RayC

Perhaps there is a case for looking the criteria governing the charitable status of schools but that's another discussion. If it were 'class warfare' as you suggest then surely the elite public schools would be the first target? However, you state - correctly imo - that these elite schools will cope with this increase in costs. The average cost of sending a child to an independent day school is +/-£18k pa; the average cost for boarders is +/-£42k pa. To afford to pay this sort of money over 6 - 12 years must mean that, in the overwhelming majority of cases, the parents are earning significantly more than the national median income of £37k before tax. I can only repeat again what I have said on many occasions previously. Parents should be free to pay for their children's education if they so wish. However, I see absolutely no reason why this group of parents should benefit from a tax loophole and, effectively be subsided by poorer parents for whom educating their kids privately is not an option.

😂 Talk about pot calling the kettle black!! This Labour government could announce that they've found a cure for cancer, discovered a way to keep the UK's temperature at a balmy 25° all year round with no side effects, found a way to turn lead into gold, etc, etc and there's no doubt that you'd still be on here complaining that the world's not yet perfect and that it's all the fault of the Labour government.

They could send their kids to a state school if they wanted to. It is their choice to go private. Spin it any way you want, this is a policy which closes a tax loophole and raises money for the Exchequer to spend on public services.

VAT is a tax where, as the name suggests, a levy is added to the value added during the production of goods and services. Private Education is a service and should therefore be st this tax. Whether VAT is considered a 'good' tax is not the point and off-topic. This change has nothing to do with satisfying a few "envious, bitter Liberals" - wealthy Liberals are likely to be among the group affected - and everything to do with equity, closing a tax loophole and raising much needed government revenue. So, yes Jonny. You're right about one thing at leas: It's not complicated; and it's a concept that Rachel from Accounts has seemingly grasped as well.

Which leaves £112bn for other capital projects. Let's see. 1. Possibly not 2. Disagree. 3a. Agree 3b. Unsure Fine. Good idea.

An extra 500 isn't going to make much difference one way or the other. You can quibble about the amount, but the UK was always going to have to pay a price for a settlement; a fact recognised by the last Tory government. I don't disagree with your statements but that is an altogether different 'black hole'. The UK is no different to almost every other major industrialised nation in having a huge national debt (the US's is $36tn!). If the debts were called in tomorrow, the world would be bankrupt. I disagree completely. What is essential is that we are able to finance the repayments on our debt. There is no reason why public spending cannot be enacted under current conditions. I don't understand your point?

Only 50% of independent schools are charitable, the other half are commercial organisations (Source: UK Parliament library). I'll heard nothing yet to convince me why such organisations should be exempted from VAT. I'd agree that the timing of the introduction of the tax in the middle of the school year is ill thought-out, but why would a government deliberately want to "cause maximum disruption and distress", not least to itself?

I think that it is the height of wishful thinking to believe that Reform have any more idea of how to improve productivity in the public sectors than either the Tories or Labour. Can you be more specific please. I just had a cursory glance at YouTube and there are no end of Cummings' videos. You asked for specific examples of projects and they were contained in the link which I provided. The total amount allocated for capital expenditure in the budget is £134bn. See the link in the previous post. I imagine that some of the money has been set aside for future investment e.g. for capital projects arising from the review of the NHS. It's not an insignificant sum but it only becomes a problem if repayments cannot be met which is why the market was concerned about Trusses' budget. Doubts about the ability of the current UK government to meet its' financial obligations do not currently exist. Indeed and I have never disputed the fact that tax cuts can generate growth. My point all along has been about timing and imo, for reasons outlined here and elsewhere previously, now is not the time for tax cuts. The indicators aren't great and the government's management and PR since it took office leave a lot to be desired, no denying that. The assumptions underlying the budget proposals are that spending will level out over the course of this parliament and growth will occur as a result of the front-loaded capital expenditure. Whether that actually happens remains to be seen.

