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

@SabrinaThwaite

I said

"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. "

Any decision not to reduce interest rates as quickly does affect borrowing costs and, therefore, mortgage payments.

Business news reports are saying the BoE isn't concerned about fluctuations due to the school fees VAT as it was factored in, and that it won't influence decisions on interest rates (the Guardian reported that it added 0.08% to the change in the headline rate). In comparison, airfares and automotive fuel prices in January contributed much more significantly, as did increasing food prices.

If the BoE slows down rate cuts (and there are still two rate cuts forecast for 2025), it won't be due to VAT on school fees when other factors have much more significant effects.

@SabrinaThwaite

There will be a combination of factors which have an effect. Business rate changes, NIC and living wages changes will have an impact. Individually, decisions might not have a huge effect on inflation, but those decisions when looked at together may well have.

Yes, that’s what I said - as in, it’s a multitude of factors that have contributed to the inflation rate increase, but VAT on school fees is negligible compared to others and was factored in.

Exactly.

It's not just the increased inflation and delayed interest rate cuts that will affect people out of scope for this tax though. It's the newly unaffordable catchments of good state schools, the unavailability of grammar places for children whose parents can't afford tutoring, and the swamped SEND provision in state schools when children arrive whose parents previously met their needs by self-funding in the independent sector. It's local communities depleted when their independent schools go out of business. It's rural communities that can no longer attract a GP because local state options are poor but private school is no longer affordable. It's the public finances when parents previously stretching to afford fees give up the struggle and drop second jobs and overtime. And as we've seen on another thread, it's hard pressed local authorities now having to fund taxis out of area because they are unable to offer school places to children moving from private to state.
If this is anything other than ideologically driven, I wonder at what point the damage will be acknowledged and policy reversed?

And equally indeed, how soon and by what criteria those of us convinced it's a danaging and self-defeating policy would have to acknowledge we were mistaken and the public benefits outweigh our private pains.

Wow. We should have opportunities and choice. Not envy.

Yet another prep school closure
https://www.bbc.co.uk/news/articles/cn9vdyvg70vo

Locally, we are expecting two prep schools (out of about half a dozen) within a few miles of us to announce their closure by the end of the year. This follows one closure already announced.

The crunch point will be April, when parents of prospective reception and Y7 pupils will have received their state school offers, and bursars and heads will have received acceptances and notices of withdrawals for September, and will know whether they are viable.
If our local picture is replicated nationally, there will be dozens of school closures (mainly preps) announced in April, effective by July.

I think we need a 5 years timeframe: long enough that most people have actively chosen school with VAT rather than stayed trapped. This reflects the long term viability of the policy.

At that point, consider how many children are in private school rather than state school. Eg I'd expect it to remain stable at 7%, as it has for years. If the proportion in private school has dropped from 7% to 6.3%, that means 10% have switched. Which is the tipping point at which the policy costs taxpayers money instead of raising it.

IF in 5 years time

• 6.8% of children are still being educated at their parents expense instead of paid for out of taxes, to match the government estimate of 3% migration
• And there are significantly more teachers in state schools than there are now (won't hold them to 6500, but at least 4000)
• And at least 75% of state schools have free breakfast clubs

THEN I will very happily admit that I was mistaken, Labour are geniuses, and all is right with the world.

IF on the other hand, private school numbers have dropped by 10% and only 6.3% of children are still educated at their parents expense - with the state picking up the education costs for the extra 0.7%...

...or if it's a slightly smaller fall but with more expensive SEN included (say 6.5% still educated privately, but only 18 % of private students now having SEN, indicating double the migration rate for students with SEN)

Then I will laugh bitterly, and continue to say that Labour are idiots and so are the people who have increased their own tax costs - and reduced what the government can provide - out of misguided ideology, envy and an inability to do maths.

Interesting that the BBC quotes the DfE as stating that around 50 mainstream private schools close each year. I wonder how many it’ll be this year. Unfortunately I suspect many more than 50, based on the number of schools which have already closed this year.

18 have announced closures since 1st Jan, that's 3 x higher than an "average" year. And the announcements are still coming.

OMG!!!
Laura Kuenssberg live: Trump was right to speak to Putin over Ukraine talks, says Education Secretary Bridget Phillipson - BBC News

she's in charge of our kids education!!!

Do you have a list of the 18?

The figure of 50 closing per year as a long term average prior to the introduction of VAT is roughly right, but the context and framing of that number is disingenuous.

Prior to 2024, the number of private schools closing and opening was roughly balanced, so there was little net change.

Now, the numbers closing have significantly increased, and the numbers opening have significantly reduced, so the numbers are not balanced and a net contraction is occurring.
The DfE is attempting to portray the current trend of closures as "business as usual". It is not.