Private schools to go bust in the coming recession

[ampletime]

The mother of all recessions is coming in my view. The world economy is pushing towards a large scale and deep debt crises. This follows the explosion of government deficits, borrowing, and leverage in recent decades and now that debt is growing due to high interests. Governments are in eye watering debt, individuals are in debt and so are private schools.
In the last 5 years private schools have been on spending sprees with new builds and new facilities mostly for marketing appeal rather than need. But it’s all been funded on debt. I work for a building service solution company and the number of private schools in the last 5 years have exploded on our books all funded by debt.

I know of one boarding school now in trouble and they have sold off their build and it will be converted to flats.

Be careful folks out there. Times are not as good as these schools portray.

“The IFS are independent, their research is much less apocalyptic.”

I thought the IFS report was just one publication by one academic in his 30s?

I'm not sure why 'in his 30s' is relevant? Thats a weirdly ageist remark. The IFS is a respected (edited) organisation. If you're attacking individuals you've lost the argument.

I think everyone would accept the private schools themselves are hardly unbiased commentators. Nor The Telegraph!!

They've been explicit to give clarity to the sector presumably.

Yeah that'll be it!! In all seriousness it is really worrying if this is the way that they do intend to make policy and for me that is the biggest worry of all this. You would expect a change of this nature to be based on sound evidence, with consultation on draft proposals to avoid unintended consequences and transitional arrangements to avoid disrupting children at key points in their education. Instead they are saying that they'll definitely do this as soon as possible whilst simultaneously making statements that are incoherent or unworkable (cf the rowing back on charitable status). I can't imagine how difficult it is for schools to respond with no certainty at all as to what will be covered, what the rate will be, how exemptions will work for SEND etc but with the constant repetition that it will happen straight away.

@Araminta1003 The IFS usually acts as an 'umbrella' under which academics / researchers publish their work - usually reputable as the IFS would not like its brand eroded.
The research has an interesting section on the uncertainty about demand elasticity - that is, how much demand will respond to increased prices and, which is rather key to the the headlines as to how much would be raised. He acknowledges that there is lots of uncertainty and, arguably, the estimates area based on historic studies where the 'income effect' is not fully considered - that is, given that fees as a percentage of income have been going up, an increase of x% will be more impactful than when fees were a lower percentage of income.
So overall, sound enough research but would be possible to produce an equally plausible paper with quite a different result.

Beyond the economics, as mentioned by others, there are the concerns about the ideological reasoning, and whether this will be extended to other areas (e.g. health) or whether the ideology will then clash against the political reality (although in both cases private providers are complementing public provision, the percentage of people affected and how it is viewed is different).

On a related note, I am quite dubious as to the wisdom by labour of making this a core tenet of their manifesto proposals - I cannot see many people deciding to vote Labour because of this policy, but I do see quite a few people deciding not to vote Labour because of the policy.

No one is suggesting private school should be scrapped.

They are. The Labour Party actually voted to abolish private schools in 2019. A lot of the people who voted for that are still members of the Labour Party. They haven’t just changed their minds. They’ve merely put Keir Starmer in his position to give the illusion of being a more Centre party. In reality, the hard left are still in the Labour Party with exactly the same views they had during Corbyn’s time.

The deputy leader of the Labour Party and the shadow chancellor have all expressed a desire to abolish private schools.

EVERY parent cares about their own child and personal financial situation. Those who can afford fees but pay extortionate amounts for catchment properties are not morally superior. FYI No-one is asking the electorate to prioritise those paying for education. You still don't seem to be able to accept the basic fact that parents who pay fees do not cost the state and their fees are not subsidised.

It will be interesting to see what happens and whether Labour will make us the first country to charge a tax on education. In our case (and many others), the damage is done and we will be going state for secondary regardless as we can't take the risk and see VAT slapped on once started.

I understand why private school.parents want to campaign against this in their own self interest.

I understand why Tory supporters more widely want to campaign against the policy.

