Whitehall “braced for private schools collapse” 7

[ICouldBeVioletSky]

Continuation of previous threads discussing VAT on independent school fees. The thread title is a headline from a Times article last autumn.

https://www.mumsnet.com/talk/education/5237575-whitehall-braced-for-private-schools-collapse
https://www.mumsnet.com/talk/education/5242586-whitehall-braced-for-private-schools-collapse-2
https://www.mumsnet.com/talk/education/5280646-whitehall-braced-for-private-schools-collapse-3
https://www.mumsnet.com/talk/education/5301690-whitehall-braced-for-private-schools-collapse-4
https://www.mumsnet.com/talk/education/5317397-whitehall-braced-for-private-schools-collapse-5
https://www.mumsnet.com/talk/education/5337850-whitehall-braced-for-private-schools-collapse-6

SheilaFentiman thank you for your correction.
Since this is the case, yes, giving to causes close to one’s heart seems the better option

If you’d like to give for example half your wealth away no one will stop you I don’t think we’ll see much movement on the tax front the way things are going.

Labour are u turning on previous taxes eg nom dom and people feel taxed enough rn. If anything the slowing of the economy and jobs will persuade people Labour’s taxes were the wrong way to go.

Ah that old chestnut again, voluntary HMRC contributions. Yawn.

I am not the one pontificating about my net worth of 10 million plus and how sending my DC to state school, nevertheless, is doing everyone else a favour. In fact, if my net worth were 10 million plus I would be too embarrassed to use the good state school places we do use, I would leave it to other children who need it more.
However, if you have a very high view of yourself then clearly the way you think must be doing everyone else a favour.

When it comes to taxes it’s probably best to look at realistic behaviours. Ie not on mn where people are quite keen to talk about wealth and how much they theoretically want to part with.

Who on here has been pontificating that their net worth is £10million plus? I must have missed that bit.

No wonder your opinions on behaviour change are so unrealistic, @newbutoldfather, if you and your friends have £8-12 million wealth. You must surely know that's very unusual, and nowhere near the norm for private school parents even in the SE. Only 10s of thousands of people in the UK have that type of wealth.

Top 1% household wealth in the UK is £3million: approximately 1.2 million households. Extrapolating, that should be about 100k school age children: a maximum of 20% private school children, if every single one of them was at private school. (Although of course in reality it will be even less than that, since wealth often accrues later in life)

Top 10% wealth means that a household has at least £1.2 million. That extrapolates to 1 million school age children, about twice the private school population. But that includes housing wealth, which isn't very useful, since you need to live somewhere. Many with that level of wealth (especially if largely held in a property they live in) still use state school:. And those using private will certainly feel the VAT.

@Araminta1003 - he did imply that his friends use private school,, since he said they didn't mind the VAT.

But you did say that your own kids used state, @newbutoldfather. If your own wealth is at that (really very unusual) £8-10 million level, then I share @Araminta1003 's incredulity that you sent your own kids to state school.

Sorry, obviously not 1.2 million households in top 1%. 263,000 households in top 1% wealth.

Interesting discussion. I think this is the problem with the global economy in its current form - it favours the massively increasing wealth of a tiny, mobile minority of individuals and of big business, and severely weakens the ability of individual countries to create taxing or spending regimes that benefit their citizens without further enriching those with no ties far more generously than the people the tax and spend policies were originally intended to benefit. That’s why Norway did the right thing by its citizens with its oil money - invested a proportion of its profits for its entire population in a sovereign wealth fund that is now colossal in size, to future-proof itself as a country. Meanwhile, the UK, which made even more money out of North Sea oil over several decades, effectively gave the profits away to big business in tax cuts in order to entice more big business into the country rather than have it go elsewhere - but big business is fickle and pisses off when the going gets bad. So, the UK pissed its money up the wall at the end of the day, and a lot of that wealth now resides offshore. You can easily get loyalty and a sense of belonging from citizens of a country who feel well looked after by the State (something really needed when the going gets bad), but there is no real loyalty in business to anything but money.

In fact, this household wealth chart by age shows how household wealth increases through your working life, then decreases through pension years, just as you'd expect.

