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Government’s Private Schools VAT Raid “Risks Costing Taxpayer £1.8bn”

by Will Jones
1 September 2024 7:00 AM

The Government’s VAT raid on private schools risks costing the taxpayer up to £1.8 billion as parents cut their work hours once their children move into the state sector, a report has found. The Telegraph has the story.

Private schools will be forced to pay 20% VAT and business rates from January 1st, with the independent sector expected to raise fees as a result. Last week, Eton College said it would join the schools passing on the cost to parents in full.

A family would need £340,000 of disposable income to pay the average annual school fees of £17,000 for two children over 10 years.

But those who can no longer afford to go private as a result of the tax raid will experience big wealth gains, and related research suggests this would make people reconsider how much they need to work.

At least some of the parents unable to afford the higher costs are likely to work less, retire early or even quit working immediately, according to analysis by the Adam Smith Institute.

The free market think tank looked at what would happen if two-fifths of money these parents earn or the hours they work specifically to cover school fees was instead taken as leisure.

It found it could cost the Treasury between £360 million and £1.81 billion, depending on how many pupils migrate to the state sector.

Worth reading in full.

Tags: LabourPrivate SchoolsTax RisesVAT

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17 Comments
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FerdIII
FerdIII
8 months ago

Just the opening salvo in their war on educational choice. Private schooling will be illegal in the future, along with home schooling.

The Totalitarian Statists in order to ‘save’ freedom, democracy and education, will make educational competition illegal – after they have pilfered and plundered the schools and parents. Soon ‘wealthy’ will be anyone earning more than the min wage.

7
0
JeremyP99
JeremyP99
8 months ago
Reply to  FerdIII

The only law in Germany from the Nazi era that remains is the ban on home schooling.

2
0
Purpleone
Purpleone
8 months ago
Reply to  FerdIII

Only one form of indoctrination will be allowed – the ‘official’ state one… scary

4
0
transmissionofflame
transmissionofflame
8 months ago

I doubt they care whether or not the policy increases tax revenue. The purposes are to play to a certain section of their support that “hates toffs” and to attack the private education sector and force more people into state indoctrination centres, and reduce choice. Communists hate freedom of choice and they hate anything being done outside the state.

7
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Sceptical Steve
Sceptical Steve
8 months ago
Reply to  transmissionofflame

It’s also intended to deflect attention away from policy areas they wish to keep away from the public’s attention, such as the proposed changes in employment and immigation legislation.

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transmissionofflame
transmissionofflame
8 months ago
Reply to  Sceptical Steve

That’s an excellent point.

2
0
RTSC
RTSC
8 months ago
Reply to  transmissionofflame

Yes, it’s ideological. Payback time for the Teaching Unions.

5
0
RTSC
RTSC
8 months ago

I expect the demand for home tutors for children removed from private schools and forced into our dire state education will rocket …. particularly for maths.

7
0
transmissionofflame
transmissionofflame
8 months ago
Reply to  RTSC

Obviously school serves a social purpose too, but I get the impression there’s a lot of time wasted in schools, especially state schools. My daughter did Economics A Level exclusively with a tutor due to timetabling issues at her (state) school, and managed it in about one third of the taught hours that she would have had to do at school.

7
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A. Contrarian
A. Contrarian
8 months ago
Reply to  transmissionofflame

As a home ed parent I can confirm this is true – I can’t remember the exact figures now, but an ex-teacher I know did some calculations and worked out that only around an hour or so of focused learning takes place each day (think this was for primary level – obviously you would expect more at secondary).

3
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transmissionofflame
transmissionofflame
8 months ago
Reply to  A. Contrarian

Sounds about right. At our kids’ secondary school it varied a lot by set – if you were in one of the lower sets for subjects they streamed in, like maths, lessons were constantly disrupted by difficult kids who were bored/felt the need to kick off.

