Private schools to go bust in the coming recession

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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.

Midnightoncemore
No one is suggesting private school should be scrapped.

Yes they are. On this thread alone 43ontherocksporfavor and arseinthecoopwindow want them scrapped.

Another76543 pointed out:
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.

My DDs didn’t experience this zero
tolerance of minor rule infringements at private school. I’m quite glad about that. Far more encouragement to improve for those who needed it. It was therefore a happy school.

No child was asked to go for anything minor as it wouldn’t have met school policy on exclusion. The rules were limited to a few short sentences which most of us appreciated. I do recall a boarding DC who ran away and couldn’t be found. Unfortunately the school should have seen this coming because she definitely should have gone earlier. She had boasted of running away from her numerous other schools. Clearly was not a happy child. It’s interesting how one child can upset the whole school!

Agree, our school also has tolerance for infringements to school rules and sets about to address why a pupil maybe struggling. However, their tolerance for persistent disruption is very low - they expect parental engagement if a child is disrupting a lesson for any reason and to work with them to help solve the issue. They will ask a family to go elsewhere if a child is disrupting everyone else and the parent does not want to help stop it.

Labour is lying that it will be implemented immediately. A complete lie and they know it fully. It’s just vitriolic spin to get more votes.

“HM Treasury (“HMT”) would need an Act of Parliament to change primary VAT legislation. Specifically, the definition of an “eligible body” in Note (1), Group 6, Schedule 9, VAT Act 1994. The definition of eligible body in Note 1 relies on several Education Acts, together with other separate qualifying criteria, which include a restriction on the distribution of profits.
It should be noted that in consultation with the education sector, HMT and HMRC have previously tried and failed to remove several anomalies from the VAT exemption for the provision of education.
The combination of archaic legislation, the need for parliamentary scrutiny of any changes, a reasonable consultation process, and a lead time for such a fundamental shift in tax treatment, will cause a lead time to any changes. It is impossible to be certain, but particularly given the bottleneck of parliamentary time, our best estimate is that these changes will not be introduced until at least the payment of fees for the 2026 – 27 school year. This estimate is based on the assumption that the General Election is no earlier than the fourth quarter of 2024.”

https://www.mha.co.uk/insights/vat-private-schools-fees-a-labour-government#:~:text=There%20are%20further%20assumptions%20and,no%20VAT%20can%20be%20recovered.

The idea that a VAT tax raid of £1.2b will do anything to fix the educational landscape is a joke.

“A government survey of the state of 22,000 schools in England in 2021 revealed a growing need for repairs, with a bill for future works already at £11.4bn.”
https://amp.theguardian.com/uk-news/2023/sep/06/price-of-fixing-school-concrete-crisis-in-england-approaching-150m

The idea that this policy will fill the magic money pot on day one of a Labour government and suddenly everything will be rosey in the state sector as a result of a VAT imposition on private schools, is just laughable.

We are more indebted historically than we have ever been. There is no money like in 1997-2010 when we had the best bull for many decades and tax receipts were plentiful.

We have an aging population and the NHS Future Workplan is fully committed to by both parties and agreed to be fully funded.

Of course Labour, rightly are trying to prioritise education too but this policy isn’t going to find the missing magic billions needed now the nhs has been given first priority.

The only way to do that is to tax genuinely rich people in the 1% at 60% or more on their higher earnings. There would be no need to tinker around with private schools raising a twentieth of what’s needed.

And why don’t they?

Because many of them are in the 1% and don’t want to be taxed personally at that level, nor they’re big fat wealthy donors.

Companies regularly use dividends to pay directors, taxed only at 20%. Most of parliament have a private company of some sort to take advantage of these tax breaks. Or they own a second property somewhere that’s in a limited company.

They are all hypocrites, Labour and Tories and they set the common people against each other while they drink subsided champagne, beers and gourmet meals in Westminster.

That should be what’s discussed on these threads. The distance between power and ordinary people never felt further in my lifetime. The Tories really screwed us on that one but I don’t foresee Labour changing the set up which will be doubt be equally advantageous to them.

“The only way to do that is to tax genuinely rich people in the 1% at 60% or more on their higher earnings. There would be no need to tinker around with private schools raising a twentieth of what’s needed. “

That does not work though. That is why they went back from 50% to 45% on the Additional Rate. People cut hours, become demotivated.

They should tax death properly. If every person has to pay A flat 10% of their wealth following death that would raise a big pot of money. But they are too scared to do that as it loses votes.

You cannot keep taxing a few higher earners more and more when other countries can easily offer them jobs. It has never worked and ends up meaning the whole country is poorer.

Exactly this. You cannot just keep saying “tax the 1%”. They will leave the country and move elsewhere. Plenty of other countries would have more beneficial tax systems. Everyone has a tipping point.

