Sir Keir Starmer, following Jeremy Corbyn, wants to remove the charitable status of private schools, which would have to charge VAT on fees and pay business rates. Tory critics say that this would drive all but the wealthiest away from private schools, perhaps even forcing some to close. But with average day school fees of about £15,000 per annum, private schools are already only affordable to the wealthiest.
Sir Keir says his policy is about fairness – why should something affordable only to the richest be considered a charity and so be tax exempt? Supporters of private schools will point out that over a third of pupils in private schools (180,524 pupils) have help with their fees, to the tune of £1.2 billion a year overall. It is this that makes private schools’ charitable status legitimate.
Not enough, says Sir Keir. In any case, one can see the attraction for a Labour government: charging VAT on fees could raise £1.6 billion for the Treasury, over £65,000 per year for each of the 24,000 schools in the UK.
What nobody seems to be in disagreement about is the huge advantage that private education confers on those who attend. Although only 7 per cent of all UK pupils attend private schools, in almost every sphere of excellence, they are over-represented. Two thirds of British Oscar winners and British Nobel Prize winners were privately educated, as were three quarters of senior judges. It’s not just about family advantage: research from around the world shows that private education adds something special, probably accountability to parents, which makes their outcomes superior to government schools.
But if there is this private school “x-factor”, why on earth is anyone talking about restricting access to them? Surely we should be arguing the opposite – that we need many more private schools, not fewer? Sir Keir is doing us a favour, by pointing to the important question: why are private schools so expensive, so out of reach of ordinary families?
Motivated by this same question, four years ago with two business partners I created a low-cost private school in the North East of England, the Independent Grammar School: Durham, charging about £3,000 per year. Would we find demand for a lower-cost private school? Could it possibly be commercially viable?
The school has proven the model. It has passed all its Ofsted inspections. It gets glowing reviews from parents, and is now full. Financially, the school can wash its face, even with that level of fees. All that is needed now is for investment to be raised to replicate the model in a chain of low-cost private schools from Hartlepool to Newcastle. As investors and entrepreneurs see the viability, it can be replicated elsewhere in the UK too. Near where I live now, I see the enormous potential in many cities and towns, like Luton and Milton Keynes, Bedford and Bicester.
Indeed, perhaps a policy like Sir Keir’s could have the opposite effect – removing charitable status could force private schools to explore new markets, and new price points.
In the end, while the VAT question has pointed us in this direction, it might be a distraction. As the affordable private sector expands, once educational entrepreneurs and investors get on board, this will raise the crucial question of why should parents pay twice for education, through their taxes, and then again through school fees. Rather than worrying about VAT on fees, tax credits and educational vouchers ought to be the education tax issues of the day. Those are education policies that should be attractive to parties other than Sir Keir’s Labour.TIOB News