An ill wind that harms state schools too
Labour's VAT policy does nobody any good; Dia Chakravarti's Telegraph article is too kind
As the old proverb goes “it’s an ill wind that blows nobody any good”.
Much of what government does, for better or worse, at least has a winner. Politicians are good at robbing Peter to pay Paul, and typically expect the support (and the vote) of Paul. There’s no shortage of examples.
Labour’s proposal to put VAT on private school fees is indeed an ill wind. Not only will it (obviously) harm private schools and their parents, it will also (fairly obviously) do no good to the public finances - there’s a strong chance it loses money as families are driven into the state sector and schools and families adjust their finances accordingly, hitting tax revenues in a number of ways that have been inadequately debated (except on this blog).
Less obvious is the harm it will do to the state sector, which is covered in Dia Chakravarti’s article today (12/7/2023)
Labour’s attack on private education will hurt state school parents too
Labour’s proposed raid on private schools is in danger of harming the very state system it purports to benefit
This post explores the harm to the state sector. Please share widely and please encourage everyone to sign Tony’s petition.
Eton, Harrow, Sidcot, Ashville
Labour want you to envisage Eton, Harrow, Wycombe Abbey. Spectacular Grade 1 buildings with world famous brands and fees to match. Some (but by no means all) the parents pay the fees in the same way you or I buy milk. Carparks with brand-new Bentleys and Astons which catch the eye (so much so that you don’t notice the 9 year-old Fords and Toyotas driven by other parents).
With no disrespect to Sidcot and Ashville, the far greater proportion of independent schools are smaller, less glamorous, less wealthy (both the schools, and the parents). They rub along. It’s these latter schools, and the children that attend them, that will suffer the worst consequences of Labour’s VAT on parents.
Smaller private schools, which some argue represent the vast majority of independent schools, risk closure in the face of the proposed new taxes. These schools tend to be relatively low cost, providing an education for children who are not from especially wealthy families.
Independent schools are good for society
As this blog keeps saying, independent schools are terrific for society and the public finances. Having worked for both the Freedom Association and the Taxpayers’ Alliance, I’d have hoped that Dia Chakravarti would be a bit more emphatic that taxing parents’ school fees is a really poor idea; she concedes too much to Labour when she writes
If the damage caused were limited to smaller private schools and aspirational parents who choose those low-cost schools, then Labour could have consoled itself that its policy would at least be targeting the right industry – the private school sector. The policy could perhaps be justified, even if those disproportionately affected wouldn’t be the wealthiest schools or the richest parents.
Perhaps what she means is that the policy could at least be justified on its own terms if it raised £1.6bn (which it won’t) and in the process harmed private schools, but that she still wouldn’t support it. There’s an alternative read for real socialists of course, which is that damage to any private schools and their families/children isn’t unfortunate collateral but something to celebrate.
Either way, I wish she had been clearer about for her usual classically-Liberal principles as well as for her main point:
Harm to state schools and their families
The middle classes in marginal seats shouldn’t be complacent about the risks to “their” free taxpayer-funded education at exclusive state schools. Imagine you’re the parent of a 3-year old and aspire to a place at a top state-school, and you’re on the edge of the catchment. Imagine you’ve noticed that (1) that’s the way for your family to get the best out of the Treasury (2) you don’t want your child to be discriminated against at University (3) you or your other half would rather go part-time or retire than slug it out for the sake of school fees on 55% marginal tax rates (40% income tax plus 2% NIC plus 13.8% employer NIC)…
…then the last thing you want is more competition for that state school place.
As someone who cannot afford private school fees even before the proposed taxes push them higher up, I am well aware of the pressures my local state schools already face as I prepare to put my own children through the system in the next few years. I am expecting to put my toddler on waiting lists for the most coveted, already oversubscribed state schools in the borough.
I love Chakravarti’s final paragraph (my emphasis)
But when the impact of the new taxes manifests itself by wreaking havoc in the state school system, the policy will have made losers of every group of parents in the country. It is, very clearly, a bad policy.
Elite state schools will be under great pressure as she describes. Some middle-class families will be edged out. No school wants to received disgruntled families. Some state schools generally won’t welcome “sharp elbows” aka. parents who demand a certain level of attention and responsiveness.
Our more challenging state schools won’t be helped either. The education budget and departmental energy will be fully occupied in managing the absorption of ex-private school families, so, even if there’s money sloshing around (which there won’t be) there won’t be any chance to improve social mobility, which Labour says is the whole point.
It certainly is an ill wind.