The Edinburgh Question: Labour's tax on private schools

[Eastcoastie]

A group has popped up on FB aimed at parents in Edinburgh who are against Labour's policy of charging VAT on private school fees if they get elected in July. 25-30% of children in Edinburgh are privately educated so the policy is very likely to require big changes to education providers in Edinburgh and some areas of the Lothians.

George Watson's has announced a 9% fee increase for the coming year and according to members of the group, if the VAT policy goes through, they have been told that this will have to be passed on too, so next years fees would likely see a 20% rise plus inflation. Staff at the school are already on a pay freeze and the accounts show an operating loss.

Members of the group have also said that GWC are planning for a loss of 350 students if the policy is enacted.

Heriots parents have been told of a 6% fee increase for the coming year and the school are also likely to pass on the VAT bill next year if enacted too. Parents are being told, if they are unhappy, to leave.

Prior to the policy being announced, Edinburgh's projections for school capacity flagged 9/23 secondary schools as being at or exceeding capacity in 2023, rising to 18/23 in 2027.

How will Edinburgh/Lothians manage even minimal fall out from the private sector?

https://www.edinburgh.gov.uk/downloads/file/22448/secondary-school-roll-projections

Not all private schools buy what most would consider an advantage. Some are about alternative education systems.

Also, the idea that parents should be taxed for doing things that benefit their children is a rather worrying idea.

I didn’t say it was wrong to buy advantage.

I did say in an ideal world you wouldn’t have to.

But it isn’t an ideal world.

My point wasn’t that you shouldn’t send your kids to a private school if you want to and choose to do it.

Merely that if you do choose to buy advantage in this way then morally you should pay tax on it.

I mean - earning money benefits children. You suggesting we don’t charge income tax?

We won’t know that until it happens.

Obviously the schools and the parents making the case for not applying tax will try to make it sound like it’s a disaster for the public purse.

As it’s in their interest.

But even if the schools lose 10% of pupils, which I doubt, then the remaining 90% paying VAT would easily fund more state places.

Job done.

Probably is an element of that.

But given the mess that Private School educated politicians have made it everybody’s finances over the last decade then it’s quite understandable.

Is it fair, well yes and no.

But the benefits fiasco that left people using foodbanks wasn’t fair either.

Political Decisions affect people, for 10 years decisions were made that were bad for the majority and better for the A1 segments.

The country doesn’t want that anymore, whatever Labour’s motivation is for the private school tax the public clearly agree with it.

Someone who has spent too much time reading American Libertarian accounts on twitter.

Guns, God and State Tyranny Y’all

Out of curiosity though, where did you get the information that 10% of pupils leaving education would be cost neutral?

Say for example there’s 50’000 private school kids in Edinburgh.

If you lose 5000 of them then you would need funding for state school places.

Which according to the IFS is £8500 per pupil in Scotland.

So you would need a total of £42.5m for them.

Now for easiness we’ll say that Private school fees in Edinburgh are £15k a year (although nearly all are much more).

The remaining 45000 pupils who paid VAT would raise £135m.

Even allowing £5m administration costs that would provide a yearly excess of £87.5m.

That would be more than enough to initially have temporary buildings and start a building programme for new state schools.

£8500 per pupil is only enough if there is space for the 5000 pupils joining state. If there is no space and you need new schools - then 87.5 million will not be enough to build and staff and resource new schools.

Worse still, the policy will determine new parents - so Edinburgh would new additional spaces going forward and less VAT income as fewer choose private.

Clearly the government needs to focus on how to raise funds to properly fund state schools

The upside is that private school kids decanting into state schools may just be the stick that breaks the camels back - as more funding and investment will be needed to educate a larger population of kids. So that could be a good thing - as they would no longer have private schools to blame and have to come up with lasting solutions

Yeah you’re right.

Let’s drop tax for, laptops, iPads, clothes, foreign travel, language apps, concerts as well.

Anything that can be used to benefit kids.

@Meeplemakeglasgow kids clothes are already vat free

That would be a yearly surplus of £87.5m.

Obviously the schools would take a few years to be built, it’s not an overnight solution but to claim an £87.5m yearly surplus isn’t enough to build a solution is not true.

Plus that’s an extremely low estimated ratio I used to make the point.

Agree with your other point though, and it’s the one that most people here either can’t or don’t want to see.

It’s not really about economics, it’s also a cultural policy designed to increase fairness and raise the standards in state schools.

In East Ren very few kids go to private schools, yet still the state schools achieve great results.

Mostly because it’s populated by families who value education and the schools have a culture of achievement.

This culture also helps the kids who maybe don’t have the same familial educational background and gives them a chance to achieve more than they would elsewhere.

So if this policy means Edinburgh schools have an influx of well motivated supported kids then I don’t see how that can be a bad thing.

https://westcountryvoices.co.uk/taxing-private-schools-coherent-strategy-or-counterproductive/#:~:text=While%20charities%20aren't%20allowed,sitting%20in%20a%20bank%20account.

