Whitehall “braced for private schools collapse”

[ICouldBeVioletSky]

Whitehall ‘braced for private schools collapse’ due to fee rises

Worth reading the whole article, it’s not quite as alarmist as the headline suggests. But as you’d expect, gov sources are talking it all down while the ISC is ringing the alarm bell.

https://www.thetimes.com/article/e6465c9e-d462-48cb-a73e-74480059a1f3?shareToken=05bf599cd4a2376fe3ce83cdce607100

I’d be quite surprised if some of the schools near us don't fold tbh. There will definitely be a contraction in the sector, I just hope those that hold on can remain a viable concern.

Prejudice and hubris?

Many of those who criticise the private sector have never set foot in a private school. They find it easier to believe the nonsense and stereotypes spouted by mainstream media and politicians.

It's human nature to use the resources at your disposal to ensure a good outcome for your children.
A competent government would take steps to make society genuinely more equal, by progressive taxation of income and wealth to properly fund public services, rather than playing scapegoats and clobbering all parents with a child in private school, many of whom are on moderate household incomes and stretched to the limit, and were forced into private education by failures of the state system.
The monumental incompetence of the current Labour cabinet was to paint themselves into a corner with pre-election promises which preclude the major changes needed to the tax system.

Even if everyone were in the state sector, there still wouldn’t be equality.

People who believe this are completely blind to the reality of how the world works.

Schools are community resources. How good a school is, is not just to do with how much money is spent on pupils and everything to do with the make up of the local community. Schools can have all the money they like to hire great teachers and build amazing facilities but if you are drawing the majority of your pupils from a community where education isn’t valued, then you’re still going to have the same issues so many schools face today.

We need a wholesale rethink of what state education looks like. Charging VAT on private schools is going to do nothing to provide a good quality of education for everyone in this country. The problems are so much deeper than money. But no one actually wants to make the real changes that need making, because they will involve a lot of hard work, bravery and vision. None of which are qualities for which our MPs are well known!

“Government spend on SEN has been increasing every year and yet the outcomes for SEN children are not. It is about using the budget more wisely, not increasing it. And using it for the children who most need help, not those who can fight best for support.”

@MerryMaker - there are far more children with SEND now and EBSA - Covid as well as premature births etc have all contributed to the rise. Economically, it is very short sighted to not support ALL children with SEND. Those with the highest need won’t be economically active, but those with lower needs will likely be if they get the right help early.
You have a lot of private school parents unburdening the state in so many ways with their SEND children and this policy is therefore sheer lunacy. They are not buying an advantage, they are mostly investing in a future taxpayer on behalf of all of us!

I can’t comment on your area but I know for a fact that in my area no state school compares in the slightest. It’s ignorant to suggest that these unicorn state schools exist everywhere. If that were the case I wouldn’t have paid £££££ in fees for 7 years!

Inequality starts at birth. Those who think preventing a few children from attending private schools will "level the playing field" are delusional. It's always the things out of reach that people want to put a stop to. No one thinks we should stop paid antenatal classes, reading and talking to our babies, paid for preschool groups etc. I grew up in a neglectful household, no amount of money or services would have improved my mother and no one should want to hold other children back to that level.

I am not a tax expert by any means but given they will be VAT registered it does mean that school purchases can be offset. This surely will make some savings for the school .. and maybe these can be passed on in other ways to reduce costs for parents eg clubs meals uniforms. or fees themselves with less VAT incoming due to savings on building works or other larger capex projects

No one is holding children back. This all started because of the absurdity of private schools being charities and getting tax breaks. It proved too difficult to remove charity status from private schools without affecting genuine charities, So vat is being imposed instead to remove tax breaks.
No one cares what you do, just do not expect a tax break for it.

@Araminta1003 we do not know why so many children these days have SEND. We really need to look at how we reduce their numbers.

Yes they will be able to reclaim input VAT. However, that is often minimal as the majority of expenditure is on staff. In addition, any input VAT will be more than offset by the increase in business rates for many schools, plus the new NIC and living wage changes coming in soon. Some schools are facing seven figure bills for business rates alone, and a similar amount for the employee cost increases.

Yes, my school has done major building ritk and clawback VAT on that as a temporary buffer.

Half of private schools aren’t charities. Those that are have to meet Charity Commission criteria, as with any registered charity. What “tax breaks” are you referring to? The imposition of VAT has nothing to do with taxes the schools themselves pay. It’s the parents who have to pay the tax charge.

