Labour plans to add 20% VAT to Private School fees.

Article 2 of Protocol 1 of the European Convention on Human Rights (to which the UK is a signatory) guarantees the right to open and run private schools, but states do not have a positive obligation to subsidise private schools. It could be argued that not imposing VAT on school fees amounts to just such a subsidy, particularly at a time of great pressure on public expenditure and when education's share of public expenditure has fallen against a backdrop of rising demand.

The consequences of levying VAT on school fees are unlikely to be significant. The consensus is that this measure would only lead to a small reduction in the number of children attending private schools and that the net gain to public finances would be about £1.3 to £1.5 billion at July 2023 prices. The total for educational expenditure in England for 2022-2023 was £116 billion.

The issue is therefore essentially one of "fairness". Should the state be subsidising private educational provision when money is so tight?

But are those parents sending their children to private schools to benefit and subsidise the state system? No, of course not, it's for personal gain. And given this is all about whether private school's should have Charitable Status (and thus exempt from VAT), think it's a difficult argument to make that they run like charities. A better system would be one where all parents and all politicians have a stake in the success of state education, rather than the rich having an opt out.

Given on average just 2% of private school students are there on scholarships, I personally find it difficult to justify it being given Charitable Status. It's not like if banks donated 2% of their profit to charities, people would be arguing that they should be exempt from all VAT.

Declining pupils numbers in state schools mean the state system can more than absorb any increase in students transferring from the private system.

I don't really see why it matters why parents are sending their children to private schools. The result is that it benefits the state system and the taxpayer.

In my view, the purpose of making something VAT exempt is to encourage and enable more people to do that thing. I think it's in our interests for private education to have that exemption (whether they do anything charitable or not), because what they do is take the burden and cost away from the state from educating around 7% of all pupils. Surely that's not something worth discouraging by adding tax to it. I'm sure the state system could absorb an increase in pupils, but the question is what's the benefit in it? If you can have private schools removing some of the financial and operational burden of that, why not have it?

In theory I can see why one might think a good system would be one in which all parents and politicians have a stake in the success of state education. But I also think very rich people will always have an opt out. For example they can hire private tutors (who are typically paid with cash-in-hand, which is very hard to add VAT or any kind of tax to). They can also send their children to boarding schools abroad - including in countries which don't charge tax on that. Finally I also think that state monopolies have the best incentives or the best track records of being the best systems. Not in the UK anyway.

But the rich will always have an opt-out. The rich with kids in state schools opt out by buying private tuition for their kids, buying books for their kids, buying cultural experiences for their kids, buying club memberships for their kids, buying the latest technology for their kids, buying stuff for their kids, buying houses beside schools that have outstanding ofsted reports ... and on and on. And if the rich with kids in private schools decide to send them to state schools instead, that's exactly how they'll opt out too. There will be no 'coming together' with less rich parents to mutually raise the state school experience for everyone - that idea is just utopian thinking.

So you're telling me that if you were a rich parent who could afford tutors, tech, trips abroad, etc, that you honestly wouldn't care about the quality of your kids' education from 8AM -4PM every single weekday? And I'm the one with utopian thinking, I think yours is a bit dystopian.

It's ridiculous, obviously parents with lots of resources would still care deeply about the quality of their kids' school education even if everyone was in the state system if they had to send them to it for ~40hrs per week.

Yes, that's exactly what i'm saying. The school part of the day won't figure at all in the parents' thinking. They will be filling all the other hours available with the stuff they can buy more easily to gain an educational advantage.

I don't really see what Rishi Sunak's tax affairs have got to do with it. The majority of people sending their kids to private schools (around 7% of all pupils in the country) aren't the Rishi Sunaks of the world. They're generally middle-class professionals (doctors, lawyers, teachers etc.) employed in the usual way and paying tax via PAYE like everyone else. The type of person you're describing is the tiniest of minorities.

Besides if you wanted to tax that sort of person more, 20% VAT on private school fees is hardly going to do much. They'd pay between around £3,000 and £10,000 extra tax per year, per child they have. Which is nothing compared to what you could get from someone like Rishi Sunak just by increasing corporation tax or inheritance tax etc. by a percent or two.

Wow, you honestly think parents won't care about schooling quality at all for their kids...... Talk about dystopian....

I think this is unlikely to be the case in reality.

But as I said in a previous post, this isn't about abolishing private schools, it's about whether they deserve and need an effective 20% tax break from the public purse. Whether public resources are really best used on subsidising private education over things like like state education, the NHS, infrastructure projects, etc. Private schools are neither an essential service, nor would they crumble and lose lots of students if VAT was imposed on fees, therefore I believe there's little justification in giving them a tax break.

The Sutton Trust has a lot of info about this. The disparities are already in the system. Adding even more rich parents to state education will only increase the existing divide. Look at this document, for example - https://www.suttontrust.com/wp-content/uploads/2023/03/Tutoring-The-New-Landscape.pdf

"[Students] at grammar schools were most likely to receive tutoring (23%). Many independent school pupils also received private tutoring, over and above the resources provided by the private school sector (19%). While the overall figure for comprehensive schools is 18%, this hides enormous disparities within the sector. At the least deprived comprehensive schools (by rates of Free School Meal eligibility), rates of private tutoring were 31%, compared to 12% at the most deprived schools.

