Looming Crisis: Private Schools Face Closures Amid VAT Hike

[The Cyclist]

8 minutes ago, Bkk Brian said:

Just read it. I doubt the left will want to read it though.

 

They wont want to read this either. From the Tory loving BBC

 

Quote

Prime Minister Sir Keir Starmer, the chancellor and business secretary have written to the UK's main regulators asking them to come up with ideas for reform that could boost economic growth.

 

Quote

Earlier this month, Sir Keir warned MPs it would take some time for people to feel their living standards improve.

 

https://www.bbc.com/news/articles/cy0n14ywzqpo

 

Private school fees is just 1 of many, crisis that are about to hit the UK.

 

PS. Economists are also predicting that living standards will not be improving in 2025.

 

PPS. Local authorities will now have to pay to return pupils, mainly SEND pupils back to the same Private School that their parents have just removed them from, due to the VAT hit.

 

All hail the economic geniuses that are Labour, being led by the economic colosus Rachel from Customer Complaints.

 

 

[Chomper Higgot]

26 minutes ago, jayboy said:

 

 

Money quote

 

"So which side is right? Well, we’ll find out soon enough. But even if there isn’t transitional dislocation, and even if Labour is able to transfer a net £1.5 billion to state education, both far from proven, the policy is still disingenuous and misconstrued. Disingenuous because the motive is primarily political, and Labour should own up to it. Disingenuous because its notion of fairness ignores the often cash-strapped parents paying for state school places in their taxes that they do not take up. Disingenuous too because it makes so much of “fairness” while ignoring the middle-class dominance of places at grammar schools. Misconstrued because, rather than trying to wound and stigmatise private schools, the government should be encouraging them to work more closely with the often excellent state sector. '

Opinions differ.

[thaibeachlovers]

2 hours ago, Will B Good said:

 

Private school kids attend public schools.....I think you mean state schools or state funded academies.

Trust the British to confuse things. In NZ a public school is a state school and a private school is a private school.

 

However not alone. I think college in the US is what we call universities. A college in NZ is a secondary school or US "high school"

[RayC]

2 hours ago, Bkk Brian said:

Anything to add to the topic? No, I'm done for the moment.

 

Thought not, just personal attacks. The only thing left when you have nothing.

 

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?

[James105]

1 minute ago, RayC said:

 

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?

 

I presume on that basis you are in favour of University students being forced to pay VAT as well then?  Or do you approve of exemptions being made for certain things... like education for example?  

[Bkk Brian]

3 hours ago, RayC said:

 

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?

It's not a credible opinion because I made statements of facts backed by links ......read my posts again. When I write something I know when I'm writing it whether it is an opinion or not. I know when I wrote my posts to you they were factaul statements because I had already researched and read about them in credible links in the previous topic on the School hikes over a month ago. So I was quite well versed already. Of course I then added links to confirm any facts I mentioned.

 

So next time you try mind reading about whether I'm giving an opinion or a factual statement try not to claim something you had no idea about.

 

Here was my firsr response:

 

 

A factual statement, not an opinion. Links were subsequently provided, go back and read them.

 

[RayC]

4 hours ago, James105 said:

 

I presume on that basis you are in favour of University students being forced to pay VAT as well then?  Or do you approve of exemptions being made for certain things... like education for example?  

 

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

[James105]

23 minutes ago, RayC said:

 

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

 

Well perhaps you should tell the dear leader about this as university students are exempt from VAT.  He is aware of this of course but they are old enough to vote and even though he is an absolute moron someone slightly less moronic will have told him that Labour's demise will be hastened should he raise tuition fees by 20% to fill an imaginary black hole.   Even Nick Clegg only raised them by 9% and that pretty much destroyed Lib dems for a generation.   

 

So anyway now you know it wasn't done out of VAT fair play.  It wasn't done to fill a black hole either as it will raise next to nothing considering the repercussion costs.   It was purely done out of spite and hatred for people who work hard and make sacrifices for their kids.  

