Scrapping VAT and removing charitable schools - Labour policy - do you agree with it ?

[threespires]

Even when you consider they are paying for a state education system they do not use?

To be blunt MB, yes. I say that recognising that people might think that unfair. I think the net benefit from the policy after the state has had to educate the approx 20-20k children who are projected to drop out of private education and into the state system is estimated to be about £1.3-£1.6n (source IFS/Nuffield Foundation). This is better than nothing but it's still a drop in the ocean compared to what is needed to address the issues in the state system so it clearly isn't the answer in itself.

I actually think the real value of this policy is the fact it should (and appears to be on here at least) open up a desperately needed debate about our education system. You've mentioned in another post that we should be spending much more on state provision and mentioned a 30% uplift which would make a lot of school leaders I know ecstatic. But even then, consider this: in 2010 the gap between the per pupil spend in the private sector compared to the state sector was 40%, by 2022 the gap had more than doubled to a 90% differential (source TES). Education for large numbers of children in this country is being decimated.

I think if we are serious as a society about equality of opportunity then we need to do two things above all else, firstly lift children out of early years poverty because so much of the die is cast then (easier said than done I accept) and secondly (and arguably easier were the political will there) invest to make the educational choices available to children more equitable. And to your point, putting aside equality of chances, it's a good investment for the economy because education more than pays for itself over time in a multiplicity of ways. This nation has shown itself capable of all sorts of world leading endeavour through the opening up of opportunity and raising the level of capability of our population.

I suspect we share much the same aspirations for our own children and the children of this country. Do I think this policy is the answer to the huge problems we have let accumulate? No. Do I think it's a gateway to the serious discussions about where we want to head as a country? Yes I do.

 

[bluenova]

The IFS report assumes that any reduction in expenditure on school fees - as a result of parents taking their kids out of private education after the introduction of VAT - would simply be redistributed to other areas of consumer spending, thereby maintain overall tax revenues.

Personally I’m not sure this would be the case as I know several people who only work in order to pay for school fees, and so if they had to remove their kids from private education, they would either give up work entirely or work fewer hours. I would also argue that if parents continue to pay increased school fees after a VAT hike, then it would likely lead to drastically reduced expenditure in other areas, so any increase in VAT revenues could be very small.

It's only a small part of the overall calculation.

As far as I can see, if they estimate that 3-7% of pupils will drop out of private education, then that's between £60-140m out of the estimated £2b tax take. If we took the midpoint and assumed that your "several people" were in fact every single one of them, then that's a £100m difference in a calculation that ends up at £1.3b-1.5b.

Of course, most people aren't going to be earning only to pay school fees, and giving up their jobs, so it's likely to be a much smaller effect. The calculations also include reduced VAT take from other spending.

As the article points out, the increase in household spending would only be in very low single figures, so it's unlikely to drastically reduce anyone's spending power.

 

[lloydie]

No, because it’s not a tax break

Can I get a tax break on my netflix, I already pay for a TV licence?

 

[metalblue]

That’s why they are asking you to pay VAT. :)

Doesn’t impact me mate, my youngest is at uni now ;)

 

[I'm With Stupid]

The IFS report assumes that any reduction in expenditure on school fees - as a result of parents taking their kids out of private education after the introduction of VAT - would simply be redistributed to other areas of consumer spending, thereby maintain overall tax revenues.

I don't think there's any plan to add VAT to private school tuition, the policy was to remove VAT completely from everything. Even if we accept that private schools' claims to be a charity are laughable, that still doesn't change the long-running policy that educational products are typically not subject to VAT. So a private English language school doesn't charge VAT on its course fees even though they pay taxes on their profits. This is the rule for any courses offered that are considered a school subjects (which bizarrely, includes golf lessons, because the people who wrote these rules probably went to a school with a fucking golf course).