Thinking about that £3million threshold for top 1% households within the context of that graph, a fair number of those households will be couples approaching retirement with a house paid off (£1million) and pension savings of £1million each. That will gives a pension income of approx £40k each, so net household pension income of £72k if they take early retirement, then £90k when state pension kicks in - generous but not outlandish given that the PLSA defines a confortable' 2-person household pension income as £60k

So 20% of private school families having £3million wealth is likely to be a significant overestimate. This completely backs up what we've been saying (certainly what I see) that most families fund private school through professional salary earnings.

Well, we'll see over the next couple of years.

Here's the chart:
https://ifs.org.uk/data-items/median-household-net-wealth-age-and-decade-birth

A bit of a derail, but does anyone else notice that median wealth at a certain age isn't very different between the generations? I do think that narrative is over-blown, and people simply aren't aware of how wealth changes over your lifetime, so the most significant difference is age, not generation.

Most of my friends (and I) are philanthropic, some of my friends large donors to various causes
@Newbutoldfather

When you say ‘large’, roughly what sort of sums do you mean?

This is just an average and the decisions white people make are probably disproportionately reflected here as a result when it’s Indian immigrants (and other South Asian) people who are most likely to own property / wealth / send their kids to private and grammar schools in this country. Even over people of East Asian origin. In some midlands private / grammar schools almost all the students are of Indian origin. Eg it’s still normal for Indian young people to buy a house in their mid-20s.

Some of the things we do to generate wealth are: living at home for as long as possible, investing, living in extended families for as long as possible (this means less care costs both for childcare and elder care), and a singleminded focus on education (while new Indian immigrants are now coming from parts of the Gujarat that focus on business, education is still considered the bedrock). Some cultures even pool their money across siblings thus allowing access to an even greater income.

I suppose different patterns of intergenerational giving will make some difference. But regardless, you build up wealth over your working life by saving/investing (including mortgage repayments) some of what you earn. Then when you retire, you no longer earn, but you continue to spend.

I don’t think that I at any point said or implied I have wealth of £10mio, more like half of that. Maybe I was closer before divorcing, but even then less than 10! I am relatively poor compared to my more successful friends.

And I only mention my wealth and demographic as I have been repeatedly told by the likes of @araminta that I don’t know or understand my own demographic.

But I would prefer a more theoretical rather than ad hominem conversation. The problem is that people don’t want to talk about medians but about tiny private schools. The median fee is close to £20k and the median private school parent is wealthy. 2/3 of private schools, and probably more in terms of pupil numbers are in London or the SE, so my experiences as a teacher in London are far more typical than what the majority of posters on here claim.

And, as for taxes, we can argue ad infinitum, but again, it is a fact that the vast majority of people paid the 50% top rate tax. A tiny number left the U.K. over it. And a property tax would raise revenue and be fair (and get rid of stamp duty at the same time). The majority of academic economists are in favour of it. I think taxing wealth is better than taxing income, as it allows wealth to be recycled and new people to become wealthy. An overall wealth tax is theoretically ideal, but it hits the middle, as wealth, unlike property, is mobile and can be hidden in trust structures, so the truly wealthy never pay it.

It is not that I am against the concept of a wealth tax, in principle, it is just that I have seen how heavy it is on administration since my brother moved to Switzerland and how much tax officer time it actually requires to implement correctly. So he has to fill in a tax form every year and so do the vast majority of citizens where he has to list every bank account (including those abroad) in every single currency (converted at an approved rate as at 31.12 of the year), all property has a deemed value, there is a mass calculation of all wealth minus debt plus deductions for things like children, health care costs, insurances. It is hugely complex and some cantons even have a concept of deemed rent (I think the more left wing cantons do). Switzerland is income tax only, no CGT - hence you need to do the wealth tax. We already have CGT, stamp duty, inheritance taxes - we really do not have the man power or resources to tax wealth properly. The reason it is done at the point of sale, death or via employment is because the burden is placed primarily on professionals like conveyancers, employers at that point. Which minimises the “policing” aspect by the tax office.

At the end of the day, a tax should only be implemented if it raises money. I really really do not believe the private school VAT will raise money, I think it will lose money, not just in kids moving to state schools, but the UK being a less attractive place for successful motivated people. I am sorry to state the obvious but in terms of quality of life the rankings look pretty bad for the UK. And hence I personally will move even if it offends some. It is not a question of me being uber wealthy but I honestly feel life has become pretty crap here in the last 15 years. Although I am British by birth, I was born abroad and I have lived in different countries so I suspect it is easier for me to move. I already have a DS with ASD living in Zurich and doing incredibly well there and I think in part the lifestyle suits his special needs far better.