[RayC]

4 minutes ago, James105 said:

 

Well perhaps you should tell the dear leader about this as university students are exempt from VAT.  He is aware of this of course but they are old enough to vote and even though he is an absolute moron someone slightly less moronic will have told him that Labour's demise will be hastened should he raise tuition fees by 20% to fill an imaginary black hole.   Even Nick Clegg only raised them by 9% and that pretty much destroyed Lib dems for a generation.   

 

So anyway now you know it wasn't done out of VAT fair play.  It wasn't done to fill a black hole either as it will raise next to nothing considering the repercussion costs.   It was purely done out of spite and hatred for people who work hard and make sacrifices for their kids.  

 

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.

[JonnyF]

3 hours ago, RayC said:

 

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

 

Typically essential services and products like education, health care, sanitary products, food etc. are treated differently.

 

This is the politics of envy. Attacking families who they see as privileged. It will backfire. Labour are misguided and leading Britain into recession. 

 

 

 

 

 

 

[The Cyclist]

2 hours ago, RayC said:

t was done to raise money for the Exchequer which will be spent on state sector education:

 

If you believe that I have a very expensive bridge to sell you.

 

The Adam Smith Institute along with others, actually advised The Government before the budget that the increased VAT will actually cost the Treasury, rather than boosting its coffers.

 

Where are they going to recruit the extra 6000 teachers promised ? Schools are struggling to retain staff, never mind find an additional 6000.

 

Car tax was meant to be spent on the roads. The current estimate for fixing the pot holes alone is £16 Billion.

 

2 hours ago, RayC said:

The black hole is real. How big it is is the only question.

 

There is a very big black hole, but it is not the £22 Billion black hole Labour were howling about. That £22 Billion black came from NHS pay and pension increases and £12 Billion to Africa.

 

Do you know what the black hole is and what size it is ?

[jayboy]

12 hours ago, RayC said:

It was done to raise money for the Exchequer which will be spent on state sector education:

 

The likelihood is that it will raise far less than the Government boasted.In any case the measure was introduced not primarily to raise money (relatively small anyway) but to appease its far left supporters who have tended to regard Starmer's administration as Tory lite.

 

Above all it's a policy motivated by class hatred.The Government loathes the middle class and is looking to erase any evidence of what they think of as privilege.The joke is that the schools they particularly detest - Eton, Harrow ,Winchester etc - will do just fine.It's the smaller provincial schools that will suffer.

[RayC]

12 hours ago, JonnyF said:

 

Typically essential services and products like education, health care, sanitary products, food etc. are treated differently.

 

This is the politics of envy. Attacking families who they see as privileged. It will backfire. Labour are misguided and leading Britain into recession. 

 

 

 

 

 

 

 

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.

[jayboy]

9 hours ago, RayC said:

I don't see why commercial organisations - whose raison d'être is to generate profit

 

None of the major independent schools have a purpose to generate profit.In fact that would be forbidden under their charitable status.It is wrong to suggest they were exempt from VAT because they have never been subject to it.No other country charges VAT on education.The measures being implemented in the UK are just an example of class hatred, spitefully introduced in the middle of the school year to cause maximum disruption and distress.

[RayC]

21 hours ago, The Cyclist said:

 

If you believe that I have a very expensive bridge to sell you.

 

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.

 

21 hours ago, The Cyclist said:

The Adam Smith Institute along with others, actually advised The Government before the budget that the increased VAT will actually cost the Treasury, rather than boosting its coffers.

 

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?

 

21 hours ago, The Cyclist said:

Where are they going to recruit the extra 6000 teachers promised ? Schools are struggling to retain staff, never mind find an additional 6000.

 

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)

 

21 hours ago, The Cyclist said:

Car tax was meant to be spent on the roads. The current estimate for fixing the pot holes alone is £16 Billion.

