Politics latest news: VAT raid on private schools will not cause pupil exodus, insists Starmer
So why are you doing it then?
The insistence is – from Polly Toynbee leftwards – that private schools should not exist therefore they must be taxed into oblivion. Because equality. Or only if all attend the state podding hutches can the New Briton be created. The urge isn’t, not really, anything to do with money, it’s abolition. So if people won;t stop because money then why bother?
Schrödinger’s tax.
They simultaneously want to end private education and spend the money that will be raised by VAT. Starmer’s just maximising the money they can spend before the before the box is opened.
As with all things it will make a difference at the margins. Those who were already struggling to pay the fees will get pushed out and back onto the state school system (increasing costs for taxpayers), the rest will suck it up and pay the new fee levels.
So really, the question is “Is the revenue raised by VAT on school fees offset by the additional costs of those forced back into the state school system?”. I doubt we’ll ever get a straight answer on that one, since both sides of the debate will simply pitched it from their own biased positions.
I guess there’s a third position, those who say “Phuq it” and withdraw from private school but instead home school their children. Doubt there will be many though.
Remember that the Labour Party supports Islamic paedophile rape gangs and Sir Keir proudly tells outrageous lies in their defence. (And so does the Home Office.)
So yarp: they’re going to do some very evil things, while lying to your face, because you get the predators you don’t decorate lampposts with.
Have any of you Blokes seen Killers of the Flower Moon? We’re the Red Injuns.
why bother?
Why bother with any of the evil, destructive and antisocial things they do? There’s no political answer to this, need to consult CS Lewis instead.
How many CofE schools are there within the state sector?
And, anyone remember what happened with the 3G spectrum auction?
John Galt: Those who were already struggling to pay the fees will get pushed out and back onto the state school system (increasing costs for taxpayers), the rest will suck it up and pay the new fee levels.
Not quite. This might hold for large public schools with high demand for places. like Eton, Harrow, Winchester etc. but most private schools with, say, 100 to 120 pupils face a serious threat. The loss of 5-10% of the intake could mean closure and the result would mean not a relatively small number looking for places in the state sector but the entire cohort.
Ducky – And, anyone remember what happened with the 3G spectrum auction?
Yarp. Ruined Britain’s telcos with debt.
The monocular thief then rapidly pissed away all that money on hiring more useless twats to the public sector. But our surviving telcos are still struggling.
TMB – The loss of 5-10% of the intake could mean closure and the result would mean not a relatively small number looking for places in the state sector but the entire cohort.
That’s the intended policy outcome, so if VAT doesn’t kill the sector, they’ll just say private schools are racist or carbon dioxide or something, and hammer them again.
NB – Eton, Harrow, Winchester, and other schools Labour ministers and their foreign donors might want to send their children to will be absolutely fine.
Think of private schools as being like cars, or foreign holidays. Cars and aeroplanes will continue to exist under Labour, but like Cabinet minister Oliver Letwin MP pointed out, they don’t want oiks from places like Sheffield being able to afford such luxuries.
@TMB – Yes, I guess schools also operating at the margins of sustainability would exacerbate the situation, but I would argue that those pupils from marginal schools which close, whose parents could still afford fees + VAT would simply move elsewhere, bolstering those schools which survive.
So it remains primarily about parental affordability of the fees rather than anything else.
Sure, there will be some who say “If he/she can’t go to my alma mater (now closed because of fees), then they might as well go to the local state school”, but I doubt that’s the case. More likely they’ll take a middle option of the local grammar school which doesn’t board and whose day fees remain affordable even after VAT (if they get tagged with that).
My argument remains that the response to this will be complex, subtle and marginal and it will be difficult to know even a few years down the line whether the tax payer wins or loses from this approach.
Taxation based on envy seems madness to my eyes and private provision does remove the strain on the state school system, while also providing opportunities for smart, but poor through bursaries, scholarships and partnerships with state 6th form colleges.
John Galt: I would argue that those pupils from marginal schools which close, whose parents could still afford fees + VAT would simply move elsewhere, bolstering those schools which survive.