I also strongly believe the UK is incredibly lucky to attract (still) a lot of talent from India/China/HK etc who then do come here and just subsidise others. I wonder how much longer this will continue for especially with all this anti immigration rhetoric going on. You will note that Germany is now suddenly attracting a lot more international students from these countries. If anything, we should make an effort to attract young and successful people and get a grip on some of the divisive chat going on. Like I said, I feel like a Londoner but I no longer identify with much of the rest of the country. It is what it is. I am still depressed about Brexit like many of my generation. It is not something I can actually forgive others for. Sorry to be melodramatic, but it is like a deep seated wound. It offends me, it makes me embarrassed to be British and so does this VAT business.

And @Newbutoldfather - I colleague should me a letter from the Head of Governors of a well known public school describing the VAT as something like an “immense burden” so it is not factually correct whatsoever that even the richer parents in private schools are happy to pay this. Most rich British people do give substantially to charity already, it is in their heritage to do so, and this VAT is simply seen as a vast political dig at them and their kind.m

One anecdote doesn't mean something can't be factually correct.

@Araminta1003 ,

Taxes do need to raise revenue. If they don’t, they shouldn’t exist. So, if VAT on schools genuinely is revenue neutral or negative, it should be scrapped.
But the calculation needs to include whether those who leave private schooling spend most of their extra spending money on other vatable items or do genuinely work less. It is a hard calculation to do and a lot of people on the internet saying they won’t have extra holidays, cars etc, doesn’t mean they actually won’t!

Tax is a compromise between fairness and the ability to actually raise revenue, so a property tax would be easy. All it would require was a current property valuation, maybe updated once a parliament. Less theoretically fair than wealth tax, but actually easier and fairer, as the genuinely rich hide and move their wealth. Blind trusts should be made illegal. I believe they tried to but it didn’t seem to work .

‘I feel like a Londoner but I no longer identify with much of the rest of the country’

You are a classic ‘citizen of everywhere’ , very well characterised in the book of that name. Equally at home in London, Hong Kong or Paris, where you will find the same designer shops, international hotels and restaurants.

There is nothing wrong with it but you really need to try to understand the ‘citizens of somewhere’ who feel very grounded in their country with a respect for the customs and history, and take pride in that.

America is going through that upheaval now and it isn’t pretty! The coastal ‘woke’ states literally have no comprehension of the ‘America First’ agenda and vice versa.

Unless countries find some commonality with the rest of the nation and attempt to empathise and compromise, we have a big problem.

Given the recent taxes I’m not sure those advising it are aware enough of behaviour change.

@pottylolly - there are loads of South East Asians at eg Westminster School as well. I wonder how they feel about this VAT?
@Newbutoldfather was singing the praises of Westminster for all the outreach they do. I reckon given their parental demographic they will have to cut it back, big time.

How about the government stops frittering and squandering UK taxpayer money, then we wouldn’t need to be taxed so heavily.
One example, out of many, £1.4 BILLION to refurbish the British High Commission in Nairobi. If you don’t believe me look it up. There is plenty of money, it’s just not being spent here.

Agreed. Angela Rayner has apparently already suggested that southern council tax should subsidise northern cities. Very easy to see an education surcharge included.

Labour are taxing people to the ends, already pitch rolling today for budget

They’re only squashing growth.

20% VAT on dance lessons? check
https://www.bdsassociation.com/post/dance-lessons-and-dance-competitions-fall-within-the-scope-of-value-added-tax-vat

20% VAT on theatre tickets for kids? check

I mean, who could ever have thought that introducing a tax on education for the first time would lead to a slippery slope of cultural impoverishment?

Still, all the money raised will go back into education, won't it? ... No, they've changed their minds.
https://www.isc.co.uk/media-enquiries/news-press-releases-statements/vat-on-fees-schools-were-promised-that-the-money-raised-if-any-would-go-to-state-education/

And the 6500 new teachers? Ooh, well, first we'll have to fiddle the numbers to exclude the 2900 that just left from the definition.
https://www.nape.org.uk/news_details/primary-schools-not-included-in-dfes-6,500-new-teacher-target

The Labour cabinet couldn't lie straight in bed.