We've enjoyed a robust but polite exchange of views up to now, so please don't patronise me or I'll reply in kind. I'm well aware that tax receipts from a particular source aren't ring-fenced. This report? https://www.adamsmith.org/news/tuition-tensions-labour-markets-and-education-taxes Even the author has doubts about his findings: Maxwell Marlow, Director of Research at the Adam Smith Institute and report author said: “There is very little evidence on what will happen if the Government imposes a tax on private education, because most countries have never tried it." So the truth is we just don’t know what will happen when VAT is charged on school fees". As an aside, I wonder if the Adam Smith Institute would argue against tax cuts, given that this report seems to suggest that increasing individuals' disposal income acts as a disincentive to work? I don't know where the figure of 6000 comes from? Are Labour (presumably) promising an extra 6000 teachers now? Is this as a result of the (presumed) closures of independent schools due to the VAT increase? (If so, presumably some of these teachers will transfer to the public sector) Which is good example of why increased public expenditure is needed. Yes, I know what an economic black hole is and no, I don't know its' exact size.

Why not? How can it be discussed and fixed if we don't know what the problems are? Agreed. True by definition. Public services contribute to the welfare of society and also act as enablers for the private sector. Without them society would not function. Every component of every public service provider has inefficiencies and layers of management which are unnecessary? A sweeping statement. It does make one wonder why successive governments over the last 50 years have been unable to significantly improve public sector productivity when improvements should be so easy to identify. Let's not pretend Labour have a monopoly on dishonest politicians. Remember a certain Mr. Johnson? https://www.theguardian.com/politics/article/2024/jul/09/what-is-the-national-wealth-fund-and-what-will-it-invest-in (in particular, the section entitled 'What will the NWF invest in?') On the one hand, you state with apparent absolute certainty that the effects of Labour's budget will result in "carnage" within six months, whilst on the other you excuse Trusses' disastrous mini-budget by stating that, "we don't know how it would have turned out" if she'd been given six-month's grace. The fact is that the UK economy couldn't have afforded six months more of Liz Truss: The country would have been bankrupt long before then; the financial markets would have seen to that. The fact that the coupon on UK 10-year gilts is now 4.64% - as opposed to 4.5% which was the rate two years ago - is completely irrelevant. The pertinent facts are that the UK bond market was in turmoil as a direct result of Trusses' mini-budget - panic didn't set in when 10-year gilt yields hit 4.5%, the yields hit 4.5% because panic had set in long before that milestone was hit. The difference in the market reaction to Labour's budget proposals is clear: The market is stable and has taken it in its' stride. A common theme throughout your posts is your belief in the need to cut taxes to stimulate growth. Can I suggest that you read the first section of the following link. The article was written in response to Trusses' budget but, if anything, it understates the reasons why cutting taxes now would be economically irresponsible, given that we have had two economically unjustified cuts to employee NI contributions since then. https://ifs.org.uk/articles/mini-budget-response (I'll pre-empt any possible objections based on political bias by pointing out that the IFS is considered to be neoliberal in its' outlook).

The imposition of VAT is a mess. Imo very few sectors e.g. food, sanitary products should be VAT exempt. The services provided by charities might also be exempted from VAT. However, I don't see why commercial organisations - whose raison d'être is to generate profit - should be exempted irrespective of whether they operate in the education, health or hospitality sector. The medium/long-term effects of Labour policies remains to be seen. I'll avoid a knee-jerk reaction.

It was done to raise money for the Exchequer which will be spent on state sector education: "It is estimated that extending VAT to private school fees will raise £460m in 2024/25, rising to £1.51 billion in 2025/26" (Source: House of Commons Library). Half a billion here, half a billion there; pretty soon it all adds up. The black hole is real. How big it is is the only question.

Why should universities be exempt from VAT? Whether they pass the cost onto students is up to them.

