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”

@nearlylovemyusername

"I fully agree that some of PS teachers can be quietly begrudging families there (and probably rightly so), but they wouldn't post at this level. At least not teachers at the schools I have experience with"

You are creating this argument for yourself, I've never said anything that begrudges people's choice to privately educate their children. I have disputed a lot of the more outlandish claims made by some of the parents about the impact of this policy.

“I can see fees rising yes, and would support that, but that will be payable with the loan? It doesn't exclude anyone, in fact I think there is data showing that there are more people from low income backgrounds studying now than ever before.”
@alladinzane - the thing is I am not interested in more and more lower income households going to uni unless those uni courses specifically translate to higher paying jobs for those students. I am certainly not interested in them getting into debt on courses that do not lead to the former. That is the worst outcome for poorer income households.

"the thing is I am not interested in more and more lower income households going to uni unless those uni courses specifically translate to higher paying jobs for those students"

Is the purpose of education purely to get a high paying job?

Even then graduates out earn no graduates ( even those from post 92 universities), reach their earning peak later, but maintain it for longer than non grads too.

@Alladinzane “I have disputed a lot of the more outlandish claims made by some of the parents about the impact of this policy.”

You have told us you are a private school teacher at an elite private school in London. Most of us fully believe that the parent groups of the really elite private schools will keep paying up and what is more, that they can demand higher salaries to compensate in any event, tax manage otherwise, draw on wealth/savings etc. worst case scenario sell their London main residence and cash out tax free there and move somewhere slightly further out.

The dispute here is NOT about elite private schools.
The dispute here is about the smaller private schools full of children with SEN in different localities across the UK who enhance whole communities through employment etc etc and the huge impact that will be felt there because of this outlandish London centric policy - which absolutely chimes with elite Labour politicians living in London, sending their own kids to great state schools.

It is this kind of stuff some of us are worried about:

https://www.dorsetecho.co.uk/news/24381771.dear-sir-keir---school-policy-will-devastating-impact/

He tells us now he was a high earner who is working as a teacher in a private school as a second career. So, understands completely the struggle of lower earners trying to send their SEN kids to ordinary private day schools who aren't the super rich living in London.

Personally, I'm in the category of don't have the money myself, but extended family will probably cough up. I just can't understand why anybody working in or using this system would take such delight or spend so much of their time online knocking parents who aren't in such a fortunate position. I'm also aware of a number of schools that have already closed. These are the smaller, idealistic schools that don't have big facilities, but offer excellent pastoral care to children who wouldn't thrive in the large classes in state school or the academic pressure cooker that a lot of private schools are.

Personally I always thought it was fascinating that the discount is not a benefit in kind and taxed as such.

It sort of makes sense for undersubscribed schools in that the marginal cost of teaching another child is small, and the school, as a business, should be free to take the additional revenue even if it's a lot less than their headline rate. Businesses are free to discriminate on price if it maximizes profit. However, an oversubscribed school will be turning away full fee paying students, so they're deliberately reducing profit.

But as we're talking about tax benefits to private schools, how much do you think that's worth?

@MyNameIsFine

I've never, ever said that I didn't understand their struggles, and I've said that there will be some parents forced out.

Repeatedly on here though people have been special pleading for people who are spending 18k plus on private education ( one even claiming people spending over 100k for 3 would have to remove their children).

By the sounds of it places like Claymore, with high numbers of ECHP students, military students refugees and funded places would not end up having to charge much VAT to many of these parents.

However, I will take it with a pinch of salt as what this letter is a big appeal to emotion, when you consider that Clayesmore charges significantly higher than the average fee to it's students who do pay full fees, at 27.5k for day students and 37.8k to boarders. Portraying it as a small charity school that won't cope when it is actually an expensive private school is a bit much.

Birbalsingh, head teacher of Michaela Community School, talks a lot about woke teachers in elite independent schools. So potentially either a parody of that or a real life example.

@user149799568

"But as we're talking about tax benefits to private schools, how much do you think that's worth?"

Well, don't most schools require a member of staff to work for the school for a number of years after their student has left in order to fully recoup their spend?

I think this one is difficult to put a cost on, having low staff turnover and staff who are able to build careers in one school is a huge advantage which has major benefits for the delivery of education, and therefore makes the school a more appealing place. But, there isn't a market price for that.

I'm sorry, perhaps we're at cross purposes here and it's probably not helpful of me to be insulting, but I am just so exasperated by your argument that the more people are spending the more money they have. I just don't understand what you mean. I know people in that position (4 children), and they live in very modest houses. It's very clear that they've made a choice somewhere between squeezing 2 kids into each bedroom and paying for private. You just can't judge how much money people have based on what they're spending.

