Clegg could make education fairer by taxing private school fees


by Sunder Katwala    
2:47 pm - January 4th 2011

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The ‘pupil premium’ is a good idea about to be sacrificed on the altar of austerity.

The Government has failed to keep the promise in the Coalition Agreement that this pledge – intended to spend more money on disadvantaged pupils – would be funded “from outside the schools budget”. Instead, the Education Secretary Michael Gove has acknowledged that the ‘premium’ will be funded by redistributing money within a shrinking schools budget, which means that most schools will see their funding cut.

Ministers face an unenviable choice: do they risk a backlash from most parents, unhappy at seeing less money spent on their children, or do they let down the worst-off children, whom they pledged to help?

But there is a fair way to keep the promise of new money, without cutting funding for most schools. A real pupil premium could be funded by putting VAT on private school fees, and dedicating the resources to an educational mobility fund.

It could raise £1.5 billion per year for the pupil premium – and would also help to stop the funding gap between state and private schools widening sharply, and setting social mobility back.

A research study ‘Level Playing Field’, published by the CfBT Education Trust, found state spending per pupil had been 50% of private spending in 1997, rising to 58% by 2009/10. In real terms, what state schools were spending per pupil by 2010 had caught up with what private schools had been spending in 1997, though of course the private schools had by then raced further ahead.

Maintaining this ’12 year time-lag’ required state school spending increases in real terms of 3 per cent per year, if the gap was to neither widen nor narrow. But now we know that state school funding will fall in real terms and the spending gap will widen.

The fairness case for levying VAT on private school fees is this: whenever £10,000 is spent on private school fees, £2000 would go towards narrowing the gaps in opportunity and mobility. Every parent paying £30,000 per year at Eton would be contributing £6000 to the pupil premium, still leaving a hefty £24,000 to be spent on the best schooling that money can buy.

It is unlikely private schools would raise their fees by 20%, as the market would not sustain that. Say increases were kept to between 5 and 10 per cent instead, the shortfall would be made up by private schools spending less per pupil. The move would therefore provide a one-off narrowing of the spending gap, which is otherwise about to accelerate sharply, and constrain the chances of a runaway widening of the gap over time.

A forgotten secret is that New Labour seriously considered levying VAT on private education in 1997, with David Blunkett strongly in favour, as Alastair Campbell’s diaries recount. The case is considerably stronger now given fiscal constraints.

This policy proposal is almost certainly too radical for every party.

Yet if we take seriously Clegg’s anger about the hoarding of chances for the pupils of Eton and Westminster, and Cameron’s commitment to every child sharing the chances he had, then they must yearn to be more radical.

—-
This is an extract from the Fabian Review this quarter. The full essay is on the Fabians site

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About the author
Sunder Katwala is a regular contributor to Liberal Conspiracy. He is the director of British Future, a think-tank addressing identity and integration, migration and opportunity. He was formerly secretary-general of the Fabian Society.
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Reader comments


“The fairness case for levying VAT on private school fees is this: whenever £10,000 is spent on private school fees, £2000 would go towards narrowing the gaps in opportunity and mobility. Every parent paying £30,000 per year at Eton would be contributing £6000 to the pupil premium, still leaving a hefty £24,000 to be spent on the best schooling that money can buy.”

Your sums are wrong – it’s a value ADDED tax, so the correct way to work out how much revenue would come from it is fee/1.2. 20% of the fee is not how much tax revenue is taken.

It’s the answer to everything isn’t it: Tax

3. Chaise Guevara

@ 2

“It’s the answer to everything isn’t it: Tax”

And your answer would be..?

I don’t use public libraries, I have nothing against them in fact I’m glad to pay for them, it’s just that I buy a lot of books and like to keep them. But would it be fair to charge me (not everyone just non-users) extra for books because I don’t use the library?

These people are already paying twice for education what, exactly, is fair about making them pay more? Just because they can (maybe) afford it and because you’re able to does not make it right or fair. Many parents go without other stuff to send their kids to private schools why should they be hit like this.

People who send kids to private school are already paying taxes, of which a large % goes towards state education already, which their kids don’t use – so I suspect there would a strong pushback asking for a commensurate tax reduction, as has been the case this has been mooted in teh past.

Personally i don’t think that there should be private education but labour has never had the balls to do anything about it. If there were no private schools I think The Mail, Telegraph etc would hound the governement (quite rightly) about the state of public education.

But, if we’re going to live in a world where it exists then let’s be bloody reasonable about it, it’s not just Eton we’re talking about here. Fair is fair and this idea isn’t

7. Chaise Guevara

@ sl

“I don’t use public libraries, I have nothing against them in fact I’m glad to pay for them, it’s just that I buy a lot of books and like to keep them. But would it be fair to charge me (not everyone just non-users) extra for books because I don’t use the library?”