Up to a point but many private schools operate at close to capacity and they are additionally not sufficiently thick on the ground to be practical alternatives for the school run.
Either way, we can probably agree that the ramifications of this policy proposal have not been properly thought through, the sums involved are footling and the proposal is entirely ideology-driven and based on old-Labour class hatred from the 1970s.
” I would argue that those pupils from marginal schools which close, whose parents could still afford fees + VAT would simply move elsewhere, bolstering those schools which survive.”
You’re assuming that there will be competing schools within a geographical area that wealthier parents whose first choice school closes can then move their children to. This may be the case in urban areas, and the SE but out in the sticks there’s often just one private school that serves an area, if it closes there may not be an alternative within travelling distance the pupils can go to, even if they have the money to pay the fees. If a school in an isolated spot closes odds are that most of the pupils will end up back in the State system, as there is no alternative for them to attend.
This is also an admission that non-state schools add value while state schools don’t add value.
This isn’t a VAT raid on private schools, it’s a VAT raise on people paying for private schools. The schools themselves will see no change in money flow. These morons clearly don’t understand how VAT works. Retailers charge VAT to customers, and reclaim it from suppliers. The very point of VAT is that the very end consumer pays it, the one link in the chain that has no follow-on to pass the VAT on to.
It’s a policy motivated purely by spite, designed to appeal to the lowest instincts. If this is a net vote winner then the people deserve what’s coming to them.
jgh: This isn’t a VAT raid on private schools, it’s a VAT raise on people paying for private schools.
Possibly not ALL of them. I’m not sure that the non-British parents overseas sending their children to school in the UK would not be entitled to reclaim the VAT element.
And another thought. I think it’s been pointed out on here that a significant fraction of private school attenders are British Army or Diplomatic staff children. So the imposition of VAT on fees is just increasing the cost to the British government. Another significant fraction are foreign pupils. Foreigners don’t pay VAT, they can reclaim any VAT paid when they go back to Foreign. So that’s just a net zero increase in revenue to the government. None of this is to raise money, it looks close to being a net *cost* to the government.
And it’s going to need some very delicate drafting to impose VAT on fees for privately-supplied education and only have it due on one perticualar form/method of supplying private education. Will piano lessons be included? Swimming lessons? The radio engineering exam I did last year?
@John Galt some of those who suck up the cost will now move to the margins have to cut back on spending on elsewhere and it won’t be on VAT free goods.
The problems with those effects is that they will be in the noise so won’t count against the politicians when/if the reckoning is ever done.
@TMB I’m sure one of our tax experts will correct me if I’m wrong, but I thought you only got the VAT back on goods you were taking out of the country? Education is consumed here so won’t/can’t count.
From the perspective of the Ministry of Defence / Foreign Office then departmental costs will rise, but HM Treasury will receive the additional so from HM Government’s perspective that aspect of it is revenue neutral.
Absolutely. This is part of the problem with attempting to measure behavioural responses to increased taxation, because people’s change in expenditure due to increased taxation will vary.
Some will simply exit, denying the treasury additional taxation, others will pay the additional tax whilst cutting back elsewhere (consumer spending), whereas still others will pay the additional tax for a year or so and then make other arrangements (like boarding overseas).
You won’t know until perhaps 5-to-7 years after a tax has been implemented whether it has generated or lowered overall revenue and this is largely about the behavioural response which is difficult to attribute.
“From the perspective of the Ministry of Defence / Foreign Office then departmental costs will rise, but HM Treasury will receive the additional so from HM Government’s perspective that aspect of it is revenue neutral.”
It does mean however that the overall tax tax will be less than initially calculated. Even if every single pupil stays exactly where they are, there will be a cost to HMG of its own policy, namely the VAT element charged to Forces/Diplomatic pupils, so the revenue would not be 20% of the total fees charged.
