Whitehall “braced for private schools collapse” 2

[ICouldBeVioletSky]

Starting a second thread as the first one is still very busy, albeit it's veered off in a few directions...

Original article

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

In London, we also regularly get a cold MacDonalds packed lunch! So not all sushi here.

Oh that has made me feel really sad Araminta1003. What a shitty lunch in every respect.

Sadly quite common @Shambles123 - I am not anti McDonald’s per se and have been with my DC, but would never ever use it as a packed lunch option for a school trip/every day lunch, as some do seem to do.
However, it is not even the worst packed lunch I have seen. The worst have been lunches from chaotic families, where clearly the child has had to scrape together whatever they could find in a cupboard at home, being things like sweets, dry biscuits, and even just dry cereal. It is not always about lack of money either, sometimes just busy lives/poor parental mental health etc, that is why FSM are a must, even if they are not always perfect.

Agree with @Araminta1003 We aren't london but local Tescos defo have sushi. (A city) But kids bringing left over McD or chips etc defo goes on too. Our large state primary regularly had some dc brining family size bags of crisps in as lunch. Or even haribo. One child had tube of Pringles each day for packed lunch.
( I'm ex gov) FSM are great but plenty don't qualify

School fees ie VAT pushing up inflation

If only someone could have predicted this.......

As the media are reporting today "The sharp increase will add to pressure on policymakers at the Bank of England to reconsider further interest rate cuts in their bid to keep inflation around their 2% target rate."

I wonder how many supporters of this policy will also be happy to see their monthly mortgage payments affected. This is just the start. The effect of NIC/living wage increases won't be factored into that inflation figure yet.

Unfortunately, too many people can't see that policies such as taxing school fees will have a knock on, negative, effect on the whole economy. They just see the headline "more money for state education" (which won't happen anyway).

The ONS also pointed out that the effect of VAT on inflation is a one off.

Maybe, maybe not but everyone is now paying for the policy. Even those who thought it didn't affect them.

100s of teachers are facing redundancy from independent schools. So far 18 have announced closures since January which is 3 x the average number, and there are a lot more to come. Which is exactly what we predicted but were repeatedly shot down on.
The majority won't go into state schools so that's going to impact income tax receipt + their own spending habits. Parents with kids in Indy schools who are at the lower end of income spectrum will adjust their spending habits long term (thats what we are having to do) so it really just isn't a short term thing. More people spending less money has an impact.

Well it’s clearly a one off price increase, so there’s no ‘maybe, maybe not’.

A one off price increase? Er no, schools are trying to mitigate this year so, in some cases, aren't passing on full 20%. That's not sustainable so next year onwards expect to see the majority passing on full 20% which is a second hike

^This. DD’s school is doing 13.5% this year increasing to the full 20% next year.

Schools haven't yet factored in the increase in NI contributions or the business rates increase.

Plus many have not applied the full 20% yet.

Then there will be bigger changes in September when schools see if there are fewer new starters and more leavers and potentially have to adjust fees higher to pay for fixed costs.

Indeed. Plus many people will be muddling through this year, but will be pressuring employers for pay rises to compensate going forward which in turn will feed inflation? In professional jobs employers will have no choice but to increase wages or these people will move companies (and even go abroad) and it tends to be cheaper to increase wages than take on board the recruitment costs (and joining bonuses) involved in replacing high level employees, so they will then put up prices for services/goods accordingly. Not always, but in the current market I think this is a distinct risk.

Teachers leaving the private sector will expect to join the state sector at the top/higher end of the grade bands for remuneration purposes (and state schools that are desperate for staff may have no choice but to pay) or they will change careers completely leaving schools using supply staff at additional costs, so I would anticipate a knock on effect in wages in the state sector (and the corresponding increase in NI payments). It’s not just the fees, but the knock-on effect of these changes that will ripple through for the next 2-3 years.

My response was to the PP claiming that the addition of VAT to school fees would be the cause of mortgage rate increases (I wonder how many supporters of this policy will also be happy to see their monthly mortgage payments affected) when the ONS has stated that the addition of VAT on fees is a one off impact for January 2025 (rising by 13%). You can listen to the interview yourselves, if you're interested - it was yesterday's R4 Today programme.

I rather think the vast majority of people in the UK will be more concerned about increasing food prices, utility costs and council tax charges plus wage rises pushing up service prices over the coming months.

I never said it would increase mortgage payments. I said we are all now paying for the policy via inflation rise.
You realise we pay all those things to: "increasing food prices, utility costs and council tax charges plus wage rises pushing up service prices over the coming months"? So anything that pushes inflation + rises up affects us all?
Hence my comment.
The people who support VAT usually do so because "it doesn't affect me". Well now it does affect them.

“I rather think the vast majority of people in the UK will be more concerned about increasing food prices, utility costs and council tax charges plus wage rises pushing up service prices over the coming months.”

This will include private school parents and they also have to pay more in school fees? Leaving them with less positive sentiment and far less likely to spend in the economy. So less likely to stimulate economic growth and support local businesses? Dampening spending via excessive taxation is never good. This kind of ideological but expensive policy could only have ever worked in a growing economy with positive outlook and people knowing they will get higher salaries without much effort.

But if the BoE puts up interest rates as a result, then they will be affected, no?

Yeah, you did, that was exactly your implication.

ETA: this is response to twisty.

Maybe you should listen to that interview - you paying VAT on school fees has less effect than increased food prices and higher air fares on this month's inflation figures.

And the BoE most likely isn't considering increasing the interest rate - just not reducing it as quickly.

“The introduction of VAT on private school fees has reportedly added further financial strain, prompting over a third of HNWIs with children in private education to consider changes to their schooling arrangements. The survey also suggests that tax changes are the primary reason that around 66% of HNWIs who voted Labour in 2024 now regret that decision.”

https://www.saltus.co.uk/wealth-index/reports/saltus-wealth-index-february-2025

Low confidence, worse than after Truss. Really not good!
These kind of socialist tax policies are an incredibly bad idea long term. It’s symbolic to show they are left and so it puts rich people off investing in the country and staying here.
Only Greece was dumb enough to do this, not too late to backtrack, the longer this continues, the worse the outcome will likely be.

That’s absolutely not been my experience- 30 years mostly in Independent schools. My current school has fantastic teachers and offers a great, rounded education and gets excellent results.

Yes — in my experience as a school governor in both sectors, the current OFSTED regime since 2020 has been downgraded so much that it compares very unfavourably with ISI. Most OFSTEDs now are 2 days of a tiny overstretched team plus a report of around 5-7 pages or less. Not remotely like the old OFSTED inspections. ISI are much more comprehensive than OFSTED these days.

No I never said any reference to mortgages! You have put those words into my mouth.

Apologies twisty - I quoted the wrong poster. It was Another76543.

This September it will be the NI and minimum wage increases and loss of business rates relief. So will be another big jump in fees.