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”

@strawberrybubblegum

"We don't belong to the state and we should benefit from our own ability and endeavours."

You going to build your own roads? Run your own excise service? Provide comprehensive healthcare and education for your employees and their families? Private fire, police? Court system for rule of law?

The state facilitates your endeavours massively and the more you earn, the more you are reliant on the state to support your earning potential.

I think they will indeed come for pensions next. They haven't mentioned that in their manifesto.

Definitely still need to save for our old age, but keep an eye out about what's happening and do some long term planning accordingly!

But pensions are long term planning. If they come for that, what long term planning have I got left?

“£100k on school fees is a choice based on an income level that means people have other options.”

No, that is incorrect. Many people do not have “other options” when it comes to the emotional stability of their family and DC after an already traumatic pandemic experience and cost of living crisis.

People like me are angry for many reasons:
a) Brexit - I still cannot really get over that self harm and the fact Labour have specifically pledged not to take us back in. Bigoted small mind thinking that our nation has displayed. Clearly they are just hankering after the votes of the bigots who took us there in the first place.

b) the pandemic - when I worked 14 hour days trying to restructure small businesses and help them and their families out late into the nights, but was told I am not a key worker and my DCs are not welcome in school! And the constant “holier than though” and divisive type of thinking that has continued around the NHS and all sorts since then.
When I know that we are contributing massively to this country not just financially but have 4 healthy and educated children, which by the way a lot of it was DIY on our part, not the state’s. One of us had a horrific accident during the pandemic and was massively let down by the NHS and had PTSD. That is not the first time we have been let down by the NHS. Sorry if I do not have much faith left in the NHS in its current form. I live in a place in London surrounded by doctors as neighbours. Guess who thought the pandemic clapping was ridiculous? They did, when they were overworked and traumatised by watching people die in a horrific way and having to be moved onto Covid wards. The NHS is on its knees because people working during the pandemic are burnt out with post traumatic stress type symptoms and instead of it getting easier, post pandemic back log has made things even worse. The same goes for teachers - no teacher signed up to having to invent and mark A levels or GCSEs themselves or have to worry about some of their pupils being abused and not fed - the burn out many of my friends have is real and not acknowledged.

Just carry on folks, as if nothing happened.

c) Lies in the manifesto which was meant to make us hopeful. Taxing and displacing school children and stressing out working families, again. Some pie in the sky energy concept that will likely lead to short term energy security issues, because I don’t trust them anymore to actually implement this kind of thing in a way that works for businesses.

How many doctors, dentists, lawyers, teachers, military and diplomatic services etc etcare there in the 3600000 families sending their DC to private school.
I am far far more interested in this than the exact income bracket they are in. It is a far more relevant question to us as a society! Why did the IFS not focus on that?

Therefore, pardon me if I do not believe any of these plans will lead to “growth” and hope but will lead to the exact opposite and us being taxed more and our kids being forced to take on even more debt to even go to uni.

"I think they will indeed come for pensions next. They haven't mentioned that in their manifesto."

This is just scaremongering now.

I do think they'll come for inheritance tax next, and also change the laws on social care funding if you have assets.

That was meant to say 360,000 odd private school families. What professions are they in? That is the relevant question to me.

I choose to be a citizen of this country and contribute my taxes in return for state services. I don't belong to the state.

I have another nationality, and have options about where to live. I certainly won't move until DD finishes school, but might work there for a bit after DD finishes school. Sunshine and relaxed living would be nice! But more significantly, my DD also has that nationality and can make a different choice right at the start of her career.

My (state educated) nephew is spending a year out after school in one of the several other countries he's entitled to live and work in. I'm gutted that he may settle far away, but it's his choice. (and free university education there might play into it)

A lot of people have choices about where to live. You live in London and work in a private school: you must see how many families have at least one parent from a different country even if you don't notice that the child who seems fully British has another nationality through a grandparent. I've just counted up and 20% of DD's class have EU nationality (as well as British), 30% have a non-EU nationality, and an additional 20% that I know of have parents who have worked abroad. It's a mobile demographic.

Even without a different nationality, educated and successful people have options. Too late for me, but several of my friends moved to Australia or Canada in their 20s.

As I said, the economic health of a country is created over decades not years. If you create a hostile environment, people my age might stay (or might not!) but young people are more likely to make different choices. To the UK's long-term detriment.