I have a little insight into how people react to fee increases, I am involved (as landlord) with a small private evangelical Christian school. I know that they have had to increase fees by about 10% in the term started last Sept, due to inflationary cost increases in 2022 and 23. This has resulted in a drop in pupils of about 15-20%, as parents either move to the State system, or home schooling. Now its unlikely that many parents would consider home schooling as much as Christian parents might, so the drop might be less in traditional private schools, however its my contention that in increase in fees of 20% will reduce pupil numbers considerably.
BiND: I’m sure one of our tax experts will correct me if I’m wrong, but I thought you only got the VAT back on goods you were taking out of the country?
You’re quite right and I don’t have the expertise to be categoric but it struck me that the customer would be the parent(/s) rather than the child so the service is being rendered offshore. If this were the case then Starmer’s calculations could be yet further adrift.
Good point, TMB.
On the general theme, there will of course be higher order effects. Private schools are currently put under a lot of pressure to provide social benefits to local communities and schools precisely because they don’t pay VAT. There probably won’t be an immediate impact but private schools will be looking to cut back costs as pupil numbers drop.
Unless I’m mistaken tertiary/university course fees are an exempt supply so students or their parents/funders don’t have to pay VAT (Generally speaking the institutions are partially exempt).
Infinitely richer pickings would be available if that was the object but no, it’s just Labour doing what they always do – taxing the “privileged”.
As some have already pointed out, this is nothing to do with the money (they don’t care whether it rakes in more, or less, or none at all), and certainly nothing to do with education.
It’s class war, pure and simple.
Just all the effort that was expended on the hunting bans (soon to be revisited and tightened up, you may be sure).
Arguments about numbers of pupils or effects on VAT receipts etc are completely beside the point.
Just *LIKE* all the effort expended…
Where’s that Edit button again?
Ted,
“This is also an admission that non-state schools add value while state schools don’t add value.”
The ironic thing is that socialists have done more to promote private schools than anyone because they tell people they have an unfair advantage. Because socialists believe that people are a product of their environment, the only reason that Eton gets better results than Scumbag College is because Eton is better. The truth is, Eton mostly does better because it gets brighter kids. You’re probably better off putting school fees into a trust fund and giving it to your kids at 21.
Western Bloke: You’re probably better off putting school fees into a trust fund and giving it to your kids at 21.
It’s very naughty to put an insane comment at the tail end of a thread just to provoke when you know full well that parents should be giving their children weapons and drugs from the age of ten to win them the esteem of their peers.
“. The truth is, Eton mostly does better because it gets brighter kids. You’re probably better off putting school fees into a trust fund and giving it to your kids at 21.”
Private schools aren’t just about As and Bs at GCSE and A level. Part of it is the opportunities that private schools give pupils that State schools don’t in all manner of non-academic areas. There’s a reason why so many musicians are privately educated, and actors/sportsmen etc as well – if you show aptitude at those things private schools will have the facilities to allow you to express those talents. In State school you may never even be exposed to them. My old school had its own theatre and music school, and oddly enough has produced a few famous actors and musicians. Wasn’t much good for me, I’m about as musical as a bag of spanners, and my acting would be similar, but the chance was there for anyone so inclined.
Tim,
Just seen your ASI Blog on this subject.
There’s a simple way to find out if the left really believe that VAT isn’t paid by the consumer and is absorbed by shareholders, propose VAT on food and children’s clothes and watch the screaming.
Yes, a very clever argument. I shall use that at some point.
Jim,
“There’s a reason why so many musicians are privately educated, and actors/sportsmen etc as well – if you show aptitude at those things private schools will have the facilities to allow you to express those talents. In State school you may never even be exposed to them. My old school had its own theatre and music school, and oddly enough has produced a few famous actors and musicians.”
I don’t think it’s that so much that there’s a correlation, that these are mostly the offspring of wealthy people and the offspring of wealthy people go to private schools. And the reason these fields have so many kids of wealthy people is that they’re jobs people want to do and on average they pay badly. When you have that combination you’re more inclined to have rich people who have another source of income doing it because they can afford to do the thing and to live comfortably doing it.