Well, you;re being charged for using the private product – so it’s like paying VAT on books you buy because you don’t want the free raggedy ones at the library. But fair point on double-charging. I suppose it would be more reasonable to raise tax on high incomes, which would hit the rich regardless of whether they send their kids to private school.

Could Clegg do this? Actually, no he couldn’t.

Well, you;re being charged for using the private product – so it’s like paying VAT on books you buy because you don’t want the free raggedy ones at the library.

Which you don’t of course, because books are zero-rated, just like schools.

Right, so this will have a twofold effect, it will either put the price of private fees up, or the spending within private schools down, both of which should have the effect of discouraging people to send their kids to private schools. Would the extra funds raised equal the extra spending required to educate these additional children? It probably would.

I have mixed feelings about private education. If you look at areas such as South East London, the state schools are pretty terrible, and a large number of independent schools have set up to cater for these areas. It would take a lot more than the VAT would raise to make the difference in these schools.

In addition, I would like to set out before hand that there is nothing wrong with academic selection. Most of the parents in the area mentioned above aren’t ‘committed’ to private education, they’re committed to good education, as illustrated by the large number who send their kids to grammar schools in Kent.

The classic argument still remains, don’t abolish first class, abolish second class. Better education should be funded out of general taxation.

11. Andy Mayer

The proposal makes about as much sense as putting VAT on private rents as a source of finance for social housing. What both would principally achieve is driving people on the margin from self-reliance to state dependency by pricing them out of the private sector. Both at a large cost to the state.

The impact of that in turn would be to increase the privilege gap and segregation between the very rich and the rest of us. Much as Labour did when they abolished the assisted places scheme, something of a home goal in respect of social mobility.

If you want to reduce the advantage of private education and open the sector up to more competition and children from a wider range of backgrounds. Provide a voucher to the value of the average (or pupil premium weighted) state subsidy for each child educated and let a variety of public, private and not for profit firms compete to provide the best education.

Support access to elite or merit-based education by letting a thousand scholarship programmes bloom. Subject them to the same tax advantages as other charitable schemes.

Etc… Trying to stop people making good choices like spending their money on educating their kids rather than beach holidays and video games is a hiding to nothing. You don’t break down social barriers or increase opportunity by making privilege more expensive. Quite the reverse.

Perhaps this sort of deliberately destructive disincentive needs a name. Bludge?

12. Chaise Guevara

@ 9

“Which you don’t of course, because books are zero-rated, just like schools.”

Bah! Knew I should have looked that up!

Provide a voucher to the value of the average (or pupil premium weighted) state subsidy for each child educated and let a variety of public, private and not for profit firms compete to provide the best education.

This is the Australian system, which seems to work pretty well. I think it’s unlikely to happen here though – it’s hard to picture Cameron defending a decision to give Eton a public subsidy.

12 – Sorry! But educational spending is usually zero-rated for VAT purposes, whether it’s school supplies, books and magazines or fees.

“It is unlikely private schools would raise their fees by 20%, as the market would not sustain that. Say increases were kept to between 5 and 10 per cent instead, the shortfall would be made up by private schools spending less per pupil. The move would therefore provide a one-off narrowing of the spending gap, which is otherwise about to accelerate sharply, and constrain the chances of a runaway widening of the gap over time.”

So the logic in this paragraph is that you would reduce the funding gap by reducing the amount spent on private education? That would come across well wouldn’t it? “You’re spending more than the state, so we’re going to restrict it. Mediocrity should be for everyone!”

People with kids in private education are probably already paying a higher level of taxation than the median, but are not getting any advantage from it. Why tax them again on money which has already been taxed at a higher rate?

Or abolishing private schools entirely. It wouldn’t be hard.

@Chris. Because that would be an act of an oppressive state that dictates the activity of its citizens. What right does the state have to compel everyone to to use the state education system? To do so, even with a democratic mandate, would be a perfect example of the tyranny of the majority.

Besides, if the 511,000 children privately educated, and the estimated 100,000 children home-educated all entered the state system if would not cope. Remember all of those parents are paying tax anyway.

17. Chaise Guevara

@ 15 Chris

“Or abolishing private schools entirely. It wouldn’t be hard.”

It would be extremely simple to create law requiring all children to attend state education (banning private education would be harder because you’d get tied up in definitions – if I pay someone to come to my house and give me guitar lessons, is that private education?), much harder to get it through parliament, and at present arguably impossible to bankroll.