Thank you both for your service, @WaftherAngelsthroughtheskies

"No, that is incorrect. Many people do not have “other options” when it comes to the emotional stability of their family and DC after an already traumatic pandemic experience and cost of living crisis."

100k per year gives you far many more options than families who have this and do not have this level of money to spend.

"People like me are angry for many reasons:

a) Brexit - I still cannot really get over that self harm and the fact Labour have specifically pledged not to take us back in. Bigoted small mind thinking that our nation has displayed. Clearly they are just hankering after the votes of the bigots who took us there in the first place."

Labour will not win seats if they promise to take us back in, it will be a re-run of the last election. Brexit is awful, but it is almost entirely a Tory project ( campaigned for by them, petitioned through Tory MPs in Parliament, campaign led by them, deal agreed by them).

It is not within Labour's power to "take us back in" either. The EU would have to agree, and although it would likely welcome us back there would have to be significant negotiation over it.

2."the pandemic - when I worked 14 hour days trying to restructure small businesses and help them and their families out late into the nights, but was told I am not a key worker and my DCs are not welcome in school! And the constant “holier than though” and divisive type of thinking that has continued around the NHS and all sorts since then."

Gosh I'm sorry, did school's struggling to provide both online and in person classes with massively limited resources not simply jump to your tune during an unpresented world wide crisis? I think the "holier than thou" stuff might just be your perception, Junior Doctors are striking, again, because, again, their pay discussions have failed. They certainly aren't be treated like that.

"I am far far more interested in this than the exact income bracket they are in"

Using the data, the top 10% of households, but with far more in the top 5%. The proportion of children who are educated privately outside of this is close to 0 in every other income decile.

@strawberrybubblegum

"I choose to be a citizen of this country and contribute my taxes in return for state services. I don't belong to the state." No one said you did, and the imposition of VAT on private school fees doesn't mean you do either ( do you feel the same about VAT on chocolate biscuits?)

A lot of people do have choices about where to live, but are the same economic and cultural opportunities available? This is what I mean when I say people vastly over estimate their geographic mobility of labour. In certain social groups there are going to be some that are way more mobile than others, but it doesn't apply to everyone, or even a majority.

"As I said, the economic health of a country is created over decades not years. If you create a hostile environment, people my age might stay (or might not!) but young people are more likely to make different choices"

I hardly think this is creating a hostile environment. The things that drive long run growth are the health and skills of the workforce, the infrastructure of the country, the business environment/encouragement for enterprise and the availability of natural resources ( as a major oversimplification).

The Tories have significantly damaged all of these, how do you propose Labour bring it back. We already know Tufton Street's favoured approaches won't work. Isn't it time for a bit of Keynes?

So here is a list of the people who should definitely not have to pay VAT on school fees:

• all military and diplomatic personell
• all people working for the NHS in a clinical capacity?
• all school teachers, state & private
• the parents of all children with SEN, EHCP or not - that will just cause a backlog
• all people working in the public justice system
• all dentists

Anyone care to add any other key worker professions?

Not sure about “politicians” themselves and those working in the Council. What do others think?

I get that lots of you are upset but I want you all to remember only 7 percent of kids go to private schools. Overall this policy does not impact that many people. Most people no matter how hard they try cannot send their kids to private schools.

The average salaries is £35,000. Lots of people come from families who have been unable to help them buy a house so have had to save until later life to buy a house with big mortgage payments or they still rent. They might also have struggled through the pandemic, hated Brexit and all the other factors mentioned above in at least one post. But they probably feel little sympathy for the plight of private school families because they are already in your worse case scenario of sending their kids to a state school.

State school parents love and care about their kids as much as you do. They work hard too. They wish they could go to better schools but often have no other choices. Maybe their child has has special needs their school does not meet they still have no choice but to send their child there.

I get you are worried about your kids having to change school but kids do that all the time in state schools too but as a parent of a child in a private school it was your choice to send them somewhere where prices might go up knowing that you might not be able to afford it and would have to change schools. It was a risk you took in order to give your kids the best chance you could because let’s face it despite all the posts here saying how we should be grateful you are saving us so much money you are not sending your kids to a private school as a favour to us all you are doing it because you know they will get a better education and have better life chances in a private school. They are much more likely to go on to university and have a professional job earning enough to be able to send their own kids to a private school because of the money you spent on their education.