But I'm not buying the idea the way this policy has been announced somehow portends Labour can't govern. Firstly, we currently have a government that visibly can't govern. Everything is broken. Labour are clearly more organised than the Tories (who couldn't even add up the 2023/24 school.budgets properly). Secondly, schools themselves have been told what to prepare for. At least they're not facing RAAC closures announced the day before school opens.

Like I say, those voters who will base their vote on this policy should just be honest they personally prioritise private school income over state school income. That's democracy, people can vote for any reason.

Democracy is also people voting for their own reasoning not this saying people ‘should just be honest’

I am being direct and honest. It’s a crap policy for ideological reasons only appealing for the wrong reasons.

I am not a Tory voter. I am a voter who desperately wants to have at least one decent responsible choice at the next election and who is very sceptical about that possibility given recent (and not that recent) history. I agree that the Tories have been awful but that in no way changes my conclusion about Labour. My conclusion is that they are doing this to try to appease the radical left-wing of the party that had called for the abolition of private schools and removal of their assets under Jeremy Corbyn. They don't actually care about whether what they are saying is coherent or workable because the policy itself is not the point. I wouldn't go so far as to say it means they are unfit to govern but it makes me sceptical of their ability to do so. The fact that I am also sceptical of the Tories ability to do so is beside the point. It would not be the first recent election at which I thought all options were poor. I had hoped that Keir Starmer's Labour would be the turning point. Perhaps it will be but he's having a difficult time keeping all of the factions in his party together.

My position is I don't think private schools should be exempt from VAT.

I've not believed they should have charitable status for as long as I remember, but I understand the practical complexity of changing that.

Private schools are not exempt from VAT they pay lots of it. I assume that what you mean is that you don't think provision of education should be exempt from VAT, at least if the provider is an independent school.

It’s interesting to see the cracks appear. It’s far easier to keep factions from getting into hot water when in opposition for a long time, but they too will get factions exposed.

This policy to me is the worst of economics and reasoning. It’ll be bad for a decent sector and it’s only there because there is very little to sell at this point.

I’d prefer they didn’t bother and were more focused on coherent and workable policies.

I think charitable status should be removed, but am fine with using vat change to achieve similar outcome, WRT private school fees.

If legally it can't be done, it can't be done.

I can foresee it's the kind of policy that gets mired in the detail.

I think, unfortunately, the media and politicians have confused people on this issue.

I think charitable status should be removed,

Plenty of private schools are not charities even as things currently stand.

but am fine with using vat change to achieve similar outcome,

Removing charitable status was never going to affect the VAT position. I don’t think the Labour Party even realised this, which might be why they’ve backtracked on their charitable status plans.

“I'm not sure why 'in his 30s' is relevant? Thats a weirdly ageist remark. The IFS is a respected (edited) organisation. If you're attacking individuals you've lost the argument.

I think everyone would accept the private schools themselves are hardly unbiased commentators. Nor The Telegraph!! “

I should have explained that better. It was meant to convey that the particular academic’s career would have spanned the Tory rule period primarily and not the whole of the 13 year Labour period before that.

State schools don't pay vat on their purchases either AND those paying fees also pay taxes to the govt and don't actually use the educational institutions, their benefits systems and other things. I think people are very misguided about what private schools do to the state of state schools. It is also ridiculously wrong for posters to say that private schools (all I am assuming ) are not worth the money. Golly gosh. Sweeping statements.

State schools don't pay vat on their purchases either

This is partly correct. State schools can reclaim the VAT they pay on their purchases. However, private schools cannot. They have to pay the VAT and cannot reclaim it (this would change if VAT was imposed on fees). Therefore, private schools are already penalised by the current VAT system.

In addition, parents are also penalised. For example, under the Assisted Instrument Purchase Scheme, state school parents are able to buy musical instruments net of VAT. Private school parents have to pay VAT on their instrument. 2 different parents are treated differently for VAT purposes depending on which school system they use, despite buying exactly the same item.

Oh don't be ridiculous. The vast majority of Tory voters send their dc to state school.