I’m with you in that I’d ideally like to see private education abolished, and would say the same about faith schools, but at present I really doubt we can afford to.

Excellent idea. Tax education !

19. Chaise Guevara

@ 16

“What right does the state have to compel everyone to to use the state education system?”

Um, those whose parents can’t or won’t pay for private education are already compelled to do this. Do you always see compulsary state education as an Orwellian nightmare, or only when it applies to the rich?

Perspective, please.

20. Adam Bell

@Andy:

I fear you’re wrong on this one. Intergenerational wealth transfers, which school fees represent, have a negative social impact and so should be taxed. They entrench privilege – your argument that pushing people out of the private system through taxation reaffirms the privilege of a wealthy elite ignores the fact that we want to reduce the number of people who benefit from an education superior to their peers simply by virtue of who their parents are. Social mobility should work downwards as well as up – if an individual succeeds simply because their parents threw enough money at them, that’s a net cost to society.

Having said that, I would agree with your voucher system – I would just tax anything spent beyond those vouchers.

@Chris. No-one is compelled to use the state. I know people on VERY modest incomes who chose to home-educate. To make it compulsion is oppressive regardless of income.

The question is ‘Why do people pay for private education?’ I would say that a surprising number don’t necessarily see it as a way of ‘buying privilege’, the popularity of grammar schools in areas where they remain is evidence of this. Most people aren’t bothered by the ‘private-ness’ of private schools, what they want is academic selection.

23. Chaise Guevara

@ Ian

“No-one is compelled to use the state. I know people on VERY modest incomes who chose to home-educate. To make it compulsion is oppressive regardless of income.”

Modest, maybe, but not tiny. If both parents have to work in an environment unsuitable for children, it’ll be almost impossible – and who’s going to look after your infant while you’re at work if they’re not at school?

All British children are compelled to go to school, as long as you include home schools in that definition. They also don’t have the right to choose where: even within the institutions available to them, it is their parents who decide where they go. This is the sort of acceptable oppression necessary for people deemed too young to make mature decisions for themselves. Why is it suddenly unacceptable just because those institutions are made more fair?

24. Mr S. Pill

erm, also: home ed =/= private ed (in this context)

you don’t have a choice if you’re poor, & especially if you’re a poor child. I’ve said it before: increase spending on state education so that it is as good, if not better, than the top private schools. boom – problem solved.

Funny how VAT has gone up today but it does not get paid by the rich who send their sprogs to private school? Why?….. It is a service like any other and according to tories we should pay tax on spending not on income.

So why do the tories allow their rich friends to avoid paying tax on this service? I pay tax on many services I have to buy, so why not this?

Because we are not all in this together like the tory scum claim. Taxes are for the little people.

As for Clegg, there are a lot of things he could do , but we know that he is about as useful as a chocolate teapot.

26. Andy Mayer

@Adam “If an individual succeeds simply because their parents threw enough money at them, that’s a net cost to society.”

Er, no, it’s called achieving your potential, something liberals generally like. And in boring numbers, assuming some part of their success is financial it means they are giving more back through taxes than had their parents not done that. Who has been harmed by the egregious example of parents doing their best for their child?

To argue success is a bad thing unless everyone is equally successful, or that only the state should be allowed to unlock our potential is rather chilling dogma.

“Intergenerational wealth transfers, which school fees represent, have a negative social impact and so should be taxed”

So could you confirm you’re happy with private education if the recipient is poor and would like to restore the assisted places scheme?

I have another novel idea for raising money for education. All those people who have attended university and obtained a degree for free should should be made to pay a retrospective fee. They all bleat on about how unfair it is to have huge fees forced upon the new generation then put your money with you mouth is? They should contribute at the same rate as new students, i.e if they are earning above £21k etc.

Or even to make it fairer they could contribute roughly half each, after all they will have proven to have benefited from their degree by way of wage income.

Sounds fair to me seeing as we are all in this together?

“So could you confirm you’re happy with private education if the recipient is poor and would like to restore the assisted places scheme?”

Classic private school defender. Ignore the vast majority of privileged parents who get a massive govt subsidy by avoiding any tax on the service they are buying , and instead concentrate on a tiny few poor kids who the private schools use to avoid paying any tax.

It is always very touching when the rich get soooooo concerned about the poor. As if.

Ah, but there is the rub. Clegg is all about taking ‘tough decisions in the National interest’ and the Tories were always in favour widening the scope of VAT, so this appears like a no brainer. Hold on though, Clegg is only interested in taking ‘tough decisions’ that have no political fallout that will affect him and the Tories only really want to raise VAT on things that will damage the poor. These were the people who introduced VAT on fuel, thus condemning the Country’s OAPs to fuel poverty and Clegg was only willing to sacrifice the rise in VAT, so long as it was the poor getting a kicking.

