneurs etc because they chose to stay in the country they studied.

The UK's future economic strength in the world is in no way inevitable or guaranteed.

If you were replying to somebody else, why did you quote my post? It makes the thread rather difficult to follow! My point wasn't about job losses at all - It was about who pays for those jobs. My dans teacher doesn't cost you a penny.

@strawberrybubblegum

As said, it was just an idea. I've never explored it really as the unintended concequences would be as you said, or, universities would just take more private school kids to cover the budgets and it would be harder for state school students to get in.

The UK's future economic strength in the world is in no way inevitable

Sadly, I think it is inevitable if successive governments continue introducing policies aimed at penalising the higher earning and most successful in our country. Why on earth would ambitious youngsters choose to stay here?

"US universities often offer generous scholarships, and the admissions criteria is more holistic, which suits those with wide extra curricular interests and experience."

US universities offer generous scholarships to US citizens, they are extremely hard to come by for foreign nationals at Ivies ( slightly easier on the tier just below) and almost all have need based criteria. I have dealt with exceptional students, with exceptional resumes, SAT scores (1590 or so) and academic backgrounds who have not got in to US schools because they were foreign nationals who needed funding.

I've heard this before though: " Oh private school kids are now discriminated against by Oxbridge, so the ones at my school all apply to ivies and get scholarships" it really is utter rot.

As an economist, no. Exponential does not and cannot mean "an extremely rapid increase". It could mean "an increase that grows more and more rapid" but you'd have to use it carefully. It can't, as our friend has said, mean both of those things at once.

And neither use is true of the data points he's observing.

And even if it was true in the past, it wouldn't mean it's useful as a predictor for the future for reasons outlined in the Adam Smith Institute paper

• different cohort of customers
• much larger price increase (15-20% or whatever) compared to historical 2-5%
• new macro environment (post-Covid, house prices, core inflation, as though independent school parents are immune to all of these, and others)
• cumulative rather than repeated price increases

Like I said. Walking towards a cliff. You haven't fallen off yet, doesn't mean it's safe to keep going.

https://www.timeshighereducation.com/student/advice/scholarships-available-us-international-students

@MrChips

"As an economist, no. Exponential does not and cannot mean "an extremely rapid increase".

But it can be used that way, and we are not writing for economists.

I do agree that we can't say that the outcomes will be exact but previous data is useful in predicting future behaviours ( otherwise we'd never do it).

If we go back a decade or so to when fees started rising at a rate higher than inflation we also had economic uncertainties, lower wage growth, there had been a period of high inflation (although not as high as now) and house prices outside of London had fallen so there some things that can be compared.

@Aladdinzane - do you actually still work? How is it helpful to encourage clever educated women to faff on MN and send their DC to state school for free rather than getting them to pay 50k tax and pay for private school? I really can’t see it!

I volunteer extensively in state schools. My DC still don’t get much attention because they are naturally able. I still have to extend them at home and extra curricularly. I don’t mind because I love children not just my own. But economically I would have been far more productive still working full time (well to be precise it was more like 180per cent - 8-midnight most days).

@Another76543

Yes they are available, I have extensive experience in helping ( and succeeding) in getting students them. Just because they are available doesn't mean what I said was incorrect.

" How is it helpful to encourage clever educated women to faff on MN and send their DC to state school for free rather than getting them to pay 50k tax and pay for private school? I really can’t see it!"

Where have I done this?

I've said repeatedly I don't think this will have as big an impact as some are predicting, I also don't think there will be a massive exodus of people from working as, as we know, money is not the only motivating reason for work. Many people will continue even if their children migrate to state school as the income will either be used for increased consumption ( as the IFS state) or (as I think) will also be used to pay mortgages off earlier, increase pension contributions, save for future university costs. Actually all of which could have positive economic impacts.

Turns out I was quoting you and meant to. I didn’t bother to check back I just assumed I had made a mistake when you replied. Sorry I confused you.

@Aladdinzane your issues with comprehension are frankly embarrassing and it's scary that you're teaching...

My point about PS kids and unis wasn't about the cost, it was about overall societal attitude. A lot of them can indeed afford US costs and Ivy are really generous in supporting the brightest ones in any case. It's about 4 A* PS student not getting a place, so PS ones just stop applying and looking elsewhere. You don't even need to ask them to pay more.

I do fully understand that this is exactly what you believe should be happening. Your lack of understanding of economic consequences given that you teach economics is deeply concerning

@nearlylovemyusername"

Are you having trouble reading what I said?

I didn't say it was at all about cost.

A lot of them can indeed afford US costs and Ivy are really generous in supporting the brightest ones in any case."

This is utter rot. Most aid at Ivies is for US citizens and getting funding as a international student is very hard, and in almost all cases, need based as well as merit. They expect you to complete detailed forms which include income and assets and if you have assets ( including your family home) which can be borrowed against/sold, they will not give you aid in many cases.

"Your lack of understanding of economic consequences given that you teach economics is deeply concerning"

Ad hom attack fail. You know you have utterly failed when you have to attack me.

I've repeatedly said there are consequences, but that they will not be as high as some here are predicting, for lots of reasons.

Just like in "top" private schools here, "top" US universities have mostly moved away from merit based scholarships to need based financial aid (bursaries). PP is correct that most US universities have limited financial aid budgets for non-US applicants. PP is incorrect in that the Ivies, with greater financial resources, are much more likely to offer "need-blind" admissions to non-US applicants than less well-resourced universities. Harvard, for example, claims to be need-blind to both domestic and international students, and offers nearly a full ride (free) to applicants whose parents make less than $85k (currently £67k). The cost to parents exceeds £9250 (UK tuition rates) at an income of approximately £105k, and exceeds £19,250 (UK tuition plus maintenance loan) at an income of approximately £135k. So a family earning less than £135k will be better off financially if their child can go to Harvard than to Oxbridge.

@user149799568 As far as I'm aware they also check on family assets in most cases?

Yes. I plugged in 0 assets into the calculator. That said, they explicitly exclude home equity from the calculations of family contributions so the conclusions should be accurate for families who don't have much outside of their primary residence.

" Harvard, for example, claims to be need-blind to both domestic and international students, and offers nearly a full ride to applicants whose parents make less than $85k (currently £67k)."

Not many private school households fall into this category though do they?Making the "they all get scholarships" statement heard from others again erroneous.

As far as I'm aware Harvard, Yale and Dartmouth are the only need blind Ivies.