Removing charitable status for independent schools

[justanotherdaduser]

What do people here think of Labour policy of removing charitable status for private schools?

I am conflicted about it.

DD goes to a London independent and if in three years or so fees rise by 20%, it will not be easy for us.

But that's just our personal circumstances, and while I will be unhappy if fees go up by 20%, I can also see the point Labour is making -

that the school our DD goes to and hundreds of others like it are not really a charity. Most spend no more than 10% of their fee income on bursaries, if that. Vast majority of parents who send children there are comfortably above national average income. The charitable status is an anomaly and independent schools don't deserve tax breaks reserved for charities.

So was wondering how others feel about it.

(Applogies if this is not the right forum. I am mostly a lurker here and wasn't sure what's the best place to post this. Happy to move this somewhere more appropriate if required)

I think Labour believe it’s a vote winner and will make a lot noise about it in the run up to the election after which it will go to committee for a few years, gather dust and then fade into memory.

100% agree and they couldn't do it overnight because the flux of new pupils could potentially cripple the existing system. They'd need to taper it in, reduce from 20% to 15% and so on over a period of 10 years or something so that everyone can adjust.

Just for the record universities are classed as charities and don't pay VAT.

But should they also pay VAT 20%, just like private schools then?

Universities aren't run for profit - but then neither are private schools.

Would everyone like to see universities have to pay 20% VAT too?

Anyway, I've searched online for the costing model for the Labour policy but I can't find it anywhere. I've heard the shadow chancellor speak and found her to be a solid speaker - so I'm surprised at this - that there's no public model available.

In my search I came up this from the FT today:

www.ft.com/content/d87a6dd7-166e-406c-a185-3c89a20c2acb

The Labour party claims that it will raise £1.71bn with its plans to levy a tax on parents by adding VAT to school fees (“Starmer urges end to ‘scandal’ of private school tax breaks”, Report, December 1).

We say: show us your working. We are yet to see any robust analysis that lends credence to Labour’s claims.

In contrast, Labour is happy to attack the independent Baines Cutler report, compiled by leading experts in the financial aspects of independent schools. It is the only research into the subject that is based on representative surveys of many thousands of independent school parents. The report concluded that far from raising money, Labour could end up losing up to £400mn a year by the end of its first parliamentary term in government. Labour has provided no impact assessment that comes close to the rigour of this report.

We, like everyone else, want to see a well-funded state education system. But the path the Labour party is mapping out would fail to raise the money our colleagues in the state sector need and deserve, while disrupting the lives and education of thousands of children whose parents work hard to fund the education they have chosen.

Julie Robinson
CEO, Independent Schools Council

Rudi Eliott Lockhart
CEO, Independent Schools Association

Simon Hyde
CEO, Heads’ Conference (HMC)

Christopher King
CEO, Independent Association of Preparatory Schools

David Woodgate
CEO, Independent Schools Bursars Association

About universities (and nurseries).

There is no VAT on fees because of how the current VAT tax law is set up. Essentially no change since we left the EU. But post-Brexit, we can now change it if the government so wishes.

This is unrelated to charitable status.

I think it would be possible to make it 'schools only' by specifying that VAT would be imposed on fees for school-based education for KS1-4, plus sixth form (but that could be omitted given how the numbers stack up rather differently in that age group)

That does however leave an issue around specialist provision

@Scaevola I think I am right in saying there aren’t more children educated privately in 6th form, just less children in school so the percentage of children in private school is higher.

That's why I weasel worded it!

Fewer in full time education 16+, much higher proportion in private school, but there are new joiners to the sector. I think it's a stage that needs individual consideration

Like the ISC etc. many people here say something like it's not workable because the 'flux of new pupils could potentially cripple the existing [state] system'. But I don't think this is right. On the latest data for my borough (Wandsworth, a fairly affluent area) 2022 Y7 admissions were 2,000 against an overall PAN of around 2,300. So there are 300 spaces this year and the forecast is that this gap is going to increase in the future. Now I know Wandsworth may not be representative of every area, and I also know that until extra schools are built there will be some transition issues, but having in effect space for the whole age group for Trinity, Whitgift and Emanuel combined doesn't strike me as anywhere close to 'crippling the existing system'.

230 in each year group at whitgift
160 at trinity
150 at Emanuel.

there are also quite a few smaller schools of specialist provision not accounted for here.

its more like 600, not 300.