We have been told today that VAT is ‘progressive taxation’, well if that is true, surely extending VAT onto private schooling is equally progressive? For the life of me, I cannot see any legitimate objection to this.

Go on Cleggy, hire yourself a backbone and go for it.

29

Exactly.. The tories only like taxing the poor. They dream up new taxes for the poor to pay. Because taxes, like morality, and laws are only for the little people.

31. Adam Bell

@Andy:
The short answer is that the child has been harmed. Exposing someone to the possibility of failure is a good thing; it forces them to develop for themselves, rather than being mollycoddled to success. That’s exactly why Adam Smith advocated market participation as an aid to personal development; the potential for failure is implicit within it.

I’m not arguing that only the state can unlock a child’s potential; clearly, the only person who should unlock a child’s potential is that child, not the state, and not their parents. Certainly, the State, society and their parents can provide them with the tools they need to do so – but to smother their potential in tutelage is wrong.

I actually have no issue whatsoever with private education. It really doesn’t matter who provides it, as long as everyone gets access to what they need to realise their potential. I do have an issue with intergenerational wealth transfers, though, for the reasons given above.

32. Chaise Guevara

@ 27 Skooter

“I have another novel idea for raising money for education. All those people who have attended university and obtained a degree for free should should be made to pay a retrospective fee. They all bleat on about how unfair it is to have huge fees forced upon the new generation then put your money with you mouth is? They should contribute at the same rate as new students, i.e if they are earning above £21k etc.”

Hardly fair or (as you seem to think) analogous, as it’s retrospective. Demanding money from the people who went to private school ten years ago, or their parents, would obviously be ridiculous.

“Sounds fair to me seeing as we are all in this together?”

Sarcasm fail! That’s not OUR motto, buddy.

@32

Whats fair about the current system Chaise? So all those millionnaires in the Coalition cannot afford to make a retrospective contribution to eleviate all the so called dept on our future generations?

I take the point that there may be people who are not in a position to contribute but the same applies today. To totally dismiss the idea without even giving it some thought is rather reactionist dont you think?

“sarcasm fail” once again your opinion?

also @32

Are you confusing private education with university education which is what I actually said?

35. Chaise Guevara

“Are you confusing private education with university education which is what I actually said?”

No. My bit about private education was to point out that your analogy would only work if the OP was calling for ex-private school pupils/parents to be retrospectively taxed.

36. Chaise Guevara

@ 33

“Whats fair about the current system Chaise? So all those millionnaires in the Coalition cannot afford to make a retrospective contribution to eleviate all the so called dept on our future generations?”

I don’t like the present system either, not arguing there. I don’t like retrospective charges is all, especially if they’re narrowly (and politically) targeted. Tax on high incomes is fine, but randomly charging £XXX to university leavers and public school graduates who were told that they wouldn’t have to pay is nasty.

“I take the point that there may be people who are not in a position to contribute but the same applies today. To totally dismiss the idea without even giving it some thought is rather reactionist dont you think?

“sarcasm fail” once again your opinion?”

Possibly. Your post read sarcastically to me, so I thought it was a failed attempt to swing the OP’s logic around in a way that would anger lefties. If not, sorry. I don’t actually think the idea is without merit, if I’m honest, but in the end my vote is that it’s just too unreasonable.

37. George W Potter

As a private school educated person, I’d be perfectly happy to see income tax rise to better fund state education but it is hardly fair to tax people twice just for spending more on their kid’s education.

Chaise the sarcasm was aimed at righties. My point being that I find it incredibly condecending when Politicians of all colours state that ” my free education was just the way it is, but were are going to treble your fees”(parafraising). Put the boot on the othet foot and see how they would like an education levvy they didnt vote for forced upon them?

@ 23 Chaise and 24 Mr S Pill. When we started home educating our income was less than £12K a year – both of us part-time on minimum wage. We made a decision to live frugally as it was in the best interests of our kids. This meant we couldn’t afford to buy a house, go on expensive holidays (we would, some years, get a week in wales somewhere if we managed to scrape it together) or many of the other things that were supposedly necessary for people who insisted they needed to both work full-time.

That was, of course, our decision and I am not saying everyone should have to do it, but the point is there was a choice – there is always a choice.

Making sure children get an education is compulsion for the welfare of the child – I can see the reason for that. Making it compulsory for everyone to attend a state school is assuming the state knows best (where is the evidence for that), is oppressive and is also financial stupidity – but why let that get in the way of ideology.

