VAT on school fees - High Court Challenge.

[EverythingAllatOnceAllTheTime]

Labour’s plan to impose VAT on private school fees in January faces a High Court legal challenge over claims it breaches human rights law.

Lawyers have written to HM Treasury arguing the policy discriminates against special needs children and has threatened court action if it is not dropped.

Showtime…

@CurlewKate

• Would schools benefit from more funding? Most likely.
• Would it make a big difference without reforming, curriculum, teacher contracts, school time tables? Not so much
• Is this an efficient way to spend parliaments time or raise tax? Not at all.

Why not focus on enhancing education and women's employment opportunities. With better school provision,

1. more women would be in work and more financially independent
2. Children from all backgrounds would get a better broader education
3. By raising womens earnings and hours to that of men's it adds £250bn to GDP and @38% total tax take £95bn in additional tax.

If at the same time you reform employment terms for public sector to that of the average for the private sector then this would reduce the national debt/costs by around £30-70bn ( depending on how future and past pensions were paid for, I would suggest that we invested this to cover the current £3trn existing liability)

Even with just £100bn extra in the treasury coffees this is a whole lot of extra public services.

Addressing the north-south divide requires a series of potentially quite unpopular measures. As I mentioned reforming housing taxation/CGT/ sdlt. Would go someway towards this would assist in capturing gains which emanated from government investment in infrastructure.

Labour are rearranging deckchairs on the Titanic.

That is a wonderful ideology, but that ‘excellent education’ isn’t available in a lot of cities, so how does that work?

The more conflated they make the word salad they write the more holes there are in the tax legislature and greater the unintended consequences.

I have found some loopholes already and it's not my specialist area. For the more expensive schools then there is so much money on the table over a child's educational career with the school it is well worth the effort/costs to do this.

In the words of Lord Robert Winston (a Labour Peer), in the Lords debate last week :

”As for the idea that somehow levelling down by taking money from the private schools is going to make a difference, it cannot possibly. The sort of money that is involved is trivial compared with what is needed. Unfortunately, my Government, which I absolutely support, have to recognise that we need to think of much more sensitive ways of dealing with what is in fact needed.”

The Director of the IFS has said similar. The money raised (if any) is tiny in the overall scheme of things.

The Adam Smith Institute has warned of the pitfalls. It is very possible that this policy could lead to a net loss.

https://www.adamsmith.org/news/applying-vat-to-independent-school-fees-could-cost-as-much-as-16-billion?format=amp

Why is the government wilfully ignoring these warnings?

Some of the more expensive schools (the ones where the VAT take will be largest) had to close their pre payment schemes over the summer because they were overwhelmed with parents and grandparents trying to pre-pay to avoid the VAT. As many of us have warned, it’s the smaller schools with lower fees and less wealthy parents who will suffer the most from this policy.

Incidentally, if any of you were in doubt that this government is in hock to the unions, watch Starmer u-turn on the WFA cuts shortly, under pressure from Unite and others.

Oh the irony.

The unions are also warning about VAT on school fees

. neu.org.uk/advice/member-groups/independent-sector/vat-independent-school-fees

And the complete irony is that, in my area, excellent is really only available in the grammar school. We're lucky our DDs are v academic so will hopefully go to the grammar and we won't have to pay - but we have friends who are much less well off than us who are facing a difficult choice. Why should I get it for free because I have bright kids but someone, who is less wealthy, have to pay tax (on top of their hefty fees) to fund that excellent education they can't use?

So, you are wrong about the IFS. They said:

‘Labour’s proposals to remove tax exemptions are likely to raise an extra £1.3–1.5 billion after allowing for exemptions, deductions and extra school spending to cater for any pupils moving to the state sector. The evidence suggests higher fees are likely to have a weak effect on demand.

‘As it is, we expect that the change in private school attendance levels will be small. This leads to surer increases in tax revenues and less need for additional public spending on state schools. If the main aim of removing tax exemptions from private schools is to raise revenue, then this is likely to be achievable.’

The Adam Smith Institute is a shadily funded pro-private sector lobbying group, and it's not a big surprise they are against it. They are entirely wrong in their scare mongering.

Lord Winston is a private school advocate, and spends a lot of his time visiting them.It's hardly suprising he's against it.

That’s beautiful, thanks.

Nah.

Its because it was a populist electioneering measure without merit or substance.

Labour are now being found out, tested and challenged.

WFA too.

Enjoy!

“Why is the government wilfully ignoring these warnings?“

@Another76543 - there is no proportionality without an economic case. Therefore, they are pretending there is an economic case to do it.
Just like Boris Johnson pretended leaving the EU would lead to 350 million for the NHS.

Another own goal from the LP. Coming in thick and fast soon enough. You’d think they might have sorted out more effective and efficient policies, given they had so long to prepare. Instead they’re so much worse than anyone could have imagined.