Wandsworth is an interesting one, because it has one of the highest proportions of privately educated pupils in the whole country

Emanuel 144 per year group
Trinity approx 140
Whitgift over 200

And then factor that pupils may well not be going to school in there borough - looking at other Wandsworth schools and the most popular in neighbouring boroughs: the 3 Dulwich schools (160-220 each), the three GDST schools (smaller, about 120 each), plus Kings Wimbledon, St Pauls, St Paul's Girls, Ibstock (the one I'd put likeliest to close), Harrodian, City, Latymer Upper, Woldingham, and others.

And it's also a place with a much higher than national proportion going privately at prep school age - have you seen any numbers on that? How many unfilled state primary places are there?

I think you are 100% correct.

Talking to some people in the Party over that last few days, the thinking is that this is a sop to the far-left in Labour.

Post GE it will all be found to be too complex, blamed on "nasty right-wing lawyers standing up for the rich" and quietly parked. Win-win. Nice dog whistle policy for the left and zero need to actually action it.

Labour will not be inheriting a happy financial picture like they did in 1997, I suspect they will find it very hard to spend money on anything for a very long time. Tax take is already far higher than when Blair/Brown were in power, and not exactly much room to squeeze anything extra.

Trinity and Whitgift are in Croydon, not Wandsworth!

Totally agree with this. And also potential reduction in income tax if parents decide to work less - because now they might well save the whole private school bill.

If our children leave the private sector after Y6, we probably will save £25k fee + £5k VAT (assuming 20%) per child. This means we don’t need £50k before tax income a year. No need for us to work so much anymore.

Yes, borough boundaries are only so much use, as pupils may travel to neighbouring ones for school.

The Croydon schools are very popular with Wandsworth resident families who live near Clapham Junction or other points with good transport links

Work less! That’s the ideal, isn’t it. What benefits you’d family first.

I agree with you. It likely won’t happen for various reasons, hopefully same with HoL plans and the difference between parties will be minimal.

Fine by me.

I think the two scenarios I can see this not ending up as policy are Labour lose next election or Starmer is replaced. The way it has been coated and laid out this is going in the manifesto. If it goes in the manifesto it is going through, it's an very simple policy change. It'll get tapered in presumably.

I’d need to pull my own 2 DC out if it’s implemented, we couldn’t absorb a 20% uplift. I work in a well paid, 45% tax rate (60% marginal rate on part of my income) job. I don’t much like it, but I do it to cover the fees. Once I no longer have the obligation to pay £4.5k a month school fees, I’ll be handing my notice in at the speed of lightening. So the state will need to fund DC’s education without the c.£50k a year tax contribution I make. I don’t personally agree with the policy, but if it does, tbh I’ll make the most of it by enjoying leaving work.

@edwinbear I now work part time in a role that I actually enjoy. We removed DS ( from the school Rishi Sunak went to ) , it was the best decision we ever made. He thrived in a state school where the teachers were qualified. I actually think that the Labour party would be doing parents a favour, no school is worth £46,000 per year. If you look at the model of countries such as Finland, that is what we should be aiming for. I would be happy to pay more tax after all a well educated society would benefit us all.

I won't even touch on the level of extreme right wing and misogynistic views at these schools, that has become all too clear to see in recent years.

Why can't you just send them to a cheaper school?

Hopefully it’s a long way off if at all. Not to persuade you either way re work. I know the feeling of not knowing re something as important as dc’ schools is stressful though.

@00100001 we could, but we live a 10 min walk away from the current school. They are particularly strong in sport which both DC excel in. We have a good state option we’re in catchment for so I’m not that wedded to private. I’m not so determined to privately educate that I’d want them commuting another 30-40 mins each way. I love our current private and without a 20% uplift I’d happily stay in work to keep them there. But if we’re going to have to stump up another 20% VAT on top of fees which for the next few years are going to go up 10% a year - that’s the tipping point for us. I can sack off my job and the kids can go to the perfectly fine state. And do their sport through external clubs.

@Lettherebedelight at Winchester prices, yes, I’d agree. We could never afford those sorts of fees - but it’s a very elite school. I’m so pleased it worked out for you and your DC 😊

There is absolutely no way that this would mean that most private schools will close down. The ones near me (London) are unbelievably competitive. For every family that might decide they are financially out of reach there will be two or three who are happy to soak up the extra cost. Labour is not planning to close private schools down!

I appreciate that the rest of the country is not London, but the main point stands - they're not actually closing schools down!

Sure some will not survive though - smaller outside London

@MarshaBradyo I know and that would a real shame for staff and pupils.

But Labour isn't actually closing schools down, a private school in difficulty could have the option of converting to an academy and as pps have said there is more capacity in the state sector than previously due to demographic changes.