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.

Supporting disadvantaged pupils is a national priority. It also benefits every other pupil in the system as it prevents behaviour issues which drain resources away later.

My children get no additional support but if the kids who need that support are helped, it alleviates pressure across the whole system, which will benefit my kids.

That’s fine. We use state foo and dc did well with university at the end, happy to have got what we did without fees.

Even using state the policy is poor. It’ll get people going emotionally, not do much, dc will be disrupted and smaller private schools will fold.

Interesting how things are being conflated and stereotypes bandied around...
Getting back to the original post - I agree that quite a few private schools are likely to go bust as a result of: (a) decrease in natality rates from the 2011-12 peak, (b) recession, (c) VAT on fees, and (d) elimination of tax benefits coming from the charitable status [To note, c is different from d].

Those that belief that parents of children in private school are all very wealthy Tories might want to get out a bit more, and visit more private schools (even within my corner of SW London there is a huge variety in the socio-economic and ethnic background of different schools) and speak with more parents with children in private schools. Similarly, the comments about people referring to parents sending children to private school because they do not want their children to mix with children from different backgrounds say more about the prejudices of the poster than about reality.

I do not think that the measures when/if implemented, would be the demise of all private schools but it will impact some, likely to be disproportionately so in less wealthy parts of the country and would make private schools less socio-economic diverse. There will be an outflow of pupils in those areas.. how big is anyone's guess - the IFS estimates were, after all, done at a time when the economic environment was substantially different. It is fair to assume that, in a recession, the impact will be much bigger. As to the impact on the finances of state schools, it remains to be seen if any money obtained from (a) and (b) will be ring-fenced for education and allocated to those areas/schools that have been most impacted. People may want to refer to previous government track record on that front.

Given that (a) and (b) are not a political decision, I would be really interested in views (especially from those advocating the demise of private schools)
(i) there are other private services that 'compete' with public provision that are not subject to VAT - would they put them in the same category and also subject private insurance and private healthcare to VAT?
(ii) given that charities have indeed tax benefits regardless of the sector, wouldn't increased requirements on charity activity be preferable - e.g. increased bursaries, outreach activities, etc?
Just some thoughts ..

Just a reminder that when you’re wishing these schools closed, it’s not just teachers who will lose their jobs. Private schools employ admin staff, receptionists, cleaners, kitchen staff, grounds people, maintenance staff. And not forgetting that money earned is money frequently spent in the local community.

God, they're getting desperate now. "But what about the cleaners? They're poor people. Don't you care about poor people? I care about poor people, as ably demonstrated by my post about them."

“They are so blinded by their hatred of private schools that they won’t care. Even if it was to the detriment of local state schools, they’d be happy to see a private school close.”

And that’s why they’re still unfit to lead the country. They don’t care what’s best for the country, they just wants whatever sounds good in the Guardian and whatever gets people on benefits shrieking ‘yeah fuck the rich’.

I pulled my autistic DS out of the state system because the noise and crowds at primary school were breaking him (and the head didn’t care). He’s thrived at private school. Now for senior school I have to choose between a state grammar school place where he’ll struggle with noise and crowds again, or a small nurturing private school where I want to send him but that I can’t afford if Labour raise the fees 20% overnight, and which might be at risk of shutting if Labour get in anyway. If we accept the grammar place, that’s one more child who lives further from the school in a cheaper area who doesn’t get to go to grammar school.

It’s repulsive seeing Labour turn children’s education into a political football. I despise Kier Starmer even more than I despise the current government and that is quite an achievement.

Ps the big famous schools like Eton and Harrow are untouchable. They could fill all of their places with Chinese and Russian children overnight no matter the price. What Starmer’s proposals will do is shut the small private schools who act as the safety net for children who can’t cope in larger state schools.

God, they're getting desperate now. "But what about the cleaners? They're poor people. Don't you care about poor people? Icare about poor people, as ably demonstrated by my post about them

Ermmm? It's a fact that hard-working, decent people will lose their jobs if/when schoolw close. It's also a fact that, even if just temporarily, it will mean less money floating around the local community, potentially impacting all sorts of other business.

As for 'they' are getting desperate, life-ling Labour voter who happens to work in a private school? There is always a bigger picture, even if you don't want to see it.

If you whack 20% on any sector it’ll contract

People will lose jobs. It’s just schools where people get enjoyment out of that

It’s repulsive seeing Labour turn children’s education into a political football

The Tories have done this for the last 13 years in the state sector. They don’t give a shit about anyone’s child. I had one at school under Labour and one at school under this government. I taught for 25 years under Tory, Labour, Tory.

I know which child had the better education and which government invested in education.

The Tories don’t care.