GWP @37

Um, isn’t that the whole point of VAT though? We are taxing people twice (or even three times) every time they walk into a shop. You could say that of everything from a pair of shoes to a pint of beer or even heat their home.. We tax almost every other sevice, and when all is said and done, private education is a service. Nobody ‘needs’ private education, it is purely a lifestyle chioce, nothing less and nothing more.

If I choose to spend my money down the pub and someone else spends it on private education, why should the State treat those chioces any differently?

41. Chaise Guevara

@ Skooter

“Chaise the sarcasm was aimed at righties. My point being that I find it incredibly condecending when Politicians of all colours state that ” my free education was just the way it is, but were are going to treble your fees”(parafraising). Put the boot on the othet foot and see how they would like an education levvy they didnt vote for forced upon them”

Oh, right! Ok, cool – I shoulda realised you were on-side when you took the piss out of the Coalition slogan. Sorry for jumping to the wrong conclusions.

42. Chaise Guevara

@ 39 Ian

Fair play to you for working hard for your kids there, although I still think a single parent in your position wouldn’t have been able to do the same.

“Making sure children get an education is compulsion for the welfare of the child – I can see the reason for that. Making it compulsory for everyone to attend a state school is assuming the state knows best (where is the evidence for that), is oppressive and is also financial stupidity – but why let that get in the way of ideology.”

Well, in some ways the state DOES know best, or at least the state moderates better. I like a state curriculum because you can use that to stop kids’ lessons being wasted being told religious lies, or being misused to indoctrinate them into a political position (any political position). That’s my defense of standardised, state-controlled learning.

My issue with private school is that I hate the way that the already-privileged can, on top of their existing advantages, get a far better service (10-child classrooms etc) than kids in state school. It only furthers the rich/poor divide.

Now, I have no problem with people who send their kids to private school – taking advantage of an unfair system doesn’t strike me as wrong when you’re just trying to give your kids the best start in life. I have a problem with a system that basically allows people to buy their children a better life, at the expense of others. With more rich people in state schools and higher taxes, you could improve educational standards with more public and financial support.

I admit this is presently a pipe-dream, though.

the forgotten secret is that Labour had a pile of populist policies which it decided not to implement for one reason or another.

the forgotten reasons why these populist policies were not implemented is the secret why Labour started promoting them since they were kicked out of office.

what we are remembering is that Labour aren’t serious.

@42 Chaise

“Well, in some ways the state DOES know best, or at least the state moderates better. I like a state curriculum because you can use that to stop kids’ lessons being wasted being told religious lies, or being misused to indoctrinate them into a political position (any political position). That’s my defense of standardised, state-controlled learning.”

You are, of course, assuming that there is such a thing as a philosophically neutral education. I would argue that post-modernism teaches us that there is no such thing – that narratives always exist. It also discounts the huge variety of educational philosophies and techniques that can better suit different children – Montessori, Classical, Charlotte Mason, Steiner (okay – that one is a bit weird) etc.

Also, if the state knows best why are private schools not following where it leads?

“My issue with private school is that I hate the way that the already-privileged can, on top of their existing advantages, get a far better service (10-child classrooms etc) than kids in state school. It only furthers the rich/poor divide.

I have a problem with a system that basically allows people to buy their children a better life, at the expense of others.”

But that isn’t the fault of private education, it is the fault of the state system If that was fixed – remember Labour promised in 1964 that every comprehensive would be as good as a grammar school – then there would be less incentive to send your kids to private school.

@43 Thomas

What populist policies and secets are you talking about?

Lets see how serious GO is when the banks announce thier £7billion bonus round this year?

46. Mr S. Pill

@Ian

I don’t think your experience of home schooling is what’s at issue here. Private schools, in the context of the OP & most discussion after, are not the same as home schooling. You couldn’t send your kids to private school on £12K p/a (except on scholarship in some cases).

Although when you say:
“[...] it is the fault of the state system If that was fixed – remember Labour promised in 1964 that every comprehensive would be as good as a grammar school – then there would be less incentive to send your kids to private school.”

I agree entirely (not that I remember Labour saying that – 20 years too early for me I’m afraid ;) )

I’m not persuaded about why school fees need to be taxed.

Only 7 pc of pupils at school are attending non-maintained schools.

A recent news report:

State school pupils ‘do better at university’: Research finds students from comprehensive schools get better degrees than privately educated peers with the same grades
http://www.guardian.co.uk/education/2010/dec/03/state-school-pupils-university

48. Chaise Guevara

@ 44 Ian

“You are, of course, assuming that there is such a thing as a philosophically neutral education. I would argue that post-modernism teaches us that there is no such thing – that narratives always exist.”

