Alexander Bowen is an MPP-MIA student at SciencesPo Paris and St Gallen specialising in public health, and a policy fellow at a British think tank.
You’re about to hear something you might not like, and that you won’t hear much elsewhere. VAT on private schools is a good idea. So too is VAT on private hospitals.
But then again so too is VAT on pasties, VAT on sanitary products, and VAT on books. The UK is, after Spain, Italy, and Greece, the worst performer on the share of VAT not collected, at only 45 per cent of potential revenue (compared to New Zealand’s 99 per cent).
The administrative complexity of variable rates, and the sky high tax threshold, has helped create a system where 12.2 per cent of VAT revenues are lost to tax cheats. Those two facts, alongside the £1.2bn raised, is why VAT on private schools is a good idea – though it is seldom cited as one.
If anything, rather than rejecting the tax charge, the Conservatives should pledge to go even further and put VAT on university tuition fees.
After all, if Labour believes a £15,000 a year private school is a ‘luxury service’ deserving of taxation then how do they justify believing a similarly-priced masters in ancient history, or an £80,000 masters in business administration, isn’t? Why is it that the party believes British children should be taxed whilst foreign students at British universities are exempt?
Taxing university tuition fees would even help to manage migration too, as foreign students at the worst performing and least-competitive universities on so called “deliveroo visas” would be most discouraged by the VAT-related price hike given relative ‘willingness to pay’ levels.
(You could even pledge to stick the £1.2-1.5bn generated by the policy into raising social care wages by 10 per cent – reducing migratory pressures in that sector.)
But I digress. Ignoring this glaring inconsistency, a large logical gap remains in Labour’s policy towards private schools ignoring universities and VAT standardisation.
You hear time and time again that who attends private school has fundamentally changed from being the children of senior professionals. Yet that is not true; enrolment rates have remained essentially unchanged since 1960.
That fees have grown exponentially is a reflection not of a compositional shift among the professional class but of two separate trends: the ageing population and the housing crisis.
The rise of grandparents paying fees has been one part, but cashing out on housing has been even greater. Recent evidence even found the effect of housing wealth has been far more important than that even of income – and they’ve become more affordable over time when compared to housing.
That a smaller share of professionals send their children to private school reflects not a compositional effect, but simply that there are more professionals.
Housing belies another area where our discourse on private school doesn’t match reality. When it comes to accessing good schools, parents both private and state are paying to play.
Paying £18,600, to be exact – that’s the effect, all else being equal, of being located near one of the ten per cent best-performing state primary schools on house cost. In London it’s £38,800. Elsewhere a similar pattern is found, with the same school being ranked as A instead of B, by the closest American equivalent to OFSTED, being worth an extra $21,000 to homeowners.
That good schools drive house prices up is a key point. If there’s one area where there simply isn’t a sufficient evidence base, it’s the downstream consequences that migration from private to state schools will have long-term if people used to spending £15,000 a year on education are now free to spend another £15,000 a year on competing for housing and school-proximity.
Will it displace lower-income families from good state schools? If so, will the £1.2bn raised be enough to offset the negative effects of that? We don’t know enough to say. But politicians must learn that unintended consequences are very real.
Vague gesturing about how the UK can become Finland – if it only abolished private schools – is not good enough. Not least because Finland very much has private schools, just ones that are legally obliged to be free. (Enforcement problems with this remain, and Finnish children performing no better than the UK on standardised international tests.)
It’s even worse when considering the role Finland’s school system has played in enhancing ethnic segregation. Hell, even the other Nordic countries don’t agree with Finland’s approach.
Progressive Norway will pay €22,000 a year for students to study at a boat-based private school whose fees dwarf Eton’s, and in Sweden 31.3 per cent of all upper secondary school students go to private schools – thanks to generous government subsidies.
We all claim to believe in evidence-based policymaking, so let’s try some, shall we?
In France, where private schools are regarded frankly as not very good, there nonetheless remain schools that dominate boardrooms and cabinets. Yet these are state-run, and whilst this might be preferable to some, it very much does not fix the underlying issue.
Lycée Henri-IV and Lycée Louis-le-Grand are every bit as dominant as Eton and Harrow; the latter alone clocks in nine modern prime ministers and four presidents; the comparable figure for Eton and Harrow combined is but five. These French state schools are both less diverse than their British public counterparts and more dominant on further education – with admissions rates to France’s Oxbridge approaching 85 per cent in some fields.
If avoiding such segregation is the goal, there are better policies than cracking down on private schools. Allowing parents who could not afford house-price competition to compete for access to the best schools, as did Westphalia, under Jürgen Rüttgers, in 2008, is one.
If the goal is maximising social mixing, and I think it ought to be, then trying a policy inspired by Singapore’s social housing policy where “diversity in enforced by law” would be a step forward.
This diversity though ought to be the most important form and the one that has been neglected most consistently: economic. Not just abolishing catchment areas, but creating ‘a snake in the tunnel’ system setting at every school, both private and state, a maximum and minimum quota for free-school meals student enrolment (with school bussing available to parents to help carry it out).
If we want schools that are capable of integration and that can actually perform their purpose as bastions of social mobility, that’s the real way forward – not building an entire education policy around a minor tax change which can never go far enough.
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Author: Alexander Bowen
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