@Ayalga There are lots of private schools, especially girls’ schools, that don’t have huge pots of endowment money. Most of these schools are relatively new. They don’t have hundreds of years of endowment gifts and subsequent uplift in value. At many less ancient schools, bursary money comes from fee income. It’s therefore difficult, in the current circumstances, to get parents to stump up even more. Many schools raise bursary funds from richer parents but unless you have a lot of these who are prepared to give, it’s hard. So I’ve seen great generosity but the more bursary students you have, you know your bursary income will be more limited as these parents don’t contribute. For obvious reasons. It’s always thought private schools are all like Eton. They are not.

We just have a section of the voting public that dislikes wealthier people but wants their money. I tend to think of people pay tax fairly, let them make choices. We have PP funding for disadvantaged Dc in state schools. There are also many private schools that are not very good. However that’s the same with state schools where poor leadership and teaching are holding the school back. Some schools in deprived areas are great. What we don’t have is enough good teachers to go round. In some schools I’m not surprised good teachers don’t want to go there. A well run school is so important and making the less popular private schools close won’t help this at all.

Labour is doing this for political and class warfare reasons. It will have no effect on improving state schools at all. None.

For those comparing Labour and conservative administrations spending on education, does it occur to you that they were operating in entirely different economic circumstances? Labour was rolling in money from 1997. They were in power when the GFC hit and a labour minister left the “there’s no money [hahaha]” note.

Do you think Covid topped up the coffers?

Education is a core political policy area. Blair ran on 'education, education, education'. The Tories are always wanging on about schools - they forced academies and free schools on an unwanting nation. Every party should do politics with education.

The bottom line is private schools look likely to lose an unjustified subsidy. That's it. They provide a non-essential private service, and their tax bill has been subsidised by the Treasury up to now, for political reasons.

There is no subsidy. VAT is extra

The Tories had enough money to keep subsidising private schools by covering their VAT and gave plenty out to people like Michelle Mone.

And the cuts the Tories have made have ground the economy further down.

And that's before we get to the economic self-harm that was Brexit.

It is a subsidy because other services pay VAT, but private schools were let off.

It costs the treasury to not charge VAT.

Education generally doesn’t attract VAT if you look outside U.K.

A subsidy would be to rebate as some places do.

Most people don’t send their kids to private school. They should all be razed and starter homes built on the huge grounds.

Arseinthecoop so would these school buildings be confiscated? That might not be easy under a democratic government.

@MidnightOnceMore Supporting disadvantaged pupils is a national priority. It also benefits every other pupil in the system as it prevents behaviour issues which drain resources away later.

Jesus wept. being disadvantaged is not synonymous with bad behaviour. Plenty of kids in private schools are badly behaved (and to an extent tolerated because of the fees they bring with them). Plenty of kids who are carers, live in one-income households, rely on benefits, have an absent parent, are homeless, are suffering themselves with illness or disability etc etc etc are well behaved in school, all day, every day.

and tipping children who struggle with noise, large class sizes, who have learning difficulties such as dyslexia etc out of the private sector into the state sector is hardly going to improve their behaviour, is it? And that will impact on everyone.

That’s one take but not the feedback I’ve had from private school parents 🤣

SabrinaThwaite as a poster who frequently writes about her strong opposition to private education, where do you come across all these private school parents? I can’t imagine you have many as friends.

We have plenty of friends that sent their children to private schools. And plenty that didn’t.

Strange that eh?

SabrinaThwaite thank you for answering my question.

Personally I would definitely stop Dc being carers. Any money from vat should stop this. If greatly limits the life of the child.

I have used both state and private schools. Regarding teaching, especially at our local small private primary, it was not universally great. We moved dd as I felt it was below par and we went state. DD had really come on during EY provision there as it had really suited her. I really thought they struggled with competent teaching above that and quite a few teachers weren’t uk qualified and would not have got jobs in state schools as teachers. They were teaching just 12 Dc and I knew they could not teach 30 in a state school. I found much stronger teaching in the state sector. I was a school governor in a deprived area so was in a position to compare. So I’m not sure all teachers will readily move to state schools if private ones close.

The great issue will be finding money for everything everyone wants. It’s not there.

Other services, such as private health, don’t attract vat. No government wants greater pressure on the health service. So vat on school fees is an attack on private education and this section of wealthier (or prudent) parents. However it’s one without thought given to the consequences. This is typical of left wing vengeful policies.

A subsidy is a direct or indirect payment to individuals or firms, usually in the form of a cash payment from the government or a targeted tax cut. is a basic explanation.

Are private schools charities? No.
Do they provide an essential service. No.

Should they be banned? No. People should be free to purchase their services on commercial terms.