It feels like we’ve got Y7 children running the country.

For sure: for wealthier parents and schools there are lots of work arounds. Some of the worst for tax receipts would move teachers salaries off shore by creating secondments from foreign branches on a rotational basis. Put property holdings in tax havens, use tax deductable loyalty schemes for payments through a Irish-Dutch sandwich.

Have the UK branch of the school licence the IP for teaching from a tax haven registered SPV creating tax deductable losses. Move the trade marks for those schools into similar entities.

Im sure with another hour or so I can probably formulate a few more ideas to suck another £250m in tax receipts out of HMRC.

Like someone pointed out, there are alot of professional parents in these schools.

As a side note ds goes to a state school and I found an extra 25% funding for the school to add more wraparound care and expand the curriculum.... It got filled under to hard/ medalling parent box. So even if you give state schools the money they lack the skills to properly spend it if it rubs up against there own employment contracts.

Please see this video from Paul Johnson, Director of the IFS:

Yes, the IFS estimates roughly 1.5 billion from this (many will argue they are being optimistic). Yet, they also say:

"Now, 1.5 billion isn't NOTHING. But in the context of the overall national budget, in the context of how much we raise from taxes in general, which is more like a trillion, this is a tiny, tiny amount of money. So you might want to do this for reasons of social justice or equity, or because you think it's appropriate to charge VAT on private school fees, but don't be fooled into thinking this is going to make any real difference to the amount of money available for public services."

Well, Starmer did say he was happy to be unpopular.

On that metric, I would say he excels.

The Labour Party, being a civil service Cabinet, are completely out of their depth. Social media has utterly changed the political game and they are not up to date and need new advisers.
The population is impatient and cynical and news travels lightning fast.

The old tricks of blaming the Tories for everything just do not work anymore. Time to grow up and raise confidence in the country. We really are not doing that badly compared to everyone else.

As @soundslikeDaffodil In terms of an indivduals budget it's the equivalent to you deciding not to go the the pub for lunch with a friend. £32 for an average earner.

I’m assuming you missed the recorded interview where the Director of the IFS referred to it as a tiny, tiny amount of money.

”in the context of how much we raise from taxes in general, which is more like a trillion, this is a tiny, tiny amount of money.” He also said “But don't be fooled into thinking this is going to make any real difference to the amount of money available for public services.”

The IFS predicted that only 3-7% of pupils would leave the private sector. 3% left last year alone, so that assumption is already on shaky ground.

Lord Winston is a private school advocate, and spends a lot of his time visiting them.It's hardly suprising he's against it.

He visits private schools as part of an outreach programme where private schools work closely with the state sector.

Robert Winston in House of Lords debate :

“What we are doing with the outreach at Imperial is using the private schools. To take one example, Peterborough is a pretty poor area. Lots of state schools there are not doing very well. We focused on Oundle, which is in the centre up there. Oundle has been amazing. I have visited Oundle maybe seven times in the last 10 years, maybe more. Other members of the college have gone there too. They have connected with the state sector and made a huge difference to the state schools in that collaboration. Those sorts of collaborations are what we should have done in the health service under Tony Blair’s Government, bringing the private sector into the health service, but he felt that the party would never stand for it. We now have another opportunity with education; we have to consider how we can manage that. The attitude of damning the private sector, with all the objections that we have heard—and I agree with them completely; they are really serious—needs to change.”

Lord Winston is not a “private school advocate”. He is an extremely well educated and intelligent man who can see the benefits that the sector can bring.

That is an insightful point.. Too true.

What I think is worse is almost blanket bans you’re seeing for routes to universities, job and internships for private school kids.

So many 18/22 year olds I know:

• did not get uni offers despite gaining or exceeding the required course grades, in one case I know got NO UK offers at all despite 4 A* and dozens of awards from inside and outside school (has gone to MIT on scholarship)
• cannot get internships anywhere
• are finding it impossible to get through assessment centres for jobs
• in most cases are being told it’s because they’re from private schools, and in a some cases also been told its because they’re white and / or male (or have been told that the organisation is only recruiting eg from ethnic minority groups, only female etc) even when those groups are over represented in an organisation already

The idea that they want private school parents to pay more tax AND block kids from accessing what should be a meritocratic system just shows it’s all about envy and division. No one talks about the fact that TWENTY percent of sixth form students are at private schools, not seven. They grasp on to the 7% as it is most convenient.

In other countries, parents receive a REBATE from govt for sending kids privately. Here, they get shut out and most will end up moving permanently overseas where there are opportunities based on actual merit as opposed to politics.

Terrific post.

No, they are not warning against VAT on fees. That's not what the article says.

The IFS are not against it. They are suggesting education needs more funding.

Lord Winston is a well educated and intelligent man who is a private sector eduction advocate. Private school "help" to fulfil their basic charitable requirements are just crumbs on the table.

They are warning about the potential impact on private school staff.