 

Which is good example of why increased public expenditure is needed.

 

21 hours ago, The Cyclist said:

 

There is a very big black hole, but it is not the £22 Billion black hole Labour were howling about. That £22 Billion black came from NHS pay and pension increases and £12 Billion to Africa.

 

Do you know what the black hole is and what size it is ?

 

Yes, I know what an economic black hole is and no, I don't know its' exact size.

[The Cyclist]

7 minutes ago, RayC said:

I don't know where the figure of 6000 comes from? Are Labour (presumably) promising an extra 6000 teachers now?

 

I got that wrong, it's actually 6500

 

Good luck with that.

 

And before I forget. Apparently we will have to pay £800 million a year in perpetuity to surrender the Chagos Island.

 

Deal of the Century, and another Labour black hole.

 

9 minutes ago, RayC said:

Yes, I know what an economic black hole is and no, I don't know its' exact size.

 

The economic black hole, that no-one wants to talk about is £1.5 Trillion. It is caused by  unfunded pensions. It is also the reason that whilst it is easy to shout for additional public spending, it is almost impossible to actually provide additional public spending.

 

Which leaves us with Labours £7 Billion National wealth fund

 

Or

 

PFI on steriods, if Labour can get anyone to invest. Selling off the rest of the gold reserves or raiding pension funds again.

[RayC]

56 minutes ago, jayboy said:

 

None of the major independent schools have a purpose to generate profit.In fact that would be forbidden under their charitable status.It is wrong to suggest they were exempt from VAT because they have never been subject to it.No other country charges VAT on education.The measures being implemented in the UK are just an example of class hatred, spitefully introduced in the middle of the school year to cause maximum disruption and distress.

 

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?

[RayC]

22 minutes ago, The Cyclist said:

 

I got that wrong, it's actually 6500

 

An extra 500 isn't going to make much difference one way or the other.

 

22 minutes ago, The Cyclist said:

 

And before I forget. Apparently we will have to pay £800 million a year in perpetuity to surrender the Chagos Island.

 

Deal of the Century, and another Labour black hole.

 

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.

 

22 minutes ago, The Cyclist said:

 

The economic black hole, that no-one wants to talk about is £1.5 Trillion. It is caused by  unfunded pensions.

 

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.

 

22 minutes ago, The Cyclist said:

 

It is also the reason that whilst it is easy to shout for additional public spending, it is almost impossible to actually provide additional public spending.

 

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.

 

22 minutes ago, The Cyclist said:

Which leaves us with Labours £7 Billion National wealth fund

 

Or

 

PFI on steriods, if Labour can get anyone to invest. Selling off the rest of the gold reserves or raiding pension funds again.

 

I don't understand your point?

[jayboy]

38 minutes ago, RayC said:

Only 50% of independent schools are charitable,

 

Every single one - repeat every single one - of the top public schools (ie any independent school that one has heard of) has charitable status.These are the well known schools that Labour hates - Eton, Harrow, Winchester etc.These are the schools that have wealth and influence.These are the schools that will cope with the government's vandalism.The smaller obscurer schools will suffer the most, the ones that educate the children of the struggling middle class.

 

43 minutes ago, RayC said:

why would a government deliberately want to "cause maximum disruption and distress",

 

It's class warfare and anything these cretins believe to be "posh" is the target of their envy and nastiness.The Government hates the middle class, hates ambition, hates aspiration and middle class people who want the best for their children.To be fair, I don't think Starmer thinks this but being a weak man, he sees this VAT vandalism as red meat to be thrown to the left.

[JonnyF]

11 hours ago, RayC said:

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.

 

Because they pass the extra cost to the consumer making essential services like education, healthcare etc more expensive due to tax. 

 

It's not complicated Ray.

 

There will be no upside to this other than a few envious bitter Liberals thinking they have got one over on those "nasty" people who pay for their own children's education (taking strain away from state schools in the process). 

