Labour’s plans for VAT on Private Schools

[Busydadof2]

The Labour Party has proposed introduction of VAT on private schools.

In the scheme of things the money they will bring in from this is tiny compared with total expenditure on state schools, while it will drive more burden on the state system as some parents leave private schools. I think this is a populist ploy to get traditional Labour voters to vote for what is in any other sense a centrist party.

Have you considered signing this petition to make sure the policy gets scrutinised and the weight of public sentiment against it is known?

Change.org petition: Stop Labour from adding 20% VAT to private school fees and forcing kids to change schools

www.change.org/p/stop-labour-from-adding-20-vat-to-private-school-fees-and-forcing-kids-to-change-schools

Various perspectives from the signatories of this vote come to mind and resonate with our own situation, including this: “I work in a state school with over 30 in a class and oversubscribed. My 2 kids went or go to private schools and we have sacrificed loads to do this. We are NOT wealthy, many of the kids at the school I work at live in bigger houses and have much more disposable income than we do. We chose to send our kids to private school rather than live in a bigger house instead of our semi detached on a main road. We holiday in the UK every year and I work full time. I buy my clothes on the high street or in charity shops. Many parents at the school my kids attend are in exactly the same situation. I agree there are some very wealthy parents there too and the addition of VAT will not even make an impact on them, they will pay it without batting an eyelid. All this will do is push the kids like ours back into an already oversubscribed state system, increase class sizes even more and create a bigger divide as private education will become truly elitist.”

Couldn’t have said this better myself.

Higher earners already contribute more to society, they also benefit disproportionately from the economic system.

I suppose it makes sense if your aim is to harm the education of 6% of privately educated children rather than to help the other 94%. This policy has got absolutely nothing to do with helping the majority in the state system, and everything to do with harming the private sector, whilst stamping feet and shouting “but it’s not fair”.

"a tiny number of families". Economic harm and disruption to children aren't OK just because you consider 40-135k children "a tiny number". I don't think we should justify doing bad things to small groups, whoever they are.

"despite a lot of the comments here, the majority of kids in private schools don't have SEN, aren't on scholarships, do have very wealthy parents, many of whom inherited money rather than worked extra hard for it."

• over 20% of children in private schools have diagnosed SEN, per the ISC census. Not a majority, but well into six figures.
• Plus many have non-SEN challenges such as anxiety, suffered bullying etc.
• Plus many with marginal but non-diagnosed SEN (which includes my daughter, I'll tell you about it if you're interested).
• Those SEN and other needs are (1) a major motivator for people choosing private schools and (2) are prevalent among marginal families
• Those marginal children benefit particularly from the setting they are in and in some cases will particularly detract from the state school setting you're relaxed about forcing them back into.

"a majority do have very wealthy parents, many of whom inherited money rather than worked extra hard for it."

• What's your definition or evidence for a majority being "very wealthy"? Maybe, peer comparison to wealthy people using taxpayer-funded schools?
• Also you've probably some meaningful data on how many marginal families have inherited money rather than working and saving?

working really long hours to pay for private school does not in itself mean you're a better parent. Many people consider having a more balanced life including as much quality time as possible with their children to be of utmost importance.

• I don't think anyone has said working to pay for private school makes us better parents; rather that working harder to pay for private school makes us bigger contributors to the public purse - by paying more tax and leaving the state resources for others.
• I agree with you regarding quality time. Astonishingly, fans of the education tax, including the IFS, have assumed people moving into state schools will continue working the long hours and paying heaps of tax despite not needing school fees, so they obviously don't think "quality time" is appealing to any of us, but only to you. If I stop needing school fees I promise I'll prove you right, and them wrong.

None at all. Nor economic sense or an idea that’s good for education generally

We’re here because there’s not much to go with and it grabs headlines and votes

But most private school kids won't leave and join state schools. So the VAT income on their fees would more than cover the ones that do.

Most recent estimate is 40% which leaves the policy as a net loss.

I agree with you regarding quality time. Astonishingly, fans of the education tax, including the IFS, have assumed people moving into state schools will continue working the long hours and paying heaps of tax despite not needing school fees, so they obviously don't think "quality time" is appealing to any of us, but only to you. If I stop needing school fees I promise I'll prove you right, and them wrong.

Just think how wonderful it would be. If VAT were to push me over the edge, I could work part time or even not bother working. TBF I’d probably go with part time as we’re in an EHCP rationing desert and I’d need the money to pay the lawyers…

But I can afford VAT for secondary (yay for the new job) so will suck it up if it comes.

According to whom?

"most". Estimates vary. 3-7% according to the IFS based on what they acknowledge to be "old, thin, sparse" data...it's actually worse than "old, thin, sparse" and of dubious relevance; their analysis is stacked with errors and dubious assumptions. Most other estimates pointing at 15-25%. A survey last week by Baines Cutler said 40%, but that has its flaws too.

