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

@DuesToTheDirt Very dramatic, but most state schools. Including ones I the so called ‘better’ areas have a good mix of pupils.

I could tell you stories about kids at Williamwood who were bullied for being poorer too.

Do you think there’s no bullying at Private Schools?

Anyone who’s paying upwards of £15k a child to attend school has an option to move to a perceived better catchment if they want.

This post has absolutely nothing to do about VAT on private schools though.

It’s just a dig at state schools.

Emotive, but without substance.

@Eastcoastie

“People living in East Ren sending their kids to state schools could easily afford private but have chosen to spend their money living in an expensive catchment”

To be fair you didn’t say everyone, but you didn’t say some people either.

It depends what you call significant stamp duty?

A 400k-450k mortgage would attract stamp duty of roughly about £15k.

In my eyes that’s a significant amount of stamp duty and an expensive house that’s well above the East Ren average.

Fair to assume that no one buying a house like that is a first time buyer here so making an assumption they have a mortgage of £350k then their monthly payments dependent on when they got their mortgage would be between £1100 and £2000.

Which isn’t an insignificant amount.

But far less than sending 2 kids to private school.

Im not seeing any logic in what you’re saying here at all.

Have the fears been borne out in reality?

I’m aware of a few at Watsons who have moved to state schools, and suspect some people might now be applying, but also aware of some people who got places at state schools but decided to stick with private

Watson’s parent here. My daughter has quite a few friends moving to state. After reading the details I believe VAT will only apply to fees from next year as we were invoices for the full year prior to 29th July.

Only if the invoice was paid before 29 July.

Any payment after 29 July will be subject to VAT if it relates to teaching after 1 Jan 2025. Don't know how this will apply to direct debit schemes - presumably they'd have to be apportioned to pre and post 1 Jan?

Not true.

The technical note states that:

“fees paid from July 29 2024 pertaining to the term starting in January 2025 onwards will be subject to VAT”.

At Watson’s we are invoiced for a full year at the start of July. If you have paid upfront for a full year I am confident you will be fine (as the payment was made pre 29th July 2024). If you are paying in instalments for a full year I think you’ll also be fine as you have been invoiced for a full year pre 29th July 2024. The fact you are paying in instalments doesn’t change the fact that you are paying fees pertaining to the overall year (invoices before the introduction of the legislation), not a term as Watson’s doesn’t invoice for terms, but full years.

Those that think they can pay for a number of years upfront and pay no VAT are mistaken though. An invoice has to have been issued pre 29th July 2024 for an exact amount for a specified period of time for the payment to be VAT free. No school’s set their fees years in advance so no schools invoice years in advance.

I await to hear our Bursar’s interpretation.

@Ginny98 there seems to be some debate as to how upfront fees for years ahead were invoiced and their presice wording as to whether or not backdated VAT will apply, from what iv heard. Iv heard some families mention they are holding out to see if the tax does come to fruition or wanting to wait until the summer. Have you noticed moves in your kids school?

So from the policy note:

"It has also been announced that fees invoiced or paid on or after 29 July 2024 that relate to the school terms after 1 January 2025 will be subject to the standard rate of VAT at the beginning of that term."

A direct debit is paid after 29 July. At least part of it will relate to a term after 1 Jan, so it would need to apportioned surely?

No moves yet, but I've heard some people have applied for out of catchment places .

Some of these were before the election, and when Reeves said no VAT before September 25 they gave up the state school place place (so are feeling pretty peeved that it's now looking like 1 Jan, as the state school places have now gone)

The payment doesn’t relate to terms 1 January onwards. The payments relate to the full year. I think they will be fine. I expect the technical note published in October will give further details.

I think the way Labour has handled this has been pretty poor. From the perspective of children being pulled out of school mid year or families who are stretched financially and having to pay the tax without time to give notice. There was a thread the other day somewhere on mumsnet where a parents bill was going up around £9k for 3 kids. They couldn't afford it and wanted to take their child out but were tied into a terms notice. If its really about raising money and doing right by the children i think starting from the next school year would have been better.

There is a lib dem mp for Edinburgh West who seems to be making a lot of noise about this policy online and that Edinburgh schools are oversubscribed. If local kids at Heriots are getting removed for example their catchment will be Gillespies.

The impression I get is it that those who are looking at leaving are also looking to make out of catchment applications, rather than applying for a place in their catchment

@Ginny98 the families will be trying to get into boroughmuir, gillespies, royal high and these schools are already oversubscribed in many year groups according to the papers etc. These families potentially bought a house in a cheaper catchment thinking they could pay for education. Im only guessing. But yes, they must be kicking themselves if they previously turned a place down

From the OP's graph there seem to be a number of schools that are under capacity, enough to take a few hundred pupils at least. Not sure if more that that would leave private?

@MistressIggi The IFS expects a 6% reduction in the number of private school pupils in the long term, but less than that that in the short term.