We are talking about different things, some posters are talking about "leveling the playing field". They aren't concerned about the tax issue but that some children get a leg up. They absolutely do care what others are doing.

On the tax issue I just think that these parents are saving the tax payer by not putting their child through state schools. Maybe each child should get funding for a year, which could be payable to private schools and then parents could pay a top up.

Most private schools are registered charities. They don’t have anyone for the profits to go to. My DS is at a public school with mostly very wealthy parents. In December they gave over £60,000 to local community and one international charity. The sixth formers are actively involved in local community service work with local children, disabled people and the elderly as well as a mental health charity. This school has lots of spare cash used for good. My DD who has additional needs is at a different school where there are now less than 10 kids in one year group. I suspect it will collapse. They don’t have money but let local schools use sports facilities, did concerts in local old people’s home and raised money for local church roof. It’s also a registered charity and over 30% of children there have SEND needs. Your comment about profits show you know very little about the vast majority of independent schools which are integral to local communities.

Not having to pay vat has been a tax break.
Yes I know half of private schools are charities with most doing piddling amounts to claim that. A few private schools take their charitable status more seriously, but most do not and do the bare minimum they can get away with.

They have had to pay VAT though. They have had to pay input VAT which they have, until now, been unable to claim. The introduction of output VAT is a tax on parents, not the schools themselves. This is the problem with the policy. Too many people don’t understand the very basics of how the private sector or the VAT system works.

@PestoPastaChaChaCha Any decent school has pupils raising money for local charities, doing concerts in old people's homes, local community work, etc. I used to work at a state school in an exceptionally deprived area and we did all of that and more. It is not exceptional, it is being part of your local community.

“Not having to pay vat has been a tax break.”

Yes we all know that is the party line lie that has been reiterated as infinitum. But it is a complete lie.
It is the state and tax payer who has been getting the tax break from parents paying for their DCs education themselves. Most have paid out of post at income in full instead of costing the state 6-8k per child per year.
So now the state wants to charge them 11k each per child on average, that is 33k per year that the state will be robbing from someone with 3 DC in private education.

Yes we do. Some smaller ones and some prestigious ones. Also some of the best state schools in the country. We have also had a huge increase in houses and people coming from over seas in recent years. They built more primary schools to take the increased number of children. Now they aren’t needed!

Not having to pay vat has been a tax break

I don't like that phraseology.

It suggests that education ought to be taxable, whereas to date under EU sales tax regime it has been exempt (not just zero rated, actually exempt).

Now, enough of the population voted in this lot, when they were clear that they would be making some forms of education subject to tax, so I don't think there's any doubt about them having a mandate to start taxing education.

I just think it is wrong as a principle.

And do wonder what other currently exempt (and/or zero-rated) items they might want to apply sales tax to next.

Or if they are perhaps thinking of reintroducing a luxury tax (VAT being a general sales tax, across the EU and alongside which no luxury tax was permitted. Now that we're outside EU, there's nothing to stop UK having one again; and attitudes shown around this issue do suggest there could well be a good level of support)

So anyone thinking of sending your DC to private school - on current average figures with VAT that will save the state 14x11k per annum 154k per child and rising (that is for DC without SEND). That is 462k for 3 DC. Do you really want them to just take that from your post tax income?
I really think the VAT changes everything for some people. An extra 3k taken by the state per child when these families are already gifting the state 8k per annum is very greedy. So I suspect there will be behaviour changes. Next August when Sixth Forms have a couple of days to make firm offers post GCSE results may well end up being pandemonium. So let’s hope there are plans in place.

FFS families are not gifting the state anything.
The state provides services for all. Those who do not use them because they home educate, privately educate, or do not have children can make that choice. None of those groups are gifting the state anything. They are simply exercising their choice not to use a state service.

So....by your rules, all parents with children with SEND should fight for better provision in the state sector and not send their children to a school that meets their needs? I mean, it's laudable but let's face it, if one parent is better off than another, it stands to reason the richer child's life will have the therapies and support requires to help manage their condition and hence a better outcome. That's just life. Some people are better off than others.

And what do you suggest SEN parents who have children at private schools do when their LA is paying the fees?

Life is unfair. Inequalities abound. Close the private schools but don't expect it to make a blind bit of difference to all the other children.

Bollocks to the eaten alive comment. You have no idea. Most of us have successfully worked in the state sector - indeed, it is our exam results that make the independents sit up and take notice when we apply. If we can get those results in sink schools, imagibe what we can do in an independent?

Many will return to the state sector if need be.