@DisquietintheRanks as less than 7% of pupils attend private school in the UK obviously most Tory voters send their dc to state school. Honestly, people face such a messed up view that bears little resemblance to reality

It's mad how skewed the reality is of who attends private schools. I think people can only 'imagine' an Eton style system of pupils. We have so many in state schools that match the wealth of those in private but I don't think the envy brigade want to know that.

I know of a country where those who educate their children privately are given a tax rebate as their children are not on the government tit for education. If they are not using state money (tax payer money) for education then why should they pay vat.

@ampletime Becayse it’s politically driven. It’s little to do with fiscal common sense. It’s a policy that’s thrown to the wolves that inhabit the left of the Labour Party. It’s about left leaning voters who are envious and believe you should be punished for earning too much, again and again. It’s punishing the middle classes though. The ones who strive for something extra for their children. It doesn’t punish those who move into desirable catchment areas or who tutor like mad for grammar schools when others cannot afford it. It’s sad really.

Why would parents of children in the private system voluntarily pay the fees into the state system if their children move to state schools.
If my DS had taken up the state school place he had at yr7 it would have saved me 105k over the last 7 yrs. I’m afraid that had he gone to state school I would not have donated that 105k to the government to help out with their education costs. Also remember that the 105k is after tax, school fees are not tax deductible. I also paid out 80k in tax and national insurance for the same period.
Once the private schools go the billions of pounds paid in school fees will become disposable income.
If the majority of middle class families, who pay out between 100 to 200k in school fees for each child, chose state over private they will have plenty of money to make sure they are in the right catchment area. They chose to prioritise education over lifestyle and will continue to do so whether private schools survive or not.

We chose private because it was a good fit for DS who was bright and a bit quirky at 11. Also the distance to the local state school was the same but it was very, very rural. His school is in the middle of a city and he had to travel by bus daily and negotiate the city centre. We just felt that he would become a bit more streetwise. The cohort for both schools was very similar, wealthy rural middle class. No superwealthy, mainly farming, business owners and professionals. The state school was 10 miles from civilisation in any direction with a small village shop.

I have electively worked for the NHS for the last 37yrs. I say electively because I could have earned two to three times the amount working privately.
There is just enough of a socialist conscience within me to feel uncomfortable about selling out.
However, I have recently retired, but still do a day a week now privately. I’ve done my bit and now I can work how I want to both ethically and morally ( this is a completely different thread ). I don’t feel I have sold out because I can now afford to provide the standard of care my patients deserve. The NHS just does not provide the fees required to be able to spend the appropriate time needed or the quality of materials available.
I suspect state education is similar. They do their very best but with the limited fiancé available. It could be so much better.
Private education is no different to state. The curriculum is identical, the teaching is the same. What is different is the environment, the zero tolerance with regard to behaviour so teachers can spend the whole lesson teaching. Lower class numbers means that the curriculum can be accelerated and many subjects include enrichment so the pupils are taught more than the bare bones of a subject.
The pupils enjoy a huge amount of cocurricular opportunities. For DS that was sport, it was very apparent how important it was for his mental health during the lockdowns.
Being confident isn’t a crime, all too often it’s seen as arrogance. Confidence allows you to push your own boundaries and realise your potential. All too often people prefer to stay in their comfort zone, particularly socially and limit their opportunities.
I think that the stereotypical private schools are very few in number. Most are schools that a lot of state schools aspire to.
A number of local state schools have adopted some of the practices common in private schools such as zero tolerance to uniform wearing and detentions for forgotten equipment or books. Even mild behaviour issues receive detention. There was much gnashing of teeth by state school parents but that eventually settles down.
Children very quickly learn to stick to rules in private schools. If they don’t they are out. Just because parents are paying doesn’t mean that school will accept poor behaviour.

I agree. Working in a state school is tough. I cannot see why anyone would want their child to suffer that if they could afford to pay. The teachers do their very best but the reality is that lack of funding in all areas means the environment, support and extras and equipment are just not possible. I would choose private secondary in a heartbeat and I work in the state sector.