It reminds me of the British Council method of 'charitable work,' which basically involves providing English lessons almost exclusively to extremely wealthy people in the developing world, charging people a fortune to take English language tests that the UK government requires, taking that money to fund the occasional art project for underprivileged kids, and then claiming to be a charity so they don't have to pay taxes on any of it. And a lot of governments around the world see through it and have forced them to separate their English and testing departments from the charitable part and pay taxes on what is obviously a profit-making operation.

But I suspect that the lack of charitable status for private schools would make very little difference to the people who attend them and might actually benefit them. Because what would happen? Well the school would just have to make sure that they didn't make a profit to avoid the tax, and so would spend most of their income each year to ensure that they don't. So we'd most likely see a huge amount of spending on ridiculous over-the-top facilities to get rid of any taxable profits.

If you really wanted to reform the sector, you would force them to operate like actual charities. None of this 1% of students on full scholarships and a further 2% getting help with fees, with most of those still going to comfortably middle class families by basing scholarships on musical and sporting excellence rather than actual need.

EDIT: never mind, I was wrong. The policy is to add VAT onto school fees. The thread title was worded in a weird way that made me think it was about two separate policies.

 

[metalblue]

Can I get a tax break on my netflix, I already pay for a TV licence?

You don’t need a tv licence if you only watch Netflix

 

[Brewster's millions]

It's only a small part of the overall calculation.

As far as I can see, if they estimate that 3-7% of pupils will drop out of private education, then that's between £60-140m out of the estimated £2b tax take. If we took the midpoint and assumed that your "several people" were in fact every single one of them, then that's a £100m difference in a calculation that ends up at £1.3b-1.5b.

Of course, most people aren't going to be earning only to pay school fees, and giving up their jobs, so it's likely to be a much smaller effect. The calculations also include reduced VAT take from other spending.

As the article points out, the increase in household spending would only be in very low single figures, so it's unlikely to drastically reduce anyone's spending power.

The analysis doesn’t take into account how the policy might impact labour supply decisions.

I’m not suggesting that every family that withdraws their children from private education would see one person give up work entirely, as that would be an extreme assumption. But I do think there would be an impact - people would work fewer hours - and the impact this would have on NICs, income tax and the economy’s potential growth rate is not included in the analysis.

 

[halfmist]

I never said it was easy, but you could start by looking at the council tax band for their residence(s) and any residential properties held within businesses. Im not saying its the only or best method but its a starter for ten. The exceptional wealthy are unlikely to slum it.

I am fortunate/unfortunate, depending on how it’s looked at to fall in to a band H.
It’s a very crude way of defining wealth and penalises those who chose to put their money in to their home rather than other assets.
There are many properties that have been re developed, extended etc that still have their original banding but are now worth double other properties in the same banding.

 

[I'm With Stupid]

To be fair, most of the argument is around whether they should have VAT exemption or not, which does make it others business too and the conservatives previously and labour now are in favour of it.

Personally I’m not averse to private schools. I just don’t think they should be subsidised.

Well the main argument in this case should really be whether education should be subject to VAT in general. The current situation is that anything that is a 'school subject' isn't subject to VAT either in terms of extra private tuition or actually attending a private school. This would also include, for example, a summer school where foreigners come over to learn English. It would also include the materials for those courses, or online courses such as the open university. It also includes most vocational courses, but I believe that certain corporate training courses are subject to VAT.

So the question would be whether you are going to add VAT onto things like summer schools as well. Because obviously it's one thing to say that these schools are clearly a business and should pay the same business rates as any other business, but it doesn't mean that the product they're selling should be subject to VAT. We do currently have a general principle that core educational products aren't subject to VAT. I don't think Tesco should be considered a charity, but that doesn't mean they should be forced to add VAT to their bread. But the question is whether private education is considered a luxury, and if so, which private education. Is your kid's Montessori nursery a luxury? Should that be slapped with an extra 20%?

 

[halfmist]

The stench of politics of envy is rife yet again on here.

If I could afford to privately educate my kids I fucking would.

What others do with their children is their own business.

In the meantime I will make sure my kids do their very best to excel at school regardless.

Spot on. The same people would have no qualms paying over the odds for a property because there is a good school nearby.