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”

You keep saying “only £69 a week”. That’s £7k a year for 2 children. £7k is a lot of money for many of those in the top decile, which will come on top of the cost of living increases.

Ah, but you see, our friend Aladdinzane, here, is on the side of everything that is good and noble. So, when he calls people fantasists and liars, he's just speaking truth to power.

Personally, I can't think if anything I just fritter away over £100 on every single week!

I just spoke to a guy in the office who is taking a job in the Middle East for a few years so he can keep paying for private school. But his wife will stay here. He is a high income earner and then they will all holiday there. He seems really happy about the idea and they are saving the tax for university too and US unis are on the cards.
If some economists believe that higher aspirational earners will not find a way around making this work for their families in whatever way they are highly deluded. These are precisely people with a brain on them and they will do whatever calculations that make sense for their own circumstances. Like the rest of us who make daily financial choices.

as far as I'm aware being need blind doesn't mean that you'll get aid

Fair enough. I'm using the more common colloquial definition of institutions that make admissions decisions without consideration for financial need and will meet the demonstrated need of any admitted student. There are many more institutions which decouple the admissions decision from the financial aid offer and, therefore, make the admissions decision on a "need-blind" basis.

" That’s £7k a year for 2 children. £7k is a lot of money for many of those in the top decile, which will come on top of the cost of living increases."

I agree, it sounds a lot. But for the majority of private school parents who have very high incomes will be able to find this flex in their budget no?

Is 7k a year a lot when you were already spending 36k?

I despair for your poor students…

Yes, it is. Maybe if you're in the very top tax bracket it isn't, but for anybody hovering around 100k (eg. GPs) it's a lot of money.

For the 100th time, no! No, many of us can't magic up another £60+ per week because (as keeps getting pointed out to you but you repeatedly refuse to accept it) many of us aren't wealthy!
You refuse to acknowledge that everyone has a tipping point and just blindly continue to state that we will all cough up. Well no we won't.

Sorry if this has already been covered, I haven’t read the whole thread: will foreign pupils also have to pay the VAT, or will they be able to claim it back? Wondering how many rich, mobile families will find that it works out far cheaper to send their kids to boarding school if they themselves are based eg in NY for a few years. Would be very painful if the new gov found that they lost the entire tax take from some of those families - as pp have said, they fund a huge proportion of our public services

“Yes, it is. Maybe if you're in the very top tax bracket it isn't, but for anybody hovering around 100k (eg. GPs) it's a lot of money.”

But that is the problem is it not? Starmer’s mates are all partners in London law firms making 1.5 million a year or bankers getting 500k bonuses and they are using elite London private schools and top public schools and they can afford the 20 per cent. And those who do not want to pay up in that bracket, will find a way around it to “save” the cash for their own consciousness like moving from boarding to day. If they don’t want to pay it.

And people like Dan Neidle who used to earn 1.5 million a year at Clifford Chance and now has found a social conscience/will to become a politician (whatever it is) is championing the Starmer lot on.

Meanwhile academics at higher levels all think anyone is crazy to send their DC to private school in the first place because they fill the gaps themselves anyway and their DCs are so academically gifted it makes a blind jot of difference.

This poster has been on here for a week now trying to prove to people that thousands of pounds isn't a lot of money, based on the completely illogical argument that if you're spending a lot of money, you must have loads more! I think we should probably just stop responding to him at this point.

Those aren't the statistics I'm referring to.

To take Harvard, Yale, Princeton, Dartmouth & MIT, the list of top US universities which will admit international students without consideration for finances and also meet their demonstrated financial need, these schools enroll about 7,000 new undergraduates each year. Oxbridge and Imperial together enroll about 10,500 new undergraduates each year.

There are about 4.4mm 18 year olds in the US currently versus about 800k in the UK. So among the list of US universities above, there is 1 place for every 628 young people in the US. There is 1 place at Oxbridge and Imperial for every 76 young people in the UK.

If you include Stanford and the rest of the Ivies, which do not offer need-blind admissions for international students but do offer generous financial aid for US students, that's still only 1 place for every 275 young people in the US.

The statistics indicate that there are a lot more DC competing for each place at a "top" US university than a "top" UK university.

It’s called “mansplaining”!

“The statistics indicate that there are a lot more DC competing for each place at a "top" US university than a "top" UK university.”

And if that is true and we are losing British top private school kids to these unis (regardless of who and how much their parents have) we are losing talent. Because these kids are people in their own right and we should be doing all we can to keep them, no?
Obviously they have a choice but to discourage them - is it worth it?
Do they come back afterwards or do they stay in the US?

"There won't be large local level moves because private schools have far wider catchments than states, this means that even a relatively large number of students moving will come at a lower cost per head."

Surrey for example. Data's not ideal but we think 1/3 of children in Surrey are at private school and we know there are zero state secondary places...in the whole county. "there won't be large local moves" it would take a few per cent to require 10-20 new schools. You are the only person in the entire country claiming it's possible to predict movement at local level. You cite the IFS and they are strongly in disagreement with you on this.

