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?

Instead this is just an isolated attack and they just won't acknowledge the consequences that everyone else can clearly see.

It’s consequences on a very small proportion of the population.

They don't give a rats ass about true social mobility or levelling up

And it has also been argued that reducing the numbers going to private schools will reduce social inequality over time.

@twistyizzy if you’d consider emailing Keir here is his email address [email protected] as I think you’ve got the most sensible argument here.

i just have emailed him, and yes like you I’d rather stab myself in my heart than vote Tory. But I’m not sure what to do.

@WarningToTheCurious and that's where you are wrong on both counts.
Private parents who can't afford the rise will take their DC out so the only parents who will be able to afford private are the wealthy which will result in private schools becoming more elitist.
Those parents who have taken their DC out of private will use the money to buy houses in catchment areas of outstanding state schools and use tutors, thereby again creating greater inequality. House prices will be pushed up even higher in catchment areas. There will be a higher % of MC fairly wealthy DC in the best schools, pushing poorer DC into the poorer performing schools.
How is any of this creating equality? Parents who can afford it will always buy privilege for their children and you can't get away from this.
The paltry 1.7 billion won't put a dent in the budget of state schools.
The whole thing is a Trojan horse,a strapline for Labour to dupe people into thinking that they care.

@UnsureSchool32 thank you. I have already emailed him and our Labour candidate requesting a discussion. Surprisingly neither have responded, go figure 🙄

Pretty much Tony Blair's first act on getting into government was to abolish the assisted places schme, so i think this will happen quickly.
Furthermore i am not sure how much input tax the school will save - what are their main vatable inputs?

Yes - this will go through pretty quickly, I would think for the 2025/2026 academic year. I would guess that schools would probably look to increase fees in the first year by 10%, they would claim back VAT, probably reduce some bursaries to lower the total net cost to parents. Then subsequent years, would be the usual increases (5-7%). The only schools that would add close to 20% would be the smaller schools, ones that don't have bursaries they can reduce etc....they could be in trouble.
The politics of envy as someone said, make the poor poorer and making the rich less rich.

Private schools closing may make some on here happy but it’s not any better than it happening to other sectors

Plus not nice for the dc. Again many love the sea of putting the boot in but it’s sad for them, leaving friends and what they know

And staff

Nope.

One in every 16 pupils goes to a private school; one in every seven teachers works at a private school; one pound in every six of all school expenditure in England is for the benefit of private-school pupils.

The UK’s private school system has long been a bastion of social inequality. That’s why people buy into it.

Go read the IFS report and some of its references.

@WarningToTheCurious and my point is that the VAT won't do anything to address this.

It will increase funding to the state sector by 2%. If (and that is a big if) it is directed at areas of low attainment then it can have some impact.

You are right in terms of general costs in that the vast majority is payroll probably up to 80% .However these schools also are very keen on flashy buildings , science labs, sports halls etc and the VAT recovery on these ( if allowed and not subject to sone specific exclusion) will be significant.

It is disingenuous of both supporters and opponents of this policy to claim that the additional revenue from this will go to state schools and help reduce inequality (or not).

The tax is not hypothecated. It goes to the same tax pot and can (and certainly will) be spent anywhere depending on where the government of the day chooses to spend.

I am 100% certain it will not reduce educational inequality if the revenue does go to state schools - partly because the amount is minuscule compared to what is needed, but also because demand for private school places is incredibly inelastic. Multiple decade long inflation busting fees rises haven't made a dent in customer numbers.

Most will pay up and continue sending DCs to these schools. I am one such parent, a Labour voter, and support the policy.

Not because I expect inequality to fall, or state schools to improve (they won't!), but I see this as one of the fairer ways of raising revenue without burning much political capital.

Vast majority affected are in the top income decile and most will carry on spending, maybe at the cost of a vacation or two.

Given the absolutely dire state of public services, near stagnant economy, and a growing demographic headwind, if Labour cannot even raise revenue from this small group, then there is no point in coming to power.

But, the state will need much more revenue than this, and the rest will not be half as easy.

I think part of the demand inelasticity to price of independent school fees is because those who pay these fees simply pass on their higher cost of living to whoever pays them. They do that because they can. So, if it’s a city lawyer or someone in finance, they bargain harder for a pay rise. If it’s a business owner, they will push up prices. This works because everyone else at their level is doing the same. The more the government squeezes them, the more they will push up the pay gap compared to the rest of the population. So inequality worsens.

I think parents should get a tax break for choosing Indy schools, not an extra tax. Taking the burden of your child's education off the state is surely to be encouraged in these days of huge classes, breaking buildings and striking teachers?

@WarningToTheCurious but low attainment isn't just due to the school, it is also due to home life/violence/level of affluence at home l and parents who aren't invested. Labour have said nothing about how they will tackle these things. The VAT will barely cover replacing concrete let alone all the wonderful additional things they claim it will bring.
Plus as a PP has said, the revenue from VAT won't go directly to schools, it will go into the taxation pot and most likely be spent elsewhere. Laboir haven't promised to ring fence the VAT revenues have they?
You need to look at the detail rather than the headlines, how will private nurseries be affected? They will have to charge VAT on their fees also. Not only wealthy people use private nurseries.

This does happen in other countries. It works well for them

I think one of the contributing factors to inelastic demand has been low interest rates. Lots of people remortgage to pay fees etc. I am not sure that inflation and interest rate rises will have been costed in to such studies - mainly because we haven’t had it for the last 10 years or so.

Plus as a PP has said, the revenue from VAT won't go directly to schools, it will go into the taxation pot and most likely be spent elsewhere. Laboir haven't promised to ring fence the VAT revenues have they?

Until the detailed proposals are published then nobody knows.

How will private nurseries be affected?

They don’t need to be, same as SEN provision doesn’t need to be affected - by careful definitions of VAT rated educational services, by exemptions or by zero rating.

We downsized in order to have much lower mortgage and be able to pay fees. We are in the cohort where we couldn't do it comfortably but were close enough that it was an option with changes made. It was a priority for us because our DS1 has significant SEN and the indy we have him at have nearly 30% SEN kids and great pastoral care.

It was worth it but we don't have much give in our budget. 20% will make a difference. A big difference and tbh I am head in the sand because I hope it won't happen.

Unlike a family member we did not fudge the situation by renting then purchasing in a more desirable catchment area then clap ourselves on the back saying we have more morals than those who just pay for private.

Well as long as your child doesn’t have to go to those rubbish state schools that’s alright then.

Who the parents!

This is what happens in Australia , if you choose private you get a credit from the state and I think private schools still get state money . This may also be the case in France with sous contract.

https://www.bbc.co.uk/news/uk-politics-66942985

They have now officially gone back on the ‘end charitable status’ pledge as predicted.

That was fast!

I imagine that it is entirely a pragmatic decision, that there would be so many laws to change to remove the charity status from all private schools, as some were set up by their own Acts of parliament, that it would be a very time consuming thing to do.