A really good article.

I really hope the Tories lose on July 4th.

@Liverpoolma123 That’s an excellent article, says it all really.

Mine were in size 7 trainers at 9 years old and are all over 6ft 2 so personally I didn’t see the benefit of that for very long.

I take your point but most people, unless they are in a genetic line of Oompa-Loompas tend to pay VAT on their teenager’s clothes.

Could not agree with this more. The education department in Edinburgh is an absolute scandal. Not sure if this has already been mentioned but with 30% of kids in private, the council should theoretically have a much healthier budget per child than other councils. Yet they spend less per child than any other local authority in Scotland.
I'd love to see their accounts.

Also agree with this

It wouldn't be a yearly surplus - because each year, less families would opt for private school. Which means more would opt for state (more going state, less paying the tax).
Partly due to VAT but mostly because adding it would introduce significant uncertainty. What if the VAT rate is increased, what if the government create and add a bespoke private school tax on top etc. It is an interesting precedent

I do agree that parental culture and value for education matters and affects outcomes. But I struggle with the idea that 93% of the UK population are not enough to move the dial of culture and educational cultural capital rests predominantly with the 7%.

My point was that the strain would highlight the underfunding even more starkly and hopefully force lasting solutions

The IFS estimate that when VAT is added then between 3 and 7% of pupils would move to the state sector.

There is nothing to suggest that this number won’t remain static or even increase as schools, like any business, will do what they can to attract more.

For context, over the past 20 years school fees have risen in real terms by 55%.

Yet the number of kids has remained consistent.

So there will always be a surplus, the fact is that an extra 20% VAT (Which may not be a 20% increase to parents as the schools will try to offset this) is not a dealbreaker for most.

It is a big bet to assume effect of past increases will mirror current increases in the context of inflationary pressures and higher mortgage rates. It is quite clear that if more than 10% leave the private sector this will end up putting more pressure on state schools - not less. But that may not be a bad thing

I guess Labour is hoping there is an improvement in the economic fortunes of the country (hope is not a strategy!) so there isn't much of a shift and those that want to continue in the private sector do so and those in the state sector get the help they need. Let's hope they are correct

Not sure it’s as big a bet as people think, pretty much all private school families are in high-earning jobs and/or have generational wealth behind them.

We’re also making the assumption that all costs will be passed on to parents when many schools may not do that.

Numbers stayed static during the 2008 recession which had more negative consequences like house repossessions/job losses than our current crisis.

It will affect those families who don’t have established wealth and are maxing themselves out trying to pay for it through their salaries.

Have tried to keep my personal opinions out of people’s choices in this conversation but if I’m honest I think it’s a stupid decision to send kids to private school if your finances aren’t going to be comfortable because of it.

If a 15%-20% rise makes it unviable then you must have planned never to have family holidays when the kids are at school, which is quite sad really.

Indeed - and may be a proportion of families do that. Rightly or wrongly

Maybe the issue is they know the underlying school fees will continue to rise at the usual 4-6% a year + 20% on top - which is what makes it unaffordable.

It would be interesting to see when the policy comes into play

And I agree that schools need to find a way to mitigate. Again, let's see what they do

Our state school in Edinburgh has 50 breakfast and afterschool club places. Limited mainly by problems attracting staff at a salary that makes the clubs affordable for parents. Our school has over 400 pupils.
Government childcare focus recently on the early years has forgotten the primary years.

I just looked at the numbers and this isn’t true. Edinburgh are about middle of the table for spend per head on both primary and secondary.

For people suggesting that they need private school for the wrap around care otherwise they had to leave their job, that feels a bit much. Both my girls went to private primary, and used wrap around care. But it closed at 6pm so when I got a job that made it impossible to pick them up in time. Even the school clubs finished at 4.30 so were hopeless and you ended up paying £30 for an hour of after school club. In the end I had to hire a babysitter to do after school pick up and care. I know quite a few other parents in the same situation with a nanny/babysitter. So it makes no odds if you are state or private, there is always a solution.

Cost was about the same as after school club, I paid through a nanny agency so could use vouchers (and furlough in covid), but it meant they could go to dance lessons and other things after school and the baby sitter would take them. Six years on and she still works for us now, even though one child is in secondary and the other starts secondary in August.

Also, we left the private system and moved state for secondary. We never really wanted to go private but our catchment primary was pretty poor. In the time since we started 10 years ago, fees have risen by over 80%. I would be lying if I said that rise wasn't a factor to overcome any wobbles we felt about taking them out. I just don't think the education was worth £100k per kid. My eldest is on track for top grades at a mid-table state secondary and is flourishing far more.

Also, if you go to independent school it now hinders you for Uni applications, so I know a number of parents who move their kids into state secondary for S6 because they think it might help them get a uni place.