Skip to content

This is an interesting thought

Labour’s private schools tax raid ‘will make education more elitist’
Labour plans to add VAT to school fees if it wins power at the next election, claiming it could raise £1.6bn to improve state education

The actual rich aren’t going to be moved one way or the other by 20% on school fees. The aspiring – or extant – upper middle and middle classes probably will be.

Let’s say that it halves the private sector – an exaggeration, but run with it. The 3.5% that still go will be only the rich perpetuating, won’t they?

13 thoughts on “This is an interesting thought”

  1. And it’s going to make no difference to state school performance. £1.6 billion is less than 3% of the education budget.

  2. What is the proportion that will be paid for by the State anyway, when fees for diplomatic and army brats is calculated ?

  3. Oh, you cover this in the next thread.

    But as you point out, Labour haven’t thought the policy through. Mind you given the intellectual capacity of the Shadow Front Bench now “enhanced” by Galactobrain Hilary Benn, I reckon that they ‘d have difficulty working out the consequences of pushing the button on a Pelican crossing.

  4. Bloke in North Dorset

    Another nail in the coffin of social mobility. Labour elites do like pulling up the ladder behind them.

  5. Pedant alert.

    Please stop referring to these creatures as “elites”. That word implies some superiority in terms of positive abilities/morality or other qualities.

    If you must, say “anti-elite”.

    Or kleptocracy, scumocracy……

    They think of themselves as genuine elites of course, and while it may be a minor thing, if you use the actual word is describing them in any sort of forum, you are – no matter how peripherally – accepting that they are.

  6. At least one major private school worked out its charitable work – providing facilities and support to state schools and underprivileged was the same 20%. So they may just stop. Any one think the UK gov will spend that money better? I know of another that thinks it can offset the cost by seeking scale and increasing provision.

    There are a few already who never were charities and they seem to compete fine.

    Going to be interesting if removing the onus of charitable restrictions that go along with the VAT saving stimulates the sector, in particular unleashing new models of capitalisation and increasing the mid range of private schooling (seems possible in poorly served cities ).

    I suspect though overall as there is a strong lag in take up impact – pre paid school fees, not interrupting exam years etc that the policy will show a good short term revenue for gov and over the long time be very very expensive in real terms for the gov with a specific loss of support for London and other city state schools.

    The mix of whether it polarises take up , locking in elitism, or makes it more egaliterian will be interesting but neither would seem to support Labour’s intent or political interests. The other potential outcome is locking in support for the perceived alternative that is grammar schools which has long seemed a odd dogmatic objection.

  7. If a political party wants to make the elite pay proportionately more in taxes to the government it’s simple. Remove the VAT exemption on food, books and newspapers.

    Obvs, you’d have to add a sterling to the weekly applicable amount of benefit claims to offset for those on lowest incomes.

  8. Chris: The same thought occurred to me. Independent schools are non-profits. Thats why they get tax relief. (This proposal should send a shiver down the spine of other non-profits which charge for their services, by the way, if they’ve got any sense.) So if they’re forced to operate on a commercial basis and become profitable, they’ll have to cut costs and try to compete – at least to some extent – more directly with the state sector. I’m not saying they all would (the boarding schools in particular are in a position to market themselves more agressively overseas) but it’s such an obvious approach that it’d be surprising if some didn’t.

    It could backfire spectacularly for the socialists.

  9. Y’all are missing the point.

    It’s nothing to do with education or equality etc etc.

    It’s class warfare, naked pure and simple.

    All educational downsides are features, not bugs.

    All costs are considered worthwhile given the desired class outcome.

  10. One other point to note – if we assume that putting up the price will reduce demand then the very marginal independent schools will go bust. Most of them have pension schemes for the staff that will then need to bailed out by the state.

  11. Sam,

    Not quite right, you can set up a limited company as non-profit (aka company limited by guarantee) , and you do not get tax breaks but simplistically only non-profits may apply for charitable status.

    Charities that do are subject to additional restrictions and reporting criteria. Including the limits on political activity and changing their activities and advantages on fund raising. As charities pay VAT they have a perverse incentive to vertically integrate.

    Some ‘charities’ play it the other way and are generating huge sums in consultancy especially to public sector – in effect paying themselves as founders whilst avoiding VAT giving them a 20% advantage – especially as these are also low input costs as charities pay VAT (with some limited exceptions). This goes for a range of ‘cause’ driven activities including some who have a dogmatic approach to what the rest of us thought was engineering …

    So we will maybe also see significant restructuring in the sector – separation into subsidiary service and real estate companies etc each of which could be optimising and spreading a model.

    Competing with the state provision will always be at a massive disadvantage in straight comparison as their state school will have the state funds (unless we follow the swedish model etc). However the value of eg innovation, self selecting peer group at parents and child level, added value services could easily offset some of that.

    It could throw into harsh relief the issue we have in use of competing public and private services – we tend to avoid looking at the systems where you are either completely state or completely private which creates a massive hurdle for those looking to simply improve a bit on state provision (although reality bites and often there are workarounds creating there own perversity – house prices in grammar school catchments …). The VAT on schools will make that worse of course but it means things like capital resource are replicated at great costs. If you use a charity based private school you are already in effect paying more than twice over for education (state funding + school fees + charity).

    However it is that lack of ‘top – up thinking that creates some of the biggest hurdles to improving ones lifestyle and is exactly what the left and unions insist on. Vase amounts of health and local authority services in particular.

  12. Thanks, Chris. I’m aware it’s not quite as simple as I made out, but I was trying to be brief.

    My parents were actually involved in turning a century-old nonprofit into a company limited by guarantee a few years back (Dad was a lawyer). It was a members’ club – amateur operatics – which had been living beyond its means, and the members, rather than reining in their spending, decided to evade their personal liability and carry on more or less as before. The club folded within a decade.

  13. That’s the other problem. You can’t simply convert a charity. AIUI, if you want to stop being a charity, you have to shut the thing down *and return the assets* – you can’t just half inch it into a new Ltd, of whatever stripe.

Leave a Reply

Your email address will not be published. Required fields are marked *