My apologies, I forgot to add “all persons working in the arts and making a significant cultural contribution to the country”.

State school parents love and care about their kids as much as you do. They work hard too. They wish they could go to better schools but often have no other choices.

Many families do have a choice to use private school if they wanted to though. There are 1.6m stay at home parents. Given that there are only around 550k children in private schools, we can assume that a least a million more are choosing to stay at home but use the state sector. If those parents went to work (assuming they are able), they could choose private school.

Not a hostile environment??

When a policy is being brought in to deliberately harm my DD because it's 'unfair' that she gets a good education - even though no one will benefit?

And you said yourself :

I do think they'll come for inheritance tax next, and also change the laws on social care funding if you have assets.

That's looking pretty hostile!

And I think you're dreaming if you think that a pension raid is scare-mongering. They'll probably keep the triple lock, but will tax anyone who has actually saved up a private pension one way or another.

The other country I have nationality for has great healthcare (I've seen it in action because my parents live there). I'll need to work there for a bit to have access to it if I choose to retire there, so that's some of the long term planning I'm now doing. I won't be alone.

No @Mepop - just no. You should not support this policy. It is an attack on our professional middle classes and we are all going to be paying for it. Just like Brexit. And if you cannot see that, you need to go and get yourself educated properly and go and actually go into lots of private schools in the regions and figure out who these people are and what professions they work in.

I have not seen one Labour MP go and visit these private schools in the regions. The cowards!!! That is all I have to say on the matter.

That's because they've told the schools that 'they don't have to pass on the whole VAT cost to the parents'. In other words, they expect teachers in the private sector to accept job losses, pension and pay cuts to fund their tax.

"When a policy is being brought in to deliberately harm my DD because it's 'unfair' that she gets a good education - even though no one will benefit?"

You are assuming that no one will benefit, and no one has said that it is unfair that your daughter receive a good education, just that this is a choice that you have made that should incur VAT.

I don't think changing inheritance tax laws or rules on self funding social care are hostile. I think its eminently sensible when so few estates are impacted by inheritance tax anyway. The social care is just necessity, these bills are going to be enormous when the baby boomers start needing it ( don't get me started on generational wealth issues). How should that be funded, should current tax payers pay for it all? So we'll need to raise taxes then, but we can't raise it on the highest earners, because there will be thread after thread here and as they keep telling us, they'll leave the country, take on fewer hours so they pay less tax etc etc.

What do we do?

@MyNameIsFine - not passing the VAT cost on? That would be illegal. A school would have no choice but to add VAT to the school fees. Otherwise HMRC will come after them in 3 months.

We have significant shortage professions in our public services that they have specifically acknowledged. NHS/dentristry/teaching/construction etc. We have significant mental health issues in our young including some kids in the private sector. We have a SEN crisis.
They absolutely must exempt all of these parents and children.

By all means tax what is left: the bankers, City lawyers, trustafarians, CEOs. That’s it. You can only tax that lot. Not the rest or it is completely unworkable.

Now obviously if you do just that, the numbers won’t add up. But you simply cannot do it any other way. Or it will harm the country.

I am not expecting my own children to be able to afford a mortgage, never mind private school. The kind of job they would have to do and how hard they would have to work to be able to afford it after tax - I would tell them, no, it's not worth it. Get a lower paid job, pay less tax, spend more time with your own children is what I'm going to tell them.

Banking, and legal and financial services were classed as critical workers in covid so we should probably exclude them as well.

Or tell them to leave the country and work somewhere where hard work and aspiration are applauded…

I think what they mean by 'not passing it on', is make cuts and lower the base fees so that the overall fee (including the 20%) isn't as high as 20% more. They're selling this to the public as 'if the private sector managed their finances better, the parents wouldn't be paying such high fees'.

They will come for every penny of savings or investments - IHT, CGT, pensions and will make everything means tested. The numbers in the right column of manifesto won't even make a scratch, it's just not enough to make any difference at all.

They won't tax businesses more or super wealth which is highly mobile, so what's left is a group of working people who happen to be working in high earning jobs.

So if you saved anything for your old age and children it's fair game for Labour.

I won't bet on Starmer staying till the end on next parliament, they can replace him with Rayner and then hello USSR.

Would be interesting to resurrect this thread in 2029 and compare notes