I agree that growth is unlikely in the short term. Once again, I agree. However, that was exactly what Liz Truss put her trust in when she introduced unfunded tax cuts. Look how that turned out Labour claims that its' proposals will be 'fully funded' by the end of this parliament. I accept that this assertion rests on some pretty optimistic assumptions, but it cannot be casually dismissed without some analyses. It's politics. You know that as well as me. Sad as it may be, why should Starmer be expected to behave any differently to any other politician? If waiting lists, etc take a turn for the worse, no doubt Badenoch will criticise Starmer and promise that the waiting lists would somehow magically disappear under her leadership without offering any credible way of achieving it The same 1st year student economist should also be able to tell you that government investment can also stimulate growth. That remains to be seen. Do you believe that: 1. Public sector services in the UK require improvement? 2. The necessary improvement can be met by improvements in public sector productivity alone? (I accept that a reasonable reply might be, "It depends on the sector and some productivity gains should be possible", but I don't have the time or inclination to discuss every sector individually so I'll stick to generalities). If you are answered either, 'No' to Q1 or 'Yes' to Q2 then there is little point in us discussing things any further as we fundamentally disagree on the current situation. If, however, your replies are 'Yes' and 'No' then how will these improvements be funded? At the risk of misinterpreting your position, you rule out tax increases but instead propose cutting taxes as this will stimulate growth and this increased volume of economic activity will, by extension, increase the absolute value of tax receipts, thus presumably enabling the government to finance its' spending. As I mentioned above, this is what Truss believed and enacted and look how that turned out. Hopefully, there will soon be a time when it is economically sensible to cut taxes but, if we want to improve our public sector services, that time is not now.

"Why is it when it comes to cuts leftists assume the only cuts that can be made are to the useful public services like police, NHS etc?" Perhaps because your statement, "Cutting the public sector by 50%", doesn't differentiate between the various public sector workers. Why would anyone - left, right, fascist or communist - assume that your comment was limited to civil servants? It's possible that the Civil Service is overstaffed but I doubt it would function in any real sense of the word if the numbers were reduced by 50-80%. To justify the size of cut on the basis that there were only 40,000 civil servants in the 19th century is frankly ridiculous.

I don't think that Badenoch is much good either. As I said earlier, the vast majority of voters - left or right - are not racist. However, unfortunately, racists do exist and they are far more likely to be right-wing than left.

You accuse me of "making things up" which is untrue; you arrogantly dismiss my opinion as not credible without explaining why while at the same time, try to pass off your own opinion as fact, and then accuse me of making personal attacks when I point this out: It's laughable. As for 'having nothing'. Would you care to have a go at answering one of my original points i.e. justifying why consumers and suppliers of private educational services should benefit from a lower rate of VAT than consumers and suppliers in other industries?

Yes, to varying degrees but do our public services need to be improved? Again, imo yes. The question is how can we do so? Can productivity be improved? Almost certainly, yes but will that be enough? Imo almost certainly, no. For example, Leeds is a major commercial centre but it lacks a mass transit system - it's the largest city in Europe without one - there is a limit to the amount of productivity gains that can be ekked out of the existing system; capital spending is required. Similar examples where capital spend is necessary can be found in other sectors. Apart from the NHS, public sector spending has decreased in real terms since 2014 and this lack of investment shows. The next question is how to finance it. There are a myriad of combinations but at the two extremes, it boils down to 'unfunded' short-term borrowing with the hope that private sector growth kicks in quickly, or 'fully funded' spending through - hopefully, short-term - tax increases. The alternative is to do nothing and watch public service provision deteriorate further

And yours is? Ahh, the misplaced arrogance. Anything to add to the topic? No, I'm done for the moment.

Imo what you posted was opinion not fact. Don't try and tell me what opinions I can post and what I can't.

It's a tautology to state that only a racist would rule out voting for Badenoch because of the colour of her skin. Fortunately, imo the overwhelming majority of UK voters are not racist.