@MyNameIsFine

The argument isn't that the more money people are spending the more money they have, it is that they are likely to be able to make decisions regarding spending which will allow them to meet the increase.

"I know people in that position (4 children), and they live in very modest houses. It's very clear that they've made a choice somewhere between squeezing 2 kids into each bedroom and paying for private."

See this is an extreme example, if you have someone squeezing 4 kids into a modest house, but paying 72k a year in fees ( and using the joining secondary in PE in year 8 mode) a total of 432k in total, then yes it is sad, but if you keep offering the extreme situations ( and most likely rare) then it isn't a good idea to base policy off that.

Would you have questioned someone who made other choices regarding their consumption, who kept their family in a small house whilst spending 420k elsewhere?

I'm not aware that most schools attach such strings to tuition discounts. At several schools that I'm aware of, there's quite a queue for TA positions among SAHP (nearly all M) because of the discount, and I don't believe that most of them stay beyond their DCs tenure.

I very much agree that there are benefits to the school; that's why they all do it. But it can also be a way to pay a sub-market wage by splitting the tax benefits (no income tax on the tuition break and, soon, no VAT on the tuition break) with the employees. I view this as a form of tax avoidance (not evasion) and wonder how much the Exchequer could raise if it was eliminated.

But this isn't an extreme situation in my school - this is most families!

@MyNameIsFine

Is your school entirely unrepresentative of most in the private education system then?

It seems every one has an exception. The Claysmore was arguing that its just a small charity community school that educates ordinary kids from ordinary families, but the figures don't match.

I've no idea whether it's representative or not. Perhaps part of the equation is that property is extremely expensive around here. I'm not saying anybody should feel sorry for us, just that there might not be the spare cash around that the economists have predicted because they haven't taken all the factors into account. This is why people hate economists 😂

"Perhaps part of the equation is that property is extremely expensive around here."

But you have a family that is living in smaller accommodation whilst spending 432k on Private education.

Are the local schools really that dreadful?

I don’t know The Claysmore personally, but presumably the full fee payers subsidise the rest? So if you penalise the full fee payers they stop going and the rest folds! And if the council is paying for some of those students who genuinely need that environment and the MOD has families there it surely is a problem for society as a whole!

That is why people keep saying that bursaries will go at smaller schools. They do not have the brand and clout to tap into Lord X estate and get cash for their endowment. Which by the way, Lord X is fully incentivised to give to a charity like X public school, because it is inheritance tax exempt. And if you give a certain amount you get a discount on your whole estate.

You are trying to fry the big fish, but this stupid policy does precisely the opposite!

The manifesto has set how the (optimistic) tax receipts from private school tax reform will be spent. They think that £35m is enough to set up 3,000 new nurseries. That’s less than £12k per nursery. How can a nursery be set up with £12k? £175m is going to be spent on mental health support for every school. There are around 25,000 schools. That’s £7,000 per school.

Hehe, the “new expert teachers ” will be ex private school Sixth Formers teaching basic maths to the rest of the class using online resources through their phones.

But that's going off the IFS initial figure which the author admitted was "optimistic" and was before they excerpted DC with EHCPs and took out state boarding schools.
As predicted NONE of it adds up.

They started off saying teachers and now they have added: nurseries, CIAG, language tuition and young future hubs.
Magic money tree springs to mind

"This is why people hate economists"

They only hate economists who disagree with them, quite happy to make authority appeals when they do agree. :)

I don't know all their reasons. Perhaps it's because they work in medicine and need the wrap around care and extra-curriculars. Perhaps it's because highly educated people often value education to a degree that can seem insane to everybody else and will go without almost anything else to pay for it (this is particularly true of immigrant families). It's also the case that 'birds of a feather flock together' - we avoid schools that are attended by the super-rich because that causes problems when your kids friends all disappear in the school holidays to their second home somewhere else. The fact is, almost every parent I speak to had to make a choice between a larger property and school fees. One family chose it because their kid has hearing difficulties. Your attitude that that's 'a business transaction, and they should cough up' is infuriating. Why can't you see that???!!!??? What is wrong with you????!!!!?????

Honestly stop replying to them. It is a waste of your time

I know. I just keep hoping. I'm beginning to wonder if the real issue here is that the really wealthy are absolutely delighted that education will be put out of reach of the aspirational. Fewer of those upstarts who got in on half-fees competing for their jobs.