I agree – and I’m not making that assumption, although I can see where you got that impression. I think that true neutrality is impossible, but that neutrality also comes in degrees, and that states will generally (generally!) be better at pushing a BBC level of neutrality than a Fox/Independent level compared to a special interest group. It’s like democracy – the decisions may be wrong, but they tend to be moderate.

“Also, if the state knows best why are private schools not following where it leads?”

Private schools go where the money is. Sometimes, that’s genuinely providing the best education possible; other times, it’s charging huge rates so Dad knows that Junior’s going to “the old place” (and forming useful old boys’ networks); still other times, it’s finding a bunch of rich people who want their kids to learn that the Sun goes around the Earth and charging thousands for it.

“But that isn’t the fault of private education, it is the fault of the state system If that was fixed – remember Labour promised in 1964 that every comprehensive would be as good as a grammar school – then there would be less incentive to send your kids to private school.”

I’m not laying the blame at the door of private education. The whole system is screwed. It’s not that people practice private education in a dastardly fashion, it’s that we have financially tiered schools in the first place. You’re right: if state schools were as good as private schools, the problem would be hugely reduced.

“You’re right: if state schools were as good as private schools, the problem would be hugely reduced.”

As I keep posting, two maintained selective boys grammar schools within walking distance of where I sit attain better average A-level grades than Eton.

@ Sally: “Funny how VAT has gone up today but it does not get paid by the rich who send their sprogs to private school? Why?….. It is a service like any other”

Excellent, it’s a service like any other….. so why should the state be involved at any level beyond funding it for those unable to afford the service for their children?

51. George W Potter

@40

Well I needed private education. The kind of learning support I needed (I have aspergers) was not available anywhere in the local state system unless I went to a school for the severely disabled which would have been as equally useless for my educational development as the crap local state schools.

As for VAT, I think the tax itself is an unfair one but, aside from that, educational items have always been exempt from VAT. Such as books for example.

@51

An enlightened state (if only we lived in one….!) should ensure sufficient high quality provision to meet the educational needs of pupils with special needs without the necessity of them having to be privately educated. This could only be done effectively, and fairly, by increasing spending on education generally.

People who can afford, and make the choice, to educate their children privately should not expect special treatment when it comes to the apparent “tax break” they are getting.

State school pupils ‘do better at university’: Research finds students from comprehensive schools get better degrees than privately educated peers with the same grades

If this is true, then all that is demonstrated is that private schools are better at teaching than state schools. Which is hardly news.

GWP @ 51

You ‘needed’ private education because you had needs not met met by your local council, that is a different issue. You came from a family that could afford that and that is fair enough.

Lots of things used to be ‘VAT free’ but have been changed in recent years, fuel for example. Surely one of the main reasons that VAT is unfair is because it is regressive? What better way to rebalance that than to extend that onto things that the better off spend their money on?

Clegg is always taking about ‘progressive’ taxation, yet here we see a prime example of an unfair tax being used to kick seven bells out of the poor and Clegg is nowhere to be seen. Cameron and Clegg will never betray their class, you have to admire their loyalty in this respect, but as for making ‘tough decisions’, well why make a ‘tough decision’ on tax when there are still soft targets that have some money left in their measly back pockets? Far easier to rip money from the mentally ill or the OAP, eh?

I would not piss on a Liberal Democrat if he was on fire
(there goes my new years resolution)

55. Chaise Guevara

@ 53 Tim J

“If this is true, then all that is demonstrated is that private schools are better at teaching than state schools. Which is hardly news.”

Um, no, it would demonstrate the opposite.

55 – it would demonstrate that taking two students with equal ability (as demonstrated by their results at university), the one educated at private school will have achieved higher grades at A-level.

55 & 56

OK..I’m confused.

The point surely is that private schools, due chiefly to smaller class sizes and much better resources, will be more able to make a silk purse out of a sow’s ear, i.e. they will be able to “spoon feed” a pupil to achieve better A-level results than their “natural” ability would suggest they were capable of.

Once at university, such students will often perform less well than pupils from state schools who achieved the same A-level results, because they haven’t been hot-housed to the same extent, and are often better at working on their own initiative rather than being intensively groomed to pass exams.

57 – On the evidence cited, private schools are just better at teaching than state schools.

Incidentally, it’s not necessarily a question of spoon-feeding or hot-housing or lack of independence (private schools are usually considered to offer far more independence of thought than is usual – at my school we covered a far wider range than the A-level syllabus, which was usually considered an annoyance to be got out of the way as soon as possible).