I stand corrected. However, the EU is moving towards allowing member states greater flexibility in setting VAT rates, so applying a 7% VAT rate as you suggest while being an EU member might not be as difficult as it first appears https://www.forbes.com/sites/aleksandrabal/2024/12/08/vat-in-europe-key-reforms-and-changes-coming-in-2025/ That's the theory. But the propensity to consume decreases as income rises, so to what extent would a simple cut to VAT across the board stimulate growth? And what about the inflationary risk? Moreover, an increase in capital spending in large public sector infrastructure projects e.g. housebuilding, transport can also stimulate growth. I assume that most of that is tongue-in-cheek? Taking your first point about cutting the public sector by 50% at face value and assuming that the cuts were made across the board, do you really think that the NHS, social housing, transport, defence, policing, education, etc, etc could continue to function under those conditions? Innovation is generally good for an economy. I'll assume that the rest of your paragraph is just flippancy. On a global scale, UK emissions are insignificant, however, climate change can hardly be tackled worldwide if each and every country adopts a 'Not my fault, not my problem' attitude. I dare say opponents of Clean Water Acts and Clean Air Acts in the past used the unproven link argument. Of course this simple solution hasn't occurred to any UK or European government over the past 20 years. Only a limited comparison can be made between Australia and the UK wrt illegal immigration. Attempting to enter Australia illegally is a lot more logistically and geographically challenging than entering the UK. No, I don't think that the current situation is perfect by any stretch of the imagination. Why would you think that I did? I've stated on numerous occasions that serious problems need to be addressed. No. Again, I've stated on many occasions that it's a problem. However, I don't buy the 'simple solution' theory. Perhaps if the last administration had not attempted to bribe the electorate with a financially unjustified cut in employee NI contributions in its' last months in office - which the OBR estimates will cost an average of £10.3bn annually for the next 5 years - then we might be in a better position to finance our debt. We have exchanged a lot of words but, in essence, things are simple: One either believes that currently public sector services are underfunded and require investment or one doesn't. Can productivity in the public sector be improved? Almost certainly. However, imo productivity increases are not enough; more investment is also necessary. Imo what we can't have simultaneously is state-of-the-art public services and rock-bottom tax rates.

You stated an opinion and provided links to support your opinion. My original comment was tongue-in-cheek in so far as I implied that it would be simple for the public sector to take over one 'failed' 'special needs' private school. However, my comment about the equitable principle involved in removing the 20% VAT exemption on private school fees wasn't tongue in cheek. Moreover, there is an economic justification for its' removal. Whether the sums add up remains to be seen. https://www.theguardian.com/education/article/2024/jun/15/number-of-private-school-pupils-rises-despite-claims-families-priced-out-by-labours-vat-plan

You could but I'm not sure that many of the consequences would be desirable. What if parents chose not to send their children to school? Would schools be free to charge what they wanted? If so, it would create an even more of an unlevel playing field.

Take your own advice and stop making things up. Nowhere did I 'blame the messenger'. I pointed out that the Telegraph headline and article - or, at least the bit which you quoted - bore little relation to each other. I'm not making things up. How else to intrepret your post other than the state system is unable to step into the breech if a 'special needs' private school goes bust? Your post: "For one, there are special private schools that provide the needs for children that are not available in the state sector." Unfortunately, some people will lose out. It's almost inevitable whenever there is a policy change. If I was a parent whose child was affected I would no doubt be furious, however, as the article which you posted points out, "The government said the VAT rise is needed to improve education for the 93% of pupils outside the private system. ....students with an Education, Health and Care Plan (EHCP), which states their needs cannot be met in the state sector, will have their private school fees paid by the local authority and will be able to reclaim the VAT fee. However, not all Send pupils have EHCP's, which has resulted in some parents paying the fees with their own money to ensure their children's needs are being met" Whether education will be improved for the 93% as a result of this VAT increase remains to be seen.