You cannot rely on the 1% to subsidise the other 99%. The only practical way of increasing tax takes to a meaningful level is to tax a larger proportion of the population a greater amount, but it isn’t politically popular.

From parliamentary publications

“a 1p increase in the basic rate of income tax would raise £5.5bn in 2022/23 and a 1p increase in the higher rate would raise £1.3bn in 2022/23; A 10% cut in the income tax personal allowance would raise £8.8bn in 2022/23 (0.4% of GDP)”

It’s all very well saying that the state education spending needs to increase, but the funding needs to come from somewhere - either increased tax or decreased spending.

There’s an estimated £6.5bn in benefit fraud per year - clamping down on that would raise almost 4 times the amount that the estimated VAT on school fees would raise.

I doubt any politician is brave enough to suggest any of these measures though.

@SoySaucePls I agree with you on the vitriolic spin but also this in pp

@Araminta1003 is right to say look at competitive tax market as it’s not just the us who wants high earners to pay the tax burden.

Anything you do needs to get tax receipts, which means people staying or not changing behaviour

Idk what that is but we do have a large section as state dependents right now

Also looking forward AI will change workforce set up. Whatever happens there we need to get tax receipts from it.

With AI the skewing of total wealth towards the rich becomes an ever greater possibility because they will have access to the newly developed AI and the funding and resources to exploit those opportunities. This situation is only going to get worse.

At a time when personal wealth has exploded but the public purse is empty, you have to ask, why are so many people so extraordinarily rich while others can't afford to put the heating.

I am in the 1% and I believe we should pay more tax as should all 1%s.

From the Oxfam study:

The report shows that while the richest 1% captured 54 per cent of new global wealth over the past decade, this has accelerated to 63 per cent in the past two years. $42 trillion of new wealth was created between December 2019 and December 2021. $26 trillion (63 per cent) was captured by the richest 1%, while $16 trillion (37 per cent) went to the bottom 99 per cent.

According to Credit Suisse, individuals with more than $1 million in wealth sit in the top 1% bracket.

The UK population was 68.4m people in 2021. According to Credit Suisse, a minimum wealth of $2,685,099 (£2,211,528) is needed to sit within the richest 1% in the UK. Latest figures from Credit Suisse in 2021 show there are approximately 685,500 Britons in the richest 1%, with a total wealth of $3.4 trillion (£2.8 trillion). In comparison, approximately 48 million Britons, 70 per cent of the population, have a total wealth of $2.9 trillion (£2.4 billion).

The four richest Britons - from the Forbes real-time billionaire list, as of 30th November 2022 - are Michael Platt - $15.2 billion (£12.5 billion), the Hinduja brothers - $15.1 billion (£12.4 billion), James Ratcliffe - $13.1 billion (£10.8 billion) and Christopher Hohn - $7.9 billion (£6.5 billion). They have a total wealth of $51.3 billion (£42.2 billion) compared with a total wealth of $46 billion (£38 billion) held by 20 million Britons."

How can four British men hold as much wealth as 20 million other people in the UK?

France, Germany, Scandanavia, many many European nations have a much higher tax burden than we do. They also have much better public services, including schools. I'm not saying these countries are perfect but I am saying that the tax rate at the moment on the 1% or let's say the 0.5% is truly inhuman to the rest of the population. I don't see billionaires rushing out of these countries to Dubai or Hong Kong where tax rates are lower, for instance.

We know what happened when Marie Antoinette said "let them eat cake".

At the moment perhaps you both have nice middle class jobs? You might be in the top 10%? But what happens when AI takes your jobs and you can only get £10 minimum wage job in McDonalds and no prospect of ever earning the old salary you had.

That figure of the 1% owning 70% will change and go to 80% and then 90% and what then? We live in a feudal system again???

Because that's what's coming.

Oxfam article source:

You ask yourself why private school creates such division?

It's because inequality has never been so high.

We know what happened when Marie Antoinette said "let them eat cake".

soysauce so what form will this forthcoming revolution take?

SoySauce do you think private medicine is as unacceptable as private education?

If this comes in, and a whole bunch of very happy, very settled children are forced to move schools when their parents are priced out of their private school, what then? Do we not have any compassion for those children? Or do we not care because they happen to be the children of fairly wealthy (but not wealthy enough) parents?

Who cares! Toffee nosed Henry can suck it up!

It makes me sad. They’re just kids.

if labour are determined to do this, at least phase it in, so families can plan ahead and make decisions that will be far kinder to the children that will be affected by it (in both sectors).

Who cares! Toffee nosed Henry can suck it up!

Plenty on here and in the Labour Party are rubbing their hands in glee at this prospect. A further bonus is that Henry will be bullied for being a posho.

Plenty get excited by this stuff. Get them and all that.

You think it's not possible?

No one ever sees it until after its happened.

Look at the Romanovs, the French royal family, Ceausescu, the Berlin Wall.

No one ever thought it would happen until it did.