The point of the statistic is that state school pupils, to be as ‘good’ as independent school pupils must actually be better, so as to make up the difference in education. Which is why, should there be two identically qualified students, universities should offer the place to the state-schooler.

59. Chaise Guevara

@ Tim J

“it would demonstrate that taking two students with equal ability (as demonstrated by their results at university), the one educated at private school will have achieved higher grades at A-level.”

I see your point, although Galen’s theory will also be correct in some places.

59 – Oh, I think Galen’s right too, in a way. I’m sure there are schools that spoon-feed and hot-house the pupils in order to chase better grades – and these pupils will be found out at university. But I don’t think that’s the chief reason why independent school grades are better – I think that’s down to academic selection, more stringent discipline and higher teachers’ salaries. Which is what explained Grammar School results back in the old days as well.

61. Tim Worstall

“A real pupil premium could be funded by putting VAT on private school fees, and dedicating the resources to an educational mobility fund.

It could raise £1.5 billion per year for the pupil premium ”

Umm, how?

500,000 private pupils at £8 k a year gives £4 billion. Of which 20% is £800 million.

Further, given that people who educate their children privately are already saving the government finances £3 and a bit billion a year (500,000 pupils times the £6 grandish the State pays to educate each kiddy) where in buggery do you get off proposing to tax people for saving the State money?

Oh, and, while we’re at it: the private sector costs include teachers pensions: the public sector costs don’t. And with a near £200 billion liability there for public sector teachers’ pensions, we might, if we actually did the comparison properly, find that there’s not all that much difference between the costs of the two systems.

But it still astonishes me that you want to tax those saving public money by spending their own.

Tim Jerk “I think that’s down to academic selection, more stringent discipline and higher teachers’ salaries. Which is what explained Grammar School results back in the old days as well.”

So a good education DOES need lot of money then? My, my we are making progress.

Perhaps you could point that out to all your tory mates who like to claim that good a education is not about money. Off course this is bollocks as Tim Rand has taken the figure of £8000 per pupil as an average in the private sector against what ? £2000-2500 in the public sector. So the dishonest tory MPS who vote against decent cash going to the state sector and lying through their teeth that good education is not about money while spending 3-4 times that amount on their own sprogs Tax free of course.

As for the Grammar schools, they creamed off the brightest 25% of the kids and then stole 60-70% of the total state school budget. No fucking wonder they got results. But then the whole system was set by our corporate masters to create a class of middle managers to serve their corporate interests. The other 75% could piss off down a mine .
.

So a good education DOES need lot of money then? My, my we are making progress

It’s not a question of absolute money spent, it’s a question of offering higher salaries than competitors to attract the best teachers. And in any event, it’s probably less important as a factor than academic selection.

Off course this is bollocks as Tim Rand has taken the figure of £8000 per pupil as an average in the private sector against what ? £2000-2500 in the public sector.

A touch over £5,000 per pupil in the state sector this year.

“If you want to reduce the advantage of private education and open the sector up to more competition and children from a wider range of backgrounds. Provide a voucher to the value of the average (or pupil premium weighted) state subsidy for each child educated and let a variety of public, private and not for profit firms compete to provide the best education.”

The inevitable result of this in a UK context – unless you massively increase the education budget at the same time – would be to drastically reduce the funding going to comprehensive schools. If you take the same education budget and divide it equally among all pupils instead of dividing it only among state school pupils, then obviously the funds going to existing state school pupils will nosedive.

The argument, I suppose, is that schools would compete for the parents able to pay more than the voucher, with weaker schools forced to drive up standards to compete – but that just isn’t the case. Schools have entrenched reputations. Former state schools would be unable to attract any significant number of parents able to pay voucher + extra fees (because of their current pupils and results), and so they would not receive the resources to compete. They would become much worse sink schools than any we have today.

In addition, it wouldn’t really help more people to go to private school. This is because private schools would simply put up their fees by the amount of the voucher, since the fees are set by supply and demand – i.e. the fees are determined by whether they can fill the school with pupils able to pay. If you subsidise pupils, their ability to pay goes up, so fees go up by the amount of the voucher. In effect, it would just be a state subsidy to already prospering institutions and already well-catered for children.

Of course, this is just the outcome many of the advocates of the idea are looking for. Money-based inequality in education – while everyone agrees it’s generally a bad thing – is understandably wildly popular among those who are on the favoured side (who tend to be more likely to be swing voters). People generally tend to prioritise their own children’s well-being over ideals of a fair society.

65. Andy Mayer

“obviously the funds going to existing state school pupils will nosedive”

Given only 7% of pupils are currently in private education that isn’t correct, but I do agree a deeply unpopular transition phase would be necessary where either new funds went to private schools or came from the overall pot. Largely I think why it would be politically difficult. But that’s a direct result of the way the tripartite then comprehensive system was set up. Persisting with deliberate segregation on the grounds of past mistakes I think is a weak argument.

