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”

Most of London 😕

The policy wasn’t intended to fund breakfast. The funds have already been allocated to new teachers and mental health support. This might be something else which Thornberry has got wrong. Their own pledge says that breakfast is going to be paid for with money raised from non dom changes. So which is it? It’s fairly basic stuff which senior Labour Party figures should be able to answer so close to the election.

Yes, let’s encourage people to further eschew their personal responsibilities and rely more and more on the state.

maybe the parents who aren’t feeding their children should have them taken away, so that they can actually be looked after 7 days a week.

An emotional thread on an emotive subject. But unless I've missed something, noone seems to have addressed the actual point -

Private schools shouldn't have charitable status because they're not charities. With the exception of a few minor fringe activities here and there, they don't actually function as charities.

Stepping back from whether the policy happens to work for your personal circumstances or ideology, how is this controversial?

" most of London"

Having lived and worked in London, in private schools and state schools for decades, I can say this is utter horseshit.

What I do know is that I've heard private school parents talk of outstanding and good IOFSTED rated London schools that have excellent student outcomes, as if they were sink holes.

London schools outperform the rest of the country even for PP students. 😣

Try again.

The policy is muddled because it’s only there to incite hatred and win votes.

Even if this results in lower than expected tax takes and I certainly do not think it will improve the state sector in any meaningful way, it will still cause a lot less damage than what the Tories have foisted on us over the last 14 years without any understanding of the consequences or, in some cases, with intent.

@SchoolQuestionnaire in my experience school policies are never thought through carefully. Everyone who devises school policies think they know how school works based on the fact they went to school! School policies very rarely work well as they are never discussed with school leaders first

The Lib Dems seem to be addressing this - they seem to say that schools will have to earn their charitable status and prove how they are being charitable - so many do nothing or the bare minimum, riding off the coat tails of the few that take it seriously. Guessing this would be available for public to see.

School accounts are already available to the public. Charity Commission is there to oversee the work of charities

I think the concept of charity status on private schools sits badly with the public - they are not charities and therefore that does need to change. However, the fact that school fees will rise and the impact is not as clear cut as it will be the lower income groups of those who can afford to send their children to private school who will pull them out. We are also likely to to see many of the smaller private schools close. How the money is a different matter - its not likely to be wholly ring fenced as over a number of years it will be used for a whole range of things as it will go into one big pot

Clearly they aren't doing their job then are they. Our local private does exactly zero.

I’d agree. I think that children should be removed from neglectful homes far sooner than they are. But not all of these parents are neglectful. Some are overwhelmed, or have mental health issues or are struggling with the cost of living and support would be more appropriate than intervention. Plus there is no denying that removing the children would cost the state far more than a packet of Weetabix and a pint of milk (which may have something to do with the fact it is left as an absolute last resort even in cases where the children aren’t adequately nourished).

Do you also feel incredulous at paying for the police when you haven't been burgled or attacked, the fire brigade when your house hasn't been on fire or the M62 if you never drive along it?

The furore over the latest school to close was hilarious. The Telegraph wrote it as breaking news but a quick google showed it was announced a few months previously, before a general election had been called, and it had 106 pupils despite having greater capacity. I think some smaller schools will hang on to this as a great excuse for closing when in reality it is falling rolls as better schools scoop their pupils.

We can agree on that at least. It beggars belief that governments have a plethora of highly-specific ‘industry insider’ knowledge to call upon and they don’t bloody bother.

That is the point. Half of schools don’t have charitable status. The VAT position has absolutely nothing to do with charitable status anyway. Those without charitable status don’t have to charge VAT because of the exemption in the VAT legislation.

No, but I’d feel incredulous at being penalised through the tax system for NOT using those things. The VAT policy is penalising parents for choosing not to use the state system funded by taxpayers.

@Another76543 Independent Schools Council (ISC) stated this year that 70 per cent (978 out of 1,395) of its members had charitable status. Government says half. So clearly this isn't being well regulated if they can't agree.

@Oakandashsplash do they offer bursaries?

The discrepancy in the figures is because not all private schools are members of the ISC.

@Another76543 Ah ok that makes sense thanks for clarifying.
Wondering what your thoughts are on the Lib Dem manifesto regarding education.

I don't think that private schools should be allowed to maintain charitable status unless they can prove a significant amount of charitable activity that (at a minimum) is equivalent in value to their VAT savings. This could include offering a substantial number of full scholarships to disadvantaged pupils (and actively recruiting those pupils), allowing state schools to use their grounds and facilities, participating in outreach programmes that help to narrow the gap between state and private schools, etc. A few private schools already do these things, but many don't, (or make a minimal effort). It isn't justifiable for VAT savings to solely benefit (paying) private school pupils, who by definition, are already privileged.

I think they should leave the VAT exemption intact and instead remove the charitable status from those private schools that have it - plus all the associated tax breaks.

This would mean that private schools would pay full business rates, appropriate tax on their income/profits, CGT, stamp duty and lose the ability to claim gift aid (and also removes the ability for higher rate and additional rate tax payers to claim the difference between their rate of tax and whatever GA the school has claimed)

I’ve only had a chance to skim read it but, on the face of it, the thinking behind their aims and ambitions look good. I would question where all the extra funding is coming from though.

I know that several leading Lib Dem figures have said they oppose VAT on school fees. I just hope they stick to that in the event that they go into coalition with the Labour Party.