Any other Heads publicly worrying about VAT?

[JustanotherBerkshiremum]

DCs at an independent school. The Head is obsessed by the proposed VAT implementation. Since October he has raised this issue in all public correspondence, ie newsletters, the school magazine and the end of term letter.

Are any other Heads out there publicly worrying about the future to their parents or is it just ours? You don’t need to name the school.

I get that it’s an issue but the school can finally claim back VAT. And if they get decent tax advice then they can cushion it a bit more. And it will only happen after the next election if (because nothing set in stone) Labour get in which is two years away.

I’d rather the Head kept his thoughts to himself at the moment. Am I being too harsh?

@twistyizzy ,

That kind of shows your school’s priorities. I wonder if that is an idle threat or has gone through the governing board.

Schools actually need their bursary students. It is often these that get the Oxbridge places abandoned the A* grades that the school depends on to attract new pupils.

Bursaries, although philanthropic, are a synergistic arrangement (on the whole, I know a few rich schools like Westminster are different). Cut the bursaries, cut the academic profile…

@Newbutoldfather DDs school isn't an academic hothouse and isn't highly selective. They pride themselves on an all-round education, not just academic results so they aren't obsessed with university destinations.

The bursaries will depend on the school. Some schools have large endowments that can only be used for bursaries, others are out of current income.

@twistyizzy ,

I can’t comment on an individual school, but what I said applies to the sector as a whole. I still suspect your daughter’s school’s website has a section on results and leavers’ destination, and I suspect most prospective parents look at that before applying.

And, even if the bursary students are not academic, they are normally chosen because they will add something to the school, be it sport or drama.

I do find it sad that private school parents donate millions (in total) towards school fund raisers for new buildings etc, on top of fees. And yet, when VAT is proposed, the go-to cost saving for many is bursaries!

Those of you who think that this is fair and should happen are just of course all happy to start paying VAT on university, nursery, music lessons, swimming lessons etc aren’t you?

VAT is not permitted on education under EU law - which can now, thanks to Brexit, be altered in the UK.

(The Charity status is a whole other barrel of fish and likely to have the lawyers rubbing their hands with glee… I would predict years of wrangling in the courts at vast expense to the taxpayer).

It’s a sop to the Labour left so they don’t notice what Starmer’s up to elsewhere.

Where it will make a difference to state education will be both in house prices in desirable catchments and in parents putting resources into extra tutoring and enrichment at state schools.

Be interesting to know how much that affects setting in state schools.

That’s sad and not helping those who benefit from them

I don’t blame the school but the policy

@OhCrumbsWhereNow ,

Why not?

The uk is in a dire position, with education and health failing. We desperately need money!

Consumption taxes on luxury goods do seem the easiest and fairest way of raising money.

@Newbutoldfather you are confusing scholarships with bursaries. Scholarships are a small (approx 10%) reduction in fees linked to a talent in sport/music/drama etc. Bursaries are up to 100% of fees due to family not being able to afford fees. You think parents will be happy to subsidise bursaries when they are being asked to pay VAT? School have said scholarships will stay but bursaries will end or be drastically reduced.

@twistyizzy ,

I know the difference.

I think schools often confuse them as well. You don’t find many bursary students in bottom sets.

@Newbutoldfather have you got data to support that claim?

But it won’t raise any money.

Private schools currently pay lots of VAT but can’t reclaim it. Now, if Labour say they have to charge parents, they’ll be able to claim back the VAT they pay (and going back at least 4 years). That’s going to be some big bills!

Best case scenario is 1% of current education budget - probably won’t even cover the cost of those kids who switch. Yet will have lots of knock on effects.

So you see nursery fees and swimming lessons as luxury items?

The vast majority of charitable schools will cut scholarships not bursaries because the Charity Commission will take a dim view of charities giving help to those who don’t need it.

I have worked in independent school finance depts and I am afraid it is true that bursaries are usually competitive , hardly any schools are ‘needs blind’ outside of the well known ones such as Christs Hospital. so to get a bursary you have to come pretty high in the entrance criteria , that may not be just the exam, it may be broader, but it’s not enough to just be offered a place. Further in a lot of schools scholarships are honory in that you only get a small amount of money off unless it’s combined with a bursary .

@Newbutoldfather private nurseries will have to pay VAT then ie wraparound care for working parents. Is that a luxury?
In theory private clubs such as swimming, dance etc would also have to pay VAT also so you're happy for their prices to rise?

@OhCrumbsWhereNow ,

’But it won’t raise any money’

https://ifs.org.uk/publications/tax-private-school-fees-and-state-school-spending

According to the IFS, it will raise £1.3-1.5 bio, including all factors such as extra funding for state schools.