There is roughly 29000 pupils in private schools in Scotland.

Even if 10% of them leave then it would be less than 3000 places to be found amongst the 350 odd high schools and higher number of primaries.

The VAT funds raised by the other 90% (assuming an annual fee of £15k, although some are much higher) would be upwards of £78’000’000.

More than enough to fund the extra places I’d imagine.

@Meeplemakeglasgow the issue with your numbers there are that a) those 3000 pupils won't be evenly spread amongst 350 Scottish schools. In Edinburgh there will be a significant strain on certain high schools as I imagine the majority of those 3000 would be from the city and b) Scotland won't get all of the VAT generated from its private schools. It'll go into Westminster coffers.

@Heatherbell1978 Not true, there’s 51 bona-fide Private Schools in Scotland.

Edinburgh has 16 of them.

Many of these are quite small and a decent proportion of kids do not live in Edinburgh.

For perspective there are 12 of these schools in the Glasgow Region.

Edinburgh may have more but it is not a special case.

Now just for the sake of making a point We’ll assume the schools in Edinburgh are 20% larger than average (although most aren’t) and that 80% of pupils live in Edinburgh (even though this will be lower).

Then approximately 900 pupils will need a state place in Edinburgh Council area catchment schools.

Which would have to be accommodated by the 23 secondary schools and 91 primary schools.

Assuming an even distribution of leavers amongst year groups (although in practice this will be more likely to affect primaries), then each school would need to accommodate an increase of -

Primary - 5.34 pupils

Secondary - 18 pupils

I’m fairly sure even a tiny proportion of the £78’000’000 raised by VAT payments would be able to fund that, don’t you think?

Sorry, not the point but can you name the 16 schools in Edinburgh please? Im a few short and can't think who they would be?!

@Eastcoastie Sure,

• Basil Paterson Middle School
• Cargilfield Preparatory School
• Clifton Hall School
• The Edinburgh Academy
• Edinburgh Montessori Arts School
• Edinburgh Steiner School
• Erskine Stewart's Melville Junior School
• The Mary Erskine School
• Stewart's Melville College
• Fettes College
• George Heriot's School
• George Watson's College
• Mannafields Christian School
• Merchiston Castle School
• St. George's School
• St. Mary's Music School

Thanks, iv never heard of the basil paterson school in my life! Nor the mannafields Christian school which looks to be a bargain at £400pm for the fees!

@Eastcoastie Yes, many of the schools are quite small.

I obviously can’t find any proper data on it (being a data geek I’d love to) but I find it a bit bemusing that everyone assumes Edinburgh is such a special case when it comes to finding state school places for private school kids that will leave.

Undoubtedly there are slightly more private schools within the Edinburgh urban area, there are 20 of them including places like Loretto which although aren’t in the city will attract city pupils.

However schools like Merchiston, Loretto and Fettes have a majority of boarding students which you would assume very few would live locally to the school.

There’s a lot of English/International pupils attending the more prestigious ones such as Fettes.

Plus given the amount of school transport coming from places like East/West Lothian, Fife, Borders and Stirling and the amount of pupils arriving at Waverley/Haymarket every day then it’s a fair assumption many day pupils aren’t Edinburgh based either.

As mentioned before there are 12 of these schools in the Glasgow area, all bar 2 are fairly large and none are boarding.

So while the stat that 1 in 4 Edinburgh pupils are at private school may be technically correct it is misleading, it should be that 1 in 4 pupils attending school in Edinburgh are a private school.

It’s an important distinction though as Edinburgh council won’t be responsible for finding them a place if they leave.

There is the point that some catchment schools might have more demand than others, but the harsh reality is that just because there might be no room at Boroughmuir or Gillespies doesn’t mean that they won’t get a school place, it just means the council will transport them to another school until when/if a place turns up.

I understand where you are coming from but everyone, including the politicians and the independent school council seem to agree Edinburgh has an abnormally high % of private school pupils. We use an Edinburgh school but live in East Lothian - its the same in Glasgow. The only people i know who either attended themselves in Glasgow or whose kids do currently, either live in East Ren or Bothwell. Loretto have a lot of local to East Lothian boarders as do Belhaven Hill, we looked at them both. The main day schools in Edinburgh are all a reasonable size, are they just as big in Glasgow? Whatever happens, and I guess time will tell, I feel bad for the kids who live locally to their private school but now can't get a place eg. Heriots and Gillespies. For a child to be whipped out of their school and away from their friends (potentially at not an ideal time) is a shame, never mind to then have to be on a big commute and potentially be changing schools again in a couple of years time. Its disruptive to the education that this policy is meant to support. The sadness is that the loser is the child. I like the English Grammar system but i cant see the SNP ever bringing that in.

About the only thing I am happy with the SNP about it they are unlikely to even go near the grammar system.

I assume being in favour of the grammar school system is on the assumption your child gets in? If not, what then?