Vat On Private School Fees.

[Deskdiary]

Contary to what many people think, sending kids to private school is not the sole preserve of the rich, and many people scrimp and save to be able to do so, so a 20% increase in their fees could make it unaffordable resulting in state schools having to take their kids in. It has been reported that 40% of kids could be withdrawn from private education. There's 550,000 kids being educated privately, so state schools will need to find places for an additional 220,000 kids. Plus this mass withdrawal could send some private schools under.

 

https://www.telegraph.co.uk/money/tax/private-school-parents-pulling-children-out-labour-vat-raid/

 

The lack of VAT on private school fees is not, as some on the Left see it, a tax break for the rich.

 

Why is he going to do this?

[New Judge]

"There's no excuse to zero rate an educational establishment. The State supplies that service anyway and so has no need to subsidise a private industry."

You seem to be suffering from the popular misconception that not taxing something which should not be taxed anyway is somehow "providing a subsidy."

The State (genuinely) subsidises all manner of private industries. Among the foremost is the so-called "renewable energy" sector. And at the top of the list among the recipients of that bounty is Drax power station in Yorkshire. This year it will receive a little over £1bn in government subsidies, much of that garnered from hapless energy customers (a few of whom may send their children to private school) in the form of "green" levies. Drax has been receiving huge subsidies for some years when it decided to switch from burning coal to "biomass". Most people would know this as freshly felled timber, most of which is sourced, processed and shipped from 5,000 miles away in the USA and Canada (Drax runs three processing plants across the Atlantic). It also helps them with their development of a "Carbon Capture & Storage" scheme - a system which, despite being in devlopment by Drax and elsewhere globally for decades has produced no significant working examples whatsoever.

Unlike Drax, private schools get no subsidies from the taxpayer. If they did not exist at all the government would get no income (tax and NI) from the staff they employ and would have to increase the State education capacity by about 7%.

Of the two options, giving Drax £100 every year which I am levied on my energy bills to help them chop down forests on the other side of the Atlantic, or seeing the Exchequer deprived of a paltry sum in VAT which would only be wasted anyway (some of it, no doubt, ending up in a "green" power station in Yorkshire) I know what I would choose.

[Ellipsis]

> The lack of VAT on private school fees is not, as some on the Left see it, a tax break for the rich.

What is the justification for private education to be zero-rated for VAT, when there is a perfectly good free education available to all?  For a school that's £8,000 a term at present, making it £9,600 doesn't change the principle of private education, just the cost of it.  I do agree that going from 0% to 20% in one jump could have unhelpful consequences - but , say, adding 4% a year for five years would be reasonable.

[bednobs]

i would have thought there was an argument to have it Zero vat rated, based on the fact that the receipients are children, and a lot of childrens necessities are zero rated already

[Ellipsis]

Children need clothes - and it's fair that if you have to pay for those clothes, it's zero-rated. But every child has a free education available. If they choose not to use that free education, and wish to pay for an alternative one instead, then that's not the same thing.  In fact, it perpetuates the disparity between free and paid education.  Still, it's a free choice - pay or don't pay for education; and vote for VAT on it, or don't vote for VAT on it.

[bednobs]

I suppose it depends on your definition of "perfectly good", which in turn probably depends on where you live

[Cloverjo]

I'm a lefty and I love Keir Starmer, but I think this is a terrible idea. My son went to a private school, and most of his friends didn't come from rich families. 
 

This is a terrible mistake by Starmer. Someone should tell him now. 

[pastafreak]

Not all free education is equal though, is it? And even that deemed good or excellent may not be the best for an individual child. 

[New Judge]

"What is the justification for private education to be zero-rated for VAT, when there is a perfectly good free education available to all?"

There's quite a number of justifications:

1. It removes the responsibilty (and the cost) from the State to provide the service. 

2. It provides an alternative for parents who want to see their children propely educated in the (many) areas when a suitable state provided alternative does not exist.

3. Exactly the same arguments could be raised for private healthcare (which is also zero rated). Are you suggesting that should be subject to VAT as well?

[gulliver1]

Are you telling me that the parents of those pair of idiots Johnson and Cameron who were educated at ETON Did not pay vat on their education.???If so then I endorse Starmers plan..So it can never happen again.

[sp1814]

From the Spectator (I know!)

Every UK pupil withdrawn from the private sector will cost the taxpayer far more than they would have raised in VAT had they stayed. The average fee for a private school pupil this year is £15,200, the VAT on which comes to £3,040. The average spent on educating pupils in the state sector is £8,000.