 

Rachel from accounts is as clueless as those who support this policy. Sixth form envy politics.

[richard_smith237]

On 12/29/2024 at 9:31 AM, RayC said:

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?

 

Consumers and suppliers of private educational services might benefit from a lower VAT rate for several reasons, often rooted in public policy objectives and the unique nature of education as a service....  Why ??...  

 

Education as a Public Good

Education is often viewed as a public good with significant societal benefits, such as fostering a more educated workforce, promoting equality of opportunity, and enhancing civic participation.

Lower VAT rates on private educational services can make higher quality education more accessible.

 

Encouraging Investment in Education

A reduced VAT rate can incentivise consumers to invest in their or their children's education, which can have long-term economic and social benefits.

Suppliers of educational services may also be encouraged to expand or improve their offerings, knowing that their services are more affordable to consumers.

 

Reducing Inequality

Having no VAT on educational services can help reduce financial barriers for families who may otherwise struggle to afford private education.The no VAT policy supports the principle of equal access to education, even in contexts where public education options are limited or less desirable - all the VAT does is ensure the wealthier continue to have access to higher standards of education while those on the 'borderline' of affordability do not. 

 

Alignment with Exemptions for Public Education

Many countries already exempt or apply reduced VAT rates to public educational services (see next further comment below in another post). Extending similar benefits to private education ensures a level playing field across the EU and recognises the role of private providers in meeting educational needs.

 

Encouraging Diversity and Choice

By lowering VAT, governments can promote diversity in educational offerings, allowing consumers to choose services that best meet their needs, whether public or private.

This approach respects individual preferences and fosters innovation and competition in the education sector.

 

Long-Term Economic Benefits

Education drives economic growth by improving skills and productivity. Lower VAT rates on educational services can be seen as an investment in human capital, which yields returns in terms of higher income and tax revenue in the future.

 

Aggregate Result Mathematics

If 10,000 students leave private school for state schools, will 10,000 (or more students from state schools) achieve the same grades ?... Will there be an overall improvement in education (demonstrable in improved grades) ?

Or, will there be no difference at all, and we have just potentially lost 10,000 high performers due to a lower standard of education ?

 

 

 

[richard_smith237]

Following on for the above comment....

 

In Europe, most countries exempt private education from VAT, recognising its role in society and aligning with the principle of supporting educational services.

 

Private education is generally not subject to VAT in... 

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece (after revoking its VAT on private education in 2015), Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden

 

These countries typically classify private education as a public good or essential service, aligning its tax treatment with that of public education, which is also exempt from VAT. 

 

In Europe, only a few countries apply VAT or equivalent taxes to private education services. These countries usually do so under specific conditions or for particular types of private education. 

Countries That Tax Private Education:

- United Kingdom (as of Jan 2025)

- Greece Introduced a 23% VAT on private education in 2015 during austerity measures, this tax was later revoked as it was disaster. 

- Ireland - Some private education services, particularly non-essential courses or commercial training, are subject 

- Switzerland - taxes some private educational services if they do not fall under exemptions for compulsory schooling or vocational education.

- Norway - Certain specialised or private education services, particularly commercial training programs, are subject to VAT.

 

 

Thus: the question has to be asked - If the vast majority of the EU identifies that taxing private education is fundamentally flawed, why does the UK Labour government see it differently ????

 

 

[RayC]

9 hours ago, JonnyF said:

 

Because they pass the extra cost to the consumer making essential services like education, healthcare etc more expensive due to tax. 

 

It's not complicated Ray.

 

There will be no upside to this other than a few envious bitter Liberals thinking they have got one over on those "nasty" people who pay for their own children's education (taking strain away from state schools in the process). 

 

Rachel from accounts is as clueless as those who support this policy. Sixth form envy politics.

 

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.

[James105]

40 minutes ago, RayC said:

 

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.