You haven't done your homework, on this or anything.

"You might assume that they can on average pay 69 pounds per week more for an education which they regard as a necessity? That they have that kind of cash within flexible discretionary income budgets? "

You assume an awful lot. In fact, you just made that up. And to give a sensible answer you'd have to start with "what is disposable income". And that's 69/week per child. You should stop assuming and say "we don't know".

"The UCL study shows that in each income decile except for the top, the proportion of students being educated privately is close to 0. For those outside it, the funding for education mostly comes from household wealth/grandparental help."

To start with it says the top % has only 50% independent school participation. That indicates the 6.5% make it far down the distribution. Actually in 2nd and 3rd deciles, the proportion of students being educated privately is between 2-3%, thus around half the average national representation, and in those deciles alone you're talking 40-60k children I'm sure you have some evidence for how much comes from grandparents, and you can tell us (being an economist) whether it's appropriate to refer to stocks in a conversation about flows.

I second that. We've had some good debates on these threads, this is just pathetic. I'm going to leave @Aladdinzane to have his/her last word now.

The two people I've had respect for are those that just said "it's about equality at any cost and I mean any cost" and were realistic about the harm this is likely to do.

As an aside, it bugs me that Labour has said that there will be adequate state school spaces because the birth rate has been falling since 2014.

I can see their point regarding primary schools because the reception intakes local to me are smaller than when my teenage children were small. However, children born before 2014 are still school age, including the large school years born between 2009 and 2014, where even the schools here that traditionally nobody wanted are full.

So if Labour are planning to introduce the plan immediately, how does the reasoning that it will be okay due to the falling birth rate since 2014 work in the case of secondary schools?

To repeat, I’m not a Tory voter, I really want to vote Labour but am struggling with this policy!

*"but if the numbers moving are large at a local level,"

They just won't be. There won't be large local level moves because private schools have far wider catchments than states, this means that even a relatively large number of students moving will come at a lower cost per head.*

Why do you think catchment size matters, except as a proxy for comparative numbers of children in private vs state?

What matters is the number switching (either immediately or just by not choosing private over the next few years), and whether there's existing space for that increased number within commutable distance.

So the concentration of private school uptake in a local area matters. And that isn't evenly distributed in the UK.

As I mentioned up thread, Edinburgh has 30% of children in private schools and Bristol isn't far off.

Do you really think that 30% of Edinburgh families are wealthy enough not to notice an extra £7k coming out of their net income each year?

If just 10% of Edinburgh families who would have chosen private decide to choose state instead, that will increase the number of kids needing a state school place in Edinburgh by 5% over the next 7 years.

There are currently 80 primary schools and 21 secondary schools in Edinburgh. Many of them don't have spaces, because this concentration of private school uptake has been in place for long enough that the council has factored it into their school provision.

So that's probably 1 extra secondary and 3-4 extra primary schools needed in Edinburgh (for 10% migration over the next 7 years)

Do you think that even 27% of Edinburgh families won't notice an extra £7k coming out of their net income each year?...

The issue is that there may be spaces but those spaces aren't where they are needed. This is just 1 example and there are many more which show that many schools just don't have space for in year transfers

“I can see their point regarding primary schools because the reception intakes local to me are smaller than when my teenage children were small. However, children born before 2014 are still school age, including the large school years born between 2009 and 2014, where even the schools here that traditionally nobody wanted are full.”

This is also my bugbear and what is more, these are groups of children massively impacted by Covid and they know it! Current Year 7, 8, 9 and 10s (10s missed proper transition to secondary completely, 8/9 have behaviour issues as a cohort and most had loads of time out of school, for example). I could go on about the lower years too - basically the Covid years are massively impacted and it includes pregnancy during Covid and the immediate aftermath. All the psychologists including educational psychologists are all over this and yet we seem to keep hearing from economists!

Parents who can barely afford it will be in a very difficult position and it will be further pressure on the DCs themselves knowing the parents are struggling just so they can go to school. Not fair on the kids! We are talking about children here after all. And that is my second bugbear. The fact that we have politicians who are happy to use actual children as pawns in their games. It is completely vile.

More than 2-'ish' would be great yes please

When did I say the pupils coming from private school were going to be bright?

Gosh! is this how Labour policy decisions are made on advice of highly educated economists???

So, top 5% household income in the UK is £81k.
Let's assume two parents and one child:
School fees £25k (average across primary and secondary, you'd be hard pressed to find a cheaper school in London at least)
Mortgage £20k
Living (all bills, food, cars, holidays) £30k - not exactly lavish

This is doable and leaves you with £6k savings/emergencies

20% VAT takes £5k out of it so no buffer whatsoever, means not doable anymore. Full stop.

Why those educated economists always make an assumption that people who are paying now can continue paying no matter what?

COVID was one of the reasons I changed my mind from state primary to prep. Academically, dc would prob have been fine in state, but they were really behind socially.