 

Labour’s policy would strike me as a bit more of an outrage had private schools not spent the past 30 years steadily pricing the middle classes out of private education. The expected 20 per cent uplift in fees (assuming that schools pass on the full burden of VAT) will merely echo the real-terms rise in fees which the private sector has already inflicted on parents since 2010. Since 2003 the real-terms rise has been 55 per cent. Doctors, lawyers, small business-owners – groups who in the past had little problem in affording private education – have steadily found themselves struggling, and looking to the state sector instead.

 

https://www.spectator.co.uk/article/private-schools-cant-complain-about-labours-vat-raid/

[newmodarmy]

It's a bit of a stretch to draw a parallel between gradual fee increases totalling around 20%  in real terms since 2010 and a one-off 20% hike now (on top of the inflationary increases)

[bednobs]

the more people take their children out of state education, the smaller class sizes in the state sector and (possibly?) an increase in quality?

[Prudie]

You only have to be a parent or a teacher to know that the statement "there is a perfectly good free education available to all" is an utter untruth. Take the words 'a perfectly good' out then it is true.

[schoolster]

I think this is such a bad idea. The maths don't add up.  I work in a secondary school and we get approx £7500 per pupil, £4000 for Sixth Form. It is way more than they would lose in VAT.  There is a lovely private school on the doorstep of where I work. Most of the students don't look like they come from very wealthy families given the cars that pick them up. The school itself does outreach with the local secondary schools, inviting us in for workshop and the like. That will probably stop if this goes ahead.

These kids, whose parents can't pay, will have to be placed in schools that are already at maximum capacity, so unless new schools are built a bit pronto, then class sizes will go up and education will drop. The transport bill for local councils who will have to pay to cart students to school if the distance is too far. will increase, adding a burden to Council Tax payers. There will also be a massive push for the 11+ with families being able to afford that extra tuition if they're not paying school fees, taking more places away from other kids in the community.

This policy is just as ridiculous as the Nation Service nonsense from Rishi.

 

[mushroom25]

// Are you telling me that the parents of those pair of idiots Johnson and Cameron who were educated at ETON Did not pay vat on their education.??? //

Boris Johnson's presence at Eton was by way of a scholarship.  so yes, Mr & Mrs Johnson didn't pay VAT.

[andy-hughes]

Ellipsis - // What is the justification for private education to be zero-rated for VAT, when there is a perfectly good free education available to all? //

Probably because the free education available to all, is anything but 'perfectly good'!

The State education system is falling apart, more rapidly now that at any time in its history.

Successive governments have hammered it into the ground with the twin attack of absence of real investment, coupled with the constant denigration of teachers, to the point where heads and teachers are leaving the profession at an unprecidented rate.

The influx of children from illegal immigrants means that already full classes are legally obliged to fit in children, sometimes with a weekend's notice.

If my children were of school age, I would seriously consider finding the funds to have them educated privately.

[New Judge]

"This policy is just as ridiculous as the Nation Service nonsense from Rishi."

I'm afraid that's what General Elections do to people who are already scarcely able to tell truth from fiction, schoolster.

[naomi24]

Got to agree that state education is not 'perfectly good'.  This is a barmy idea.  Pricing children out of private education serves only to burden an already buckling state system even more.  

 

[Ellipsis]

> Probably because the free education available to all, is anything but 'perfectly good'!

Well, in that case, fix it.  Here's a couple of reasons why:

1) even if somebody can afford to pay for private education, they'd probably rather not have to pay, if the exact same quality of education was free in the state school next door

2) if a thick, awful kid with rich parents is placed in a private school, and a lovely, bright kid with poor parents is in a state school, that does not make a better society after those two children have grown up

But as I said, the principle isn't abolishing private schools .  It's simply about making people pay VAT for them - £8000 a term becoming £9600 a term, for example. It's the same principle, just different numbers.  Nobody is saying "Abolish private schools". 

And also as I said, if people don't like the policy, they don't have to vote for it ...

[Old_Geezer]

Where tax need not be applied and is then it should be applied across the board. Where it isn't, then that's the equivalent to a subsidy to cover the tax that should have been applied.

 

Why isn't private healthcare subject to tax ?

 

If state education is so bad then campaign to get it sorted, don't pay private companies to do the job instead. If folk want private education let them pay for it.