The Flagpole

Following up from my last letter on 30 August, I write to update you on the Government’s plans to add VAT to independent schools’ fees.

We have been continuing our communications with local MPs across the political spectrum to ensure that they are aware of the key issues and potential damage that this policy could have both locally and nationally.

In addition, we have made comprehensive submissions to HM Treasury’s public consultation over this issue. As such I thought it would be worth sharing some of the key points that we have raised.

The Government’s consultation on the policy posed three key questions:

1. Will the policy raise revenue to support the public finances and help deliver the Government’s commitments relating to education and young people?
2. Will the policy ensure high-quality education is available for every child?
3. Is the policy fair, with all users of private schools paying their fair share?

Our view is:

1. The policy is unlikely to raise any revenue that can go into the state education system, in fact there is a significant chance it will have a negative effect on the Government’s finances.

The £1.6 billion that the Government continues to claim that this policy will raise is based on a single report from the IFS. The Government’s extrapolation from this report is fundamentally flawed since they have ignored a number of key factors: they have absolutely no data on parents’ levels of affordability or independent schools’ ability to change their business model so that they can drop their fees and remain viable. As a consequence, it appears that the Government has no data with which to make a reasonable estimate of the numbers of pupils who will be forced out of independent schools due to affordability.

The latest figures from the Adam Smith Institute show how the migration from independent to state sector would affect the government’s finances:

Some schools will have parents of enormous wealth who will be able to afford the additional 20% on top of their fees. Such schools are outliers. At Princethorpe College the overwhelming majority of our parents are not the super-wealthy; they are aspirational, hard-working people who work exceptionally hard to send their children to the school they believe best meets their needs, aptitudes, and abilities.

At the Princethorpe Foundation we are fortunate to be in a strong financial position; in addition, we have been able to make cost savings through a range of measures and we would significantly reduce our fees to support our families – our strategy being to retain our pupils and ensure the high-quality education provision is maintained. Were this policy to go ahead in January, our parents would effectively have a 5% fee increase – whilst this is still a considerable extra burden for many of our parents, our pupil numbers have remained very strong. However, in many schools both locally and nationally, parents will face an increase of well over 10% and in many cases closer to 20%. This will be unaffordable to many families who will be forced out of their schools

2. The policy will not ensure high-quality education is available for every child, in fact it is likely to damage the education of a significant number of pupils currently in both the state and independent sectors.

Without doubt, this policy, on its own, could never ensure high quality education is available for every child. Education is highly complex, as are young people, and the world in which we now live. There are so many factors which go into high quality education, whilst proper financial investment is obviously a key factor, there are many others: genuine parental choice; a broad and rich curriculum; a meaningful and inclusive co-curricular programme; highly motivated, passionate and well-qualified teachers; the ability of the school to meet every child’s specific needs…

This policy, whether or not it raises any additional revenue, will reduce the choice of school for a significant number of parents. It will be hugely disruptive for any child who has to leave their current school where they are happy and flourishing. However, there will undoubtedly be a negative effect in the state sector too where school resources will be stretched more thinly with the additional influx of children who, were it not for VAT, would be educated independently. This will affect all pupils but perhaps none more so than those with additional needs or those with SEND.

This policy will therefore not help the government achieve its aim of ensuring high-quality education for every child; rather it will damage it significantly.

3. The policy and in particular the timescales of its introduction are not fair.

Fair is an interesting word as it will mean different things to different people.

Is it fair that our parents, who save the Treasury money by not taking up places for their children in the state sector, are the very people who are targeted to pay more for the state sector?

It is important to note that many of our families are not hugely affluent and are currently making enormous sacrifices to send their children to a Princethorpe Foundation school. My personal belief is that it is much fairer to use income tax to generate any additional money needed for the state education system. In this way, the burden falls on those with the broadest shoulders, not just those who make the greatest sacrifices for what they consider to be best for their children.

Whilst personal views on the fairness of the questions posed above will differ, it is universally accepted that for a decision to be fair and reasonable the decision-makers will have taken account of all relevant factors in their decision-making. The fact that timescales of the policy were announced before any consultation had even started is testament to the fact that the government has not applied this principle of fairness.

Before the election, the Labour Party made it absolutely clear they would be looking to implement this policy if elected, with a September 2025 implementation. The news on 29 July of a January 2025 implementation is perhaps the most unfair aspect of it. The rush to implement this policy without any attempt to examine all the relevant factors makes it unfair for schools and for parents who will be forced to make life-changing decisions in the middle of a school year. The timing of the announcement of the policy (in the middle of the summer holiday) and the proposed timescale (in the middle of the academic year) could not have been worse. It feels like a deliberate attempt to cause the greatest possible havoc to independent schools, their parents and most importantly the pupils.

The Bottom Line:

The stated aims of this policy for the Government are underpinned by the assumption that very few families will be forced out of the Independent Schools sector.

This aligns with the aims of the Princethorpe Foundation – we want to be able to be able to keep our pupils and support our families. It will be the same for all independent schools.

The short timescale does not provide reasonable time for schools to adjust their finances thus increasing the likelihood that more pupils will leave and move to the state sector. A move to September 2025 the start of a school year, would be more reasonable and would minimise the potential for disruption to pupils, families, independent and state sector schools. The decision to being the date forward smacks of a desire to deliberately undermine the sector.

The Government must look at the timing of execution of their policy. For it to have any chance of succeeding, schools across the country need time to adjust their business models and become leaner so they can continue functioning and generate the income which can provide the extra money the Treasury expects. Whilst we have been able to do this at Princethorpe, I know that many schools have not been able to throw the time and resources into this huge challenge at such short notice.

The Government decision to ban junk food adverts before 9.00pm has recently been announced with implementation from October 2025; the introduction of this VAT policy must not be overly rushed – a January 2025 implementation would have catastrophic consequences for many independent and state schools and most importantly their pupils.

Thank you as always for your support for our schools and to those parents who have contacted their MP or made a submission to the public consultation.

E D Hester