@Newbutoldfather but that's a tiny fraction of the current education budget and won't even cover the costs of replacing all the concrete! Pumping money into teacher recruitment won't work unless you fundamentally change the environment in which teachers work, that's why they are leaving: Ofsted, pupil behaviour, constant demands from SLT etc. Those things won't change in the near future and 1.7billion won't touch the sides of it.

@twistyizzy ,

It isn’t much in the context of a £2trillion economy and 800 bio in tax raises. In fact it will be about 0.15% or 0.5% of income tax. OTOH, if the choice is between this and a 0.5% income tax rise for everyone, this seems far fairer.

A meaningful property tax on expensive properties (and a massive reduction in stamp duty) would raise far more and be more economically beneficial, but I suspect it would be equally unpopular here!

Realistically, we need revenue, or growth, or both! There are a limited number of people who can afford more costs…

@Newbutoldfather or we go after big tax avoidance schemes + companies which would raise a lot more than 1.7billion and ring fence that for education?
The people who will take the hit on the VAT rise ultimately are the DC. I'm pleased though that you think private nurseries and extra curricular clubs are luxuries so those parents won't mind taking the hit too.
I am sick of constant race to the bottom in this country in the name of levelling UP. Where is the up? Where is the promise to raise state secondary schools to the level of private schools, to revolutionise the curriculum, to ensure all children get a first class education? Nope, it is a about penalising kids in private schools.
Why do we have to drag down to the lowest common denominator instead of having ambition?
VAT rise won't fund ambition or raise standards in state schools. It is just a soundbite for the tabloids to exclaim a faux attack against the elite. Laughable when so many Labour politicians send their kids to private/grammar/exclusive state schools.

I’m not sure how much of an impact it will have on the election result. Most people don’t have kids in private schools so won’t be affected anyway. I have mixed feelings. Part of me would love to see the end of private schools and good education for all. Not likely to happen. As it is if people are priced out of private they will get tutors and so the inequality in education will be just the same, except the kids will be in the same schools not different ones. In places where a lot of kids go private (Edinburgh) apparently the state system wouldn’t cope if all the kids moved to state. And of course there are always plenty of parents who are rich enough to swallow any increase

. Sounds like yet something else dreamt up to generate populist appeal but not great when you look into the detail.

@twistyizzy ,

The argument that I am most sick of is the idea that a state school, on maximum 50% the income per child of state schools can somehow, magically, level up!

How?

Do you have any idea of the economics of schools (I do, in both sectors). It is almost impossible to attract good teachers in scarcity subjects to state schools. They have to have a very strong sense of vocation to even think about it.

This argument is nearly always made by people who actually care little about education in the country, as long as their little expensive oasis delivers what it says on the packet.

@Newbutoldfather exactly! So Labour's premise for adding VAT is a load of bollocks.
We need a properly considered and costed massive investment into education, not knee jerk and populist random initiatives like VAT.
The state sector is on its knees, if politicians were serious about inequality then they would commit to proper funding etc that would enable standards to improve and thereby negate the need for private schools. Instead they tinker around the edges and actually end up creating more harm.
VAT will result in some kids being removed from the private sector but the parents will employ tutors/move to better catchment areas both of which increase inequality.

@twistyizzy ,

Fundamentally, I agree.

But these ‘proper funds’ need to come from somewhere

Tax is always ‘slice and dice’. I agree with taxing business and hidden wealth, and also a significant property tax, which will also affect absentee landlords.

But, £1.5 bio is significant, and no reason it shouldn’t be a part of the levelling up process that you talk about. As I said , it is 0.5% of the total income tax take.

The people who will take the hit on the VAT rise ultimately are the DC. I'm pleased though that you think private nurseries and extra curricular clubs are luxuries so those parents won't mind taking the hit too.

You’re assuming that there won’t be exemptions for specialist provision.

And of course there are always plenty of parents who are rich enough to swallow any increase

Yup. Demand for private schooling is generally seen as inelastic.

@Newbutoldfather I would be more willing to accept VAT if it was one in a raft of measures but it's not which shows how disingenuous Labour are being. They don't give a rats ass about true social mobility or levelling up otherwise there would be a proper plan and other significant tax clawbacks. Instead this is just an isolated attack and they just won't acknowledge the consequences that everyone else can clearly see.
So for the first time ever I won't be voting Labour because fundamentally they are now Tory-lite but hiding behind the VAT as a disguise.

@twistyizzy who do you suggest voting for? I am in a similar camp to you, I’m from a w/c union membership family so voting Conservative goes against any values I grew up with. Send my kids to Private school; they need it for various reasons and the state sector at a very good Primary was not doing all they needed.

not sure we could swallow the rise.

@UnsureSchool32 good question! I'm going to spend time really unpicking policies from all parties (apart from Tories obviously as hell would have to freeze over) and see which is the best fit.