 

I think that some people are so tribal they will support anything this clown show of a government introduces.  If they decide to "close the tax loophole" on children being exempt from tax on their pocket money I'm sure you will be on here justifying why its a good thing to raise much needed government revenue which just gets spaffed away on carbon capture, foreign climate aid, foreign terrorist aid, foreign aid etc. 

[The Cyclist]

11 hours ago, RayC said:

An extra 500 isn't going to make much difference one way or the other.

 

Really ?
 

Looking to recruit an additional 6500 Teachers, which apparently equates to 1 teacher for every 3 schools. That of course is ignoring the current levels of understaffing in schools.

 

The high end of the estimate for pupils being taken out of private school is 90,000 by the end of the current Ecication year.

 

A very large % of them are what are deemed SEND pupils, which State schools cannot accomodate, so councils will have to pay the fees to send tham back to the same school they have just left.

 

Tell me again, when you look at all the component factors together, rather than individually, that it is not going to make much of a difference.

 

11 hours ago, RayC said:

I disagree completely. What is essential is that we are able to finance the repayments on our debt. 

 

Really ?
 

We are on track to borrow close to £200 Billion in the current financial year. Borrowing even more to ensure that debt is serviced, does not seem like a good plan to me. In fact, it seems rather idiotic.

 

The more the debt servicing costs rise, the less to spend on Public Services. Cannot have it both ways.

 

11 hours ago, RayC said:

I don't understand your point?

 

I know, and I have just explained why you do not understand my point.

 

The UK Government has a finite amount of money that it can raise in taxation. The more you borrow, the higher debt servicing costs rise, the less you have to spend on Public Services.

 

The previous Labour Government got around this problem by doing 3 things.

 

1. Raiding Pension funds twice

 

2. Selling half the Gold Reserves.

 

3. PFI on steroids. Which will not be paid off until 2050.

 

The current Labour Government do not have the first  2 of those options available to them.

 

So any public expenditure either comes from PFI on steroids or a massive increase in borrowing.

 

 

[The Cyclist]

10 hours ago, JonnyF said:

 

Because they pass the extra cost to the consumer making essential services like education, healthcare etc more expensive due to tax. 

 

It's not complicated Ray.

 

There will be no upside to this other than a few envious bitter Liberals thinking they have got one over on those "nasty" people who pay for their own children's education (taking strain away from state schools in the process). 

 

Rachel from accounts is as clueless as those who support this policy. Sixth form envy politics.

 

 

[jayboy]

1 hour ago, RayC said:

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.

 

 Parents who go private are already paying twice, because they pay taxes for state schools that they don’t use and fees on top of that – which is why school fees are tax deductible in Germany.

 

Spin it any way you want, this is a policy born of cynicism and class hatred.

[RayC]

41 minutes ago, jayboy said:

 

 Parents who go private are already paying twice, because they pay taxes for state schools that they don’t use and fees on top of that – which is why school fees are tax deductible in Germany.

 

Spin it any way you want, this is a policy born of cynicism and class hatred.

 

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.

[James105]

6 minutes ago, RayC said:

 

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.

 

It will end up costing taxpayers money according to estimates, so to disrupt kids in the middle of their school year with this vindictive spiteful policy will actually mean less tax revenue not more.  Of course bigger class sizes will also disrupt the kids already in state schools so it's a loss for private school kids, a loss for state school kids, and a loss for the taxpayer.   Creating a policy where literally everyone loses is quite an achievement though and I doubt many other customer service reps would be able to replicate this.  

 

https://www.taxpayersalliance.com/analysis_vat_on_private_schools_could_end_up_costing_taxpayers

 

Of course you will likely suggest that the estimates are wrong as you seem to have absolute faith in the lying charlatans "running" the country right now despite the fact they have done nothing but lie to you over and over again.   

[Chomper Higgot]

It seems the wider public back Labour in this:

https://www.theguardian.com/education/2024/dec/31/labours-private-school-tax-plan-strongly-backed-by-public-poll-shows