“Former state schools would be unable to attract any significant number of parents able to pay ”

Depends on the school, the willingness of the governing body to attract the right head teacher, and whether the voucher retains the pupil premium bias. You forget we have a voucher system today, it’s just controlled by the DE and LEAs rather than parents. Moving to an explicit rather than implicit scheme is not particularly revolutionary change.

“private schools would simply put up their fees by the amount of the voucher”

Then new players would enter the market offering a better deal, governing bodies would react against naked profiteering, disgusted parents could choose the state or not for profit alternative, so it would in practice be extremely difficult to do that.

“Money-based inequality in education”

Where there is inequality in money there is inequality in access to opportunity. That is largely redressed through the tax system. You can debate how well, but trying to micro-rig one aspect on top of that, schooling, by creating collective farms for minds, for over 45 years has done little other than destroy diversity, and increase the price premium on opting out. This makes little difference to the very rich but does penalises aspirational families from a range of low to middle income backgrounds. Or the squeezed middle as a minor politician spun recently.

64/5 – It’s hardly a wildly impossible way of doing things – it’s been done in Australia for 40 years. One result has been a proliferation of very low cost independent schools – 30% of children are educated at an independent school, but average fees paid are below A$1,000.

Erm…

You people do actually know that you can’t implement this policy unless the UK leaves the European Union, don’t you?

Don’t you?

The VAT exemption for education is an EU-level exemption, enshrined in the VAT Directives.

Under the doctrine of Supremacy of EU law, even if the UK Parliament passed a law charging VAT on private school fees, they would still be exempt because the EU Directive trumps UK statutes.

This exemption has been in EU VAT law right from the beginning.

There is no chance of the EU changing the law on this. Under the non-discrimination principle any change would have to charge VAT on private schools in all EU members. Independent (including church schools) schools are significant (more than 10%) in Austria, Belgium, Denmark, Ireland, Malta, the Netherlands, Slovakia, Spain and Sweden (and possibly others; those were the only ones for which I could easily find data). In Germany private schools are constitutionally protected.

So your chance of getting a change through the Council of Ministers is nil.

So there can’t be any VAT on school fees, unless we leave the EU.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Clegg could make education fairer by taxing private school fees http://bit.ly/eNnYMl

  2. John Ruddy

    how about private health care too? RT @libcon: Clegg could make education fairer by taxing private school fees http://bit.ly/eNnYMl

  3. Chris Patmore

    RT @libcon: Clegg could make education fairer by taxing private school fees http://bit.ly/eNnYMl

  4. unionworkeruk

    Clegg could make education fairer by taxing private school fees | Liberal Conspiracy http://t.co/JthAsZv via @libcon

  5. Gavin Duff

    RT @libcon: Clegg could make education fairer by taxing private school fees http://bit.ly/eNnYMl

  6. ABC

    RT @Peckhampulse: Clegg could make education fairer by taxing private school fees | Liberal Conspiracy http://t.co/JthAsZv via @libcon

  7. TeresaMary

    RT @Peckhampulse: Clegg could make education fairer by taxing private school fees | Liberal Conspiracy http://t.co/JthAsZv via @libcon

  8. Carlos

    Labour should've done this. The pupil premium is a crock. This would help. http://t.co/3OzMabN via @libcon

  9. Elizabeth Eva Leach

    RT @libcon: Clegg could make education fairer by taxing private school fees http://bit.ly/eNnYMl

  10. Emily Davis

    RT @libcon: Clegg could make education fairer by taxing private school fees http://bit.ly/eNnYMl

  11. ABC

    RT @andrewroche: Just read: Clegg could make education fairer by taxing private school fees http://dlvr.it/Cjs8N

  12. Andrew Roche

    Just read: Clegg could make education fairer by taxing private school fees http://dlvr.it/Cjs8N

  13. Liberal Vision » Blog Archive » Bludge - incentivising ignorance

    [...] a diatribe appeared yesterday on the Liberal Conspiracy website, a forum for the Miliband Tendency before there was a Miliband [...]

  14. Gareth Hughes

    Clegg could make education fairer by taxing private school fees | Liberal Conspiracy http://t.co/CWz3T1c via @libcon

  15. Nearly there Andrew Neil, but we need to nationalise education not restore grammar schools « LeftCentral

    [...] need a far more radical solution. Sunder Katwala has called for higher taxes on private education, which would be a start – but not an end. What we actually need is the effective nationalisation [...]





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