So nobody knows. In fact, this isn't "knowable". You / we / the IFS are speculating on the behaviour of a segment of people that proponents of the tax resolutely refuse to speak to or engage with.
Labour's VAT policy is out-of-touch (substack.com)
“I haven’t visited any private schools officially in my role, no,” Ms Phillipson said.

What does the "coverage ratio" look like? Well, based on £3040 vs 8000, even the 40% migration rate is breakeven. But that's not right because

• £8k is variable cost. If they need new classrooms, we could assume we should include fixed costs, thus £11k.
• ...and when did the public sector ever do a change programme without raising overheads?
• also independent schools contribute more tax and employ more people, so contraction of the sector / migration costs a further £3k in tax
• state schools have a VAT tax break when they reclaim supplies, worth a further £400 per pupil
• if even a quarter of parents, relieved of school fees, choose more leisure instead of spending those fees on fast cars and restaurants, it costs £4k per child migrating.
• ...and those parents working less also hurts downstream economics; their customers, employers and employees; the contraction of the taxable economy could be estimated at a further £4-8k per child.

So at that rate it's more like 10% of children migrating raises zero money; even at 5% migration it raises around half the sum expected.

If you want to justify this policy based on revenue-raising, you have to think as an economist. And then you'll see it's a poor proposition. And then, if you REALLY care about improving state schools, as I personally do, you'll say "surely there's a better, less risky, less harmful, less divisive way to raise some money?"

And you'll realise that "taxing education" is less attractive than "taxing higher earners" more broadly, so that the responsibility of fixing state schools falls on those actually using them, rather than being targeted only at those that don't.

If you don't want to justify this policy based on revenue, then don't be surprised about the "envy and pitchforks" jibes, because that's all there is left.

I think it important to understand it not just the families that have no way of covering even a term of VAT and fall out of the system immediately but to understand the fall in numbers of people starting that journey in reception, year 7, year 12. Then factor in families that will be working out how to cover VAT until the next natural break of year 3, 7 or 12 and how to make sure they have a good state school place lined up by that point...

3-7% is going to be woefully underestimating the move from private to state in the next 5 years (and the IFS are distancing itself from their report anyway).

Are they distancing themselves? I hadn't seen that...?

Im sure Ive seen a disclaimer from them about it but I cannot find it now, will keep looking. It is based on 15% VAT as well I think it is important to underline. Im not sure most schools will find 5% to knock off personally.

Baines Cutler is wildly over estimating, as you might expect.

@quantmum
"Despite a lot of the comments here, the majority of kids in private schools don't have SEN, aren't on scholarships, do have very wealthy parents, many of whom inherited money rather than worked extra hard for it."

The majority of children in independent schools do not have very wealthy parents - most (65%) of them are not even in the top socioeconomic 20% of the population.

On the matter of SEND you are correct, most don't have SEN. However, nor do most children in state schools, and as MisterChips has indicated, the prevalence of SEN in independent schools is higher than in the general population.

Left-wing tribal taxonomies (the basis of their politics after the abandonment of the working class - Brexity/Climate Denying/Tory/Anti-freedom of Movement/Rich/Privately Educated/Boomer etc.) tend not to stand up to scrutiny.

You’re basing this on what exactly?

It's hardly a neutral party is it.

It surveyed parents

It’s the closest there is to anyone asking what the behaviour will be

Well we'll just have to wait and see won't we.

It shows though how damaging this might be for education, especially if the reaction is as pp in dismissing a survey of those who will make decisions

I don't think so.

Why do you say Baines is ‘not a neutral party’?

They research / survey people

That you’ve leapt to not neutral makes me think you’re not really there with process and speaking from bias

Which estimate do you think comes from a neutral party?

If you think the IFS is neutral...I have news for you.

It's impossible to know. It would be reasonable to be cautious and consider the impact of multiple scenarios. If I had to bet I'd say 10-15% (at which point this education tax makes no money) with 25% worst case (for a substantial loss to the taxpayer and completely unmanageable for the state sector.

The prevalence of SEN in private schools is commonly attributed to wealthier parents having better access and support in identifying SEN children. Not because private schools provide better suppprt for SEN children (although I’m sure some do).

Private schools are sometimes the only option for some kids -my son in small state primary -come secondary school age -he won’t be able to cope in a school of 1500-and he also does not fit the profile of SEN schools either(even if places were available ) -we have few small private schools locally % of Sen kids in there around 25% -some have occupational therapy facilities etc whilst secondary comprehensive in the area one has just 3% SEN ..most parents of SEN have the issue around secondary school time some if they can afford pay for private ,some leave jobs and go homeschooling ,some fight with council to get EHCP and/or some kind of education -you ll be also surprised at how many SEN kids are out of education at all for years as councils “can’t find places that can meet needs “plus not providing any education at all in the meantime .

Don't be obtuse.