2
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Gerry England
Gerry England
8 months ago
Reply to  transmissionofflame

My experience was a very long time ago – late 60s-early 70s – but I went from a state primary school to a private prep school. At prep school we were into serious education from the start in all lessons. We were also given lessons to prepare us for the 11-Plus and it was done so well I didn’t even know when I actually sat the exam as we had been through so many test runs. No anxiety around at my school. We also learned French from age 7 or 8. The school took pupils in early such as myself knowing that you would stay at the same level for one year – either the final one or whenever they thought you could have done better. The senior school was still private and my parents could not afford it – ironically 2 years later it went state. So I went to a state grammar school that was in the process of dumbing down to comprehensive once my age group had passed through. The different was very noticeable. French went back to square one as nobody had been taught it at their primary schools. And to gauge progress there were exams at the end of every term and it was stressed that we should not worry about them. I had been doing this since 7 years old so what were state schools doing? And I despair when I hear the subjects – or non-subjects – of state school lessons these days. A lot of fluffy nonsense.

2
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transmissionofflame
transmissionofflame
8 months ago
Reply to  Gerry England

Interesting

From what my kids and their friends told me the main differences seemed to be behaviour and levels of expectation

1
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iconoclast
iconoclast
8 months ago

Home schooling is a great option.

For two kids it saves at least £34,000 pa after tax so is sufficient to justify one parent giving up work.

Also, home schooled kids only need about 4 hours per day teaching.

Which means lots of time for lots of extra-curricular activities like music, sport, chess etc.

There are also lots of online resources for the kids and to help parents.

Well worth considering if the State sector has little appeal.

0
0
iconoclast
iconoclast
8 months ago
Reply to  iconoclast

A civil servant could stay in work and work from home and make sure the kids do their online lessons and help them when needed.

0
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iconoclast
iconoclast
8 months ago

19 minutes ago

GB News

Labour to REFUSE Commons vote on stripping Winter Fuel Allowance for pensioners
Labour is set to block a vote on cancelling pensioners’ winter fuel allowance in Parliament this week – prompting fury from across the benches and within the party itself.

Chancellor Rachel Reeves has hailed the controversial paring-back of the payments as the “right choice” in order to fill the so-called “black hole” in public finances after 14 years of Tory rule.

Writing in The Observer, Reeves said: “They were not the choices I wanted to make or expected to make but they were the right choices to put our country on a firmer footing.”
And the Leader of the Commons, Lucy Powell, claimed that if the payments – expected to save taxpayers some £1.5billion annually – were kept in place, Britain could be forced to endure a run on the pound.

Despite both Conservatives and Lib Dems urging ministers to consider holding a parliamentary vote on axing the payments, Government insiders have shut down the idea.
Across the benches, MPs say the scale of the winter fuel cuts mean the measures should be given airtime in the Commons.

But a Government source said succinctly: “We are not going to do that”.
Shadow Treasury Minister Laura Trott slated the plans to push through the allowance cuts, saying: “This simply shows how desperate the Labour government is to run from responsibility for the tax rises they always planned but hid from the public during the election.

“After handing billions in inflation-busting pay rises to their union paymasters, no one believes Labour’s ‘Chicken Little’ strategy.

“They should stop trying to deceive the public with ridiculous fantasies and instead have the courage to let Parliament debate cuts to winter fuel payments for the sake of those pensioners who will lose out thanks to the decisions of this Government.”

The plans to axe the payments – despite the fact they’ll be kept open to pensioners taking home less than just under £1,000 per month – have seen wide-ranging condemnation, not least at the hands of Age UK, which has written to the Chancellor in a push to make her reconsider, and whose petition has reached almost half a million signatures.

Labour’s own Rachael Maskell, MP for York Central and chairman of the All Party Parliamentary Group for Ageing and Older People, said: “This is not going to go away – the Government cannot run away from it.”

Last edited 8 months ago by iconoclast
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0
iconoclast
iconoclast
8 months ago
Reply to  iconoclast

The VAT raid was total knee-jerk envy politics and made clearly without any thought of the implications.

The £1.8 bn came within days of the publication of that figure as an estimate from one of those think-tank type outfits.

Starmfuhrer simply latched onto it as if it was a valid well-considered [ie. properly costed] tax-raising policy.

The figure was nothing to do with Labour.

So that also makes Starmfuhrer and Rachel Reeves look like liars when they claimed all their proposals were properly costed.

Last edited 8 months ago by iconoclast
0
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