Looking at household characteristics, in particular measures of socio-economic background, there are significant disparities, as you would expect, the most obvious of which is income. Those in the top quartile of household incomes had, by a distance, the highest rates of tutoring, at 32%, with a significant gap even to the second highest quartile (18%). This is in the main driven by extremely high rates among the top rung of incomes (net household income of £75,000 or more), of 35%. This contrasts with less than 13% of those in the bottom quartile of income paying for private tutoring. Though this figure is likely to be inflated by some well-off households who report low or no income.40 Looking at social class, as defined by the NS-SEC three category classification, 24% of those in professional and managerial households received tutoring, compared to 17% of those households with intermediate occupations, and 11% of those with routine and manual occupations (including those who never worked). There are also associations with the education of parents, with 26% of those with a graduate parent receiving tutoring, twice as many as those without a graduate parent (13%). Pupils in houses with a co-habiting partner were also more likely to receive tutoring (20%), compared to those living with a single parent (12%)."

In your second sentence, you literally imply that those who are at private school are rich. So why wouldn't they be able to afford to pay VAT on a luxury non-essential service (assuming schools even pass on the VAT in its entirety)?

Your copy and paste job from a report is all about the disparity in household incomes, and that adding a bunch of rich people to the state system may not be beneficial... I'm not saying they should be added to the system, I'm saying if they're really so rich that they would cause such big disparities in the state system, then they can afford to pay the VAT on private school fees.

You can't have it both ways. You can't say they're too rich that it'll cause problems if they drop into the state system, but are too poor to pay VAT on a luxury service.....

As a side point, incredible that 19% of private school kids still need extra private tutors after school..... At what point does it become a bit embarrassing if you're paying around 20k in fees per year for 7yrs, plus private tutoring costs, plus potentially any prep school costs, and you get to uni and find most kids in that uni are from the state system and have paid way less but are equally smart..... I know private schools offer more than just uni entry, but I'd find it a bit embarrassing to have so many resources directed my way just to get to a university institution where most have had just a fraction spent on them

Hang on - I never said anything about whether or not private school parents should/could pay VAT! Tbh yes, I'm all for it! But it won't have the effect that those wanting to abolish private schools are hoping to see. And equally, the black hole that is state school funding won't be noticeably improved by the policy either.

It would be simple to adopt the finnish model to remove private schools without breaking any human rights laws

In principle, it would be possible (though hardly simple) to adopt the Finnish model but, as advocates of private school reform have pointed out, doing so would face a raft of legal and logistical obstacles (see, for example, Green and Kynaston, Engines of Privilege, Bloomsbury, 2019).

The Finnish model was developed over several decades to address the failings of a seriously underperforming education system based on a patchwork of public and private provision. Finland is a small country with a racially and culturally homogeneous population. There is much to admire about its education system and its enviable standard of living. The situation in England is very different and rather than adopting a coherent national plan for state maintained education it has been moving in the opposite direction with a fragmented network of so-called academy schools. Moreover, it is incorrect to believe that there is no fee-paying private provision in Finland: private tuition is widespread and there are a number of international schools that charge fees.

The question we are addressing here is not whether there should be fee-paying private schools but whether the state should subsidise these schools at a time when there are so many urgent priorities for public expenditure and when "fiscal headroom" is so limited. The IFS study cited in an earlier post implied that they were being subsidised to the tune of £1.3 to £1.5 billion a year. If, as analysis suggests, most private schools and their patrons can easily absorb the additional cost, why not impose VAT on their fees as a source of revenue and in the interests of fairness?

Fair play about who we are talking about. I agree. We could get much more from the likes of Sunak. But equally, I think it is unfair that we are subsidising private schools. They are set up as charities yet there is nothing charitable about them. They certainly don't benefit the wider community in the same manner as a typical school does. So remove that status and allow them to operate just like any other business in the economy out of pure fairness.

I think everyone wants to have meritocratic school system, however I don’t believe this is possible as even if you had school parity inevitably students would be affected by family, socioeconomic & life factors that have a huge impact on how ready you are for school.

A problem I always wonder is if pushing the costs up of private education and as such squeezing the percentage of students who go to these schools (perhaps it would drop from 7% to 3 or 4%). Would just lead to greater disparities within the state system if “good” schools become more in demand and the knock on effects on things such as housing would push poorer families away from the better schools. Im glad to see more has been done in recent years in university admissions to quantify how students perform relative to their peers (rather then a national comparison) however i still think there is more room for improvement here particularly on how do we pass this information onto employers.

I would probably focus on strategies and what tools we can use that are long term economically feasible that lead to greater educational parity and access to opportunities. I also think a massive factor is instilling the right motivations & self belief within students which needs schools to set a positive culture.

I agree it’s a bit nonsensical for private schools to have charitable status. I think that’s really just the historical mechanism by which they’ve been given the tax break.

I would normally agree that private businesses selling luxuries that most people can’t afford don’t need to be getting tax breaks. I just think private schools are slightly different, in that the more people go to private school, the more of taxpayers’ money is being saved. So I just see a tax break as a way of encouraging and enabling that.

Rather than taxes just being a way of raising revenue, I think taxes and subsidies are also good ways to encourage or discourage certain behaviours. If the state really wants to tax the middle class and the rich more, I think inheritance tax is the place to start, as opposed to private school. Currently people can bequeath up to £1 million tax-free, which is rather a lot IMO. I think taxing this more heavily would actually help the economy, by encouraging people to work more (less reliance on money from parents) and also by encouraging people to spend money within their lifetimes rather than hoarding it for their kids.

I’m aware of the topic. I gave my response in post 3 of the thread

Hang on - I never said anything about whether or not private school parents should/could pay VAT! Tbh yes, I'm all for it! But it won't have the effect that those wanting to abolish private schools are hoping to see. And equally, the black hole that is state school funding won't be noticeably improved by the policy either.