OK so if we live in an authoritarian state (which is becoming scarily possible) then like in China we'll have no form of resistance, people will be silenced.

Have you seen how the Tories have killed off dissent, protests, arresting journalists?

Is that what you want? That's what's coming if we don't rebalance the wealth of this country. You potentially naively assume you'll be on the right side of the fence.... but that pool is getting ever smaller.

What's that got to do with this?

I've already argued for private schools to stay. Look further upthread.

I'm happy for private medicine to stay. Of course.

I'm all for a free market - but with PROPER FAIR TAXATION.

Yet this will not reduce the inequality in any way!

You think it's not possible?

SoySauce I’m sure it’s possible - I’m just interested to know what form you think the revolution will take.

OK so if we live in an authoritarian state (which is becoming scarily possible) then like in China we'll have no form of resistance, people will be silenced.

Surely people who lived under Ceaucescu and behind the Berlin Wall were silenced but they managed to resist.
.

Tianamen Square. And more recently the covid protests in China. They’ve all been sent to prison, those poor young students never to be seen again.

The way our government is going with making lawful protests unlawful, snooping on our data, phasing out cash so they can have full oversight of all our transactions, authoritarianism isn’t as far away as most people might think.

You can’t protest if you’re constantly surveilled and it’s become unlawful anyway to protest. Which actually it already has.

Its quite frightening what’s going on but most people have got their heads down in their phones…

https://www.amnesty.org.uk/press-releases/uk-passing-new-public-order-laws-marks-dark-new-era-peaceful-protest

I completely agree

“The way our government is going with making lawful protests unlawful, snooping on our data, phasing out cash so they can have full oversight of all our transactions, authoritarianism isn’t as far away as most people might think.

You can’t protest if you’re constantly surveilled and it’s become unlawful anyway to protest. Which actually it already has. “

Our Government could not even police Covid infringements properly. We do not even have ID cards etc - it is an incredibly free country compared to most countries.

A cashless society is good as long as banks are safe, because it cracks down on people not paying taxes, drugs, money laundering etc - all of which are rife. Those black markets are much bigger than some private schools and the Government could make much more money that way for those who need it.

In the mean time, Ireland is booming and now offering a much better quality of life than England. Education and top jobs are competing with each other worldwide now. Limiting opportunities in England will do zilch and just lead to talent leaving and not even arriving. It is already happening due to Brexit. The only bit I do agree with is bringing kids up to be more socially conscious and that does start in schools. Part of the reason why Scandinavian countries and places like Switzerland are successful.

Regarding in person protests, people can protest online far more than they have ever been able to 30 plus years ago and they can reach a much wider audience online.

In person protests require police presence which is needed elsewhere so desperately. If they don’t have enough police how can they allow protests? So if you want to protest do it online surely? Isn’t that more influential anyway without causing trouble on the streets for police officers? And as it is all moving online what is most important are data protection laws and people’s rights over their own digital footprint (and that is seriously lacking even on Mumsnet). It is this latter point that I find most troubling that private companies own so much of our online past.

You assume that things won't change enough that you'll be able to continue dissenting online and that the government won't snoop further. You assume that Prime Ministers for instance won't break the law and that the Police will use their power wisely.

The problem is, power corrupts. Perhaps you've read Lord of the Rings. That's what the book was all about.

The more we allow power to centralise into one place, the more they want it and so the circle continues.

Only 30% of the world lives with democracy. Personally I think it should be protected at all costs.

https://www.theguardian.com/media/2022/nov/23/senior-officers-ordered-unlawful-arrests-of-journalists-at-just-stop-oil-protests

https://www.theguardian.com/media/2023/sep/20/british-journalist-held-by-police-at-luton-airport-for-five-hours-without-arrest

A journalist held for 5 hours under house arrest???

https://cpj.org/2023/05/uk-police-arrest-journalist-rich-felgate-while-covering-coronation-protest/

Another arrested while covering the coronation.

https://pressgazette.co.uk/media_law/justice-police-arrests-journalists-public-order-bill/

Journalists being arrested might become commonplace.

Don't you see what's going on?

A cashless society is fine - until you have no power, a cyber-attack - and then what happens?

There being a reduction in police numbers is no reason to say that in-person protests should be scrapped! That makes no sense at all. Let's just do away with a core tenet of democracy because the Tories under-funded the police? Can't you see where this goes?

The answer is more police, not less. The answer is more freedoms, not less. Everyone's voice should be allowed to heard. Freedom of speech and all that.

Exactly this- people who want private schools shut are seriously misguided as to how it will benefit them. It will merely give your smug envy a little tickle. Rest assured that those who can afford will always be able to find ways to help their children. Out of interest, are the haters also opposed to private healthcare and private home ownership?

@lolo99 Probably. They are fairly close to communists except they will actually need the better off to pay for all they want. So they want the cake and be able to eat it too at someone else’s expense .