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Second order effects, changes in demand etc

Labour’s private school tax raid could cost the taxpayer £1.6 billion a year as it forces a quarter of pupils into the state sector, a new report has found.

Sir Keir Starmer’s party has made introducing VAT on independent school fees a flagship policy, claiming it would generate £1.7 billion to spend on state education.

But an analysis by the Adam Smith Institute (ASI), a free market think tank, warned that the policy was based on flawed assumptions and could cost the public purse billions across a single parliament.

20 thoughts on “Second order effects, changes in demand etc”

  1. He who now sends his children to state schools pays no VAT. Closed private schools pay no VAT.

    Could it become worthwhile for some private schools to clear off to another English-speaking country e.g. Republic of Ireland? Does that, for instance, charge VAT on school fees?

    Compared to the leftist assault on state schools in the 60s and 70s, though, it’s probably small beer. Or compared to the Scotnaz assault on Scottish schooling (for which the bastards should be hanged).

  2. I understand that the average reading age among the UK public is eleven, in some deprived areas it is as low as seven. So state schooling is not exactly fit for purpose is it?

  3. Bloke in North Dorset

    The forecast tax revenue is the excuse not the reason, so they will dismiss any reports like this as being Tory right wing etc, etc defending their privileges.

    If Labour get the forecast majority their assault on what they consider Tory privileges will be relentless, Starmer will have to keep his left flank protected in the same way Blair did with the fox hunting bill. They’ve already signalled tightening of hunting laws and going after more housing in Blue Wall areas,

  4. I wonder if the foreign office staff and other public sector employees will have to foot the additional VAT bill for their kids education in the UK when they are posted overseas. Perhaps the “allowance” will go up to exactly match the VAT due.

  5. Since Sir Kneel’s party is based on a flawed assumption then it is unlikely that he and his rabble of thickos will come up with any sensible laws…
    State schooling is entirely fit for purpose. It’s churning out illiterate, innumerate simpletons who do exactly what they’re told if scared enough. They understand that their sole purpose in life is to work to fund the State, the NHS and the BBC.

  6. @stonyground

    I wonder at what point average reading age gets recalibrated?

    Presumably when the entire adult population has benefited from a fully inclusive and vibrant level of ‘education’ that will become the new average?

    I wonder how an average reading age of 11 year old in 2024 compares to an 11 year old in 1974?

  7. No need to wonder, Starfish, just look at an exam paper from 1974. Then for shits n’ giggles, give it to a modern school kid to complete.

  8. @JuiliaM

    I remember comparing my o-level maths to my children’s GCSE maths exam papers

    I know the syllabus has changed but even so, not impressive

  9. My daughter demanded help with GCSE physics. Turned out there was no Ohm’s Law. There were three different Laws depending on which variable you wanted on the left hand side. And then they were taught a mnemonic to help them memorise the three.

  10. I sneeze in threes

    How realistic is the assumption that spending on state schools would increase due to an increase in students?

  11. BiND- ‘forecast tax revenue excuse not the reason’ I agree.

    ONS should publish the demand and supply curves and show the net effect. It might be that increased house moving to get in good catchment areas will uptick stamp duty revenues.

    The underlying Labour reason is that private educates perpetuates class, so that it’s not the educational uplift but the mutual class back scratching that benefits the kiddies.
    But the VAT will mainly affect the decisions of those who can only marginally afford private school. Those people will have plenty of peers earning similar amounts in the state sector but having chosen not to spend those sums on education. When those marginals come out of private they’re unlikely to suddenly want to take an extra holiday and get a new Tesla. They’re going to spend it on the kiddies doing music and fencing lessons, extra private tuition, improving educational trips to Machoo Pikachu. Some of which will be VAT free. i’d expect quite a few new charitable enterprises spreading the mastery of the Viola for state schools. And because of those parents’ propensity to spend extra on education you’ll probably still see them appearing in similar numbers in the top universities. The number of state educated top places will go up. (hurrah) but it’ll be the same pupils. (boo? presumably from Labour)

  12. @HB: I used to say that if Cambridge demanded that every entrant showed themselves capable of playing the cello while bowling leg-breaks, all you’d have to do was wait a few years before hundreds of suitably qualified candidates appeared.

  13. The ASI could have under-estimated:
    Loss of child student visas, currently £490, I presume that makes a small profit for the Home Office.
    Throw in mobile parents not making one of their UK residents their main residence for the duration.
    Loss of Air Passenger Duties if they’re boarders and go home to mum during holidays.
    And a tiny movement in the value of the £ as lots of foreign currency doesn’t come.

    Interesting what happens at the margins. Is there a name for the study of this? And does Labour currently hire anyone qualified in said subject.

  14. I remember comparing my o-level maths to my children’s GCSE maths exam papers

    GCSEs and O-levels coexisted for quite a while, and the top grade in GCSE was deemed equivalent to an O-level pass. About 10 years ago, I helped a friends daughter prepare for A-level maths by going over a few past papers – they didn’t seem that different from what I recall of my 1969 version.

  15. All these abstruse arguments about better/worse education or higher/lower cost are completely beside the point.

    The purpose of this policy is simply to screw the kind of people who send their children to private schools – it’s pure and simple class warfare, nothing else.

    All other effects whether positive, negative, second-order, or unexpected, are quite irrelevant.

  16. Starmer doesn’t seem to have the control of the party that Blair had, be interesting to see what happens after a year or so, especially given Conservative leadership shenanigans the last few years.
    My guess would be they know that Rayner and ilk would be vote losers and a certain level of his internal support is due to acceptability, he’s someone the electorate can hold their noses and vote for, unlike Corbyn

  17. How does this ASI report on removing the VAT exemption for private schooling relate to the ASI position that VAT exemptions should all be removed?

  18. @dearieme

    Clear off to another English-speaking country e.g. Republic of Ireland? Does that, for instance, charge VAT on school fees?

    EU doesn’t permit VAT on education, norr do most other countries

    @Chris Miller

    GCSEs and the O-Levels did not co-exist. Original system was CSEs and GCEs (O-Levels)

    Socialist slug Kenneth Baker rolled them into GCSEs thereby abolishing O-Levels.

    @Peter MacFarlane, March 18, 2024 at 5:08 pm

    Class warfare, nothing else, All other effects whether positive, negative, second-order, or unexpected, are quite irrelevant

    Exactly. Cost of building, equiiping, running costs new schools, more teachers, teacher assistants, admin etc will swallow the VAT and more

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