The Labour party plans to end charitable status for private schools, applying 20% VAT and business taxes to raise £1.7 billion and help improve social mobility via the state education system.
(N)either Labour nor the Treasury has actually published any assumptions or cost/benefit. I was excited when the Institute for Fiscal Studies published a review. According to one of the IFS founders, “never again should a government, regardless of its political colour and intentions, introduce far-reaching tax legislation without the benefit of deep and thorough analysis of second- and third-order effects”. That sounds sensible.
Disappointingly, the IFS recites Labour’s lines. Its headline is Labour is basically right – the 20% effective fee increase will cause only a small migration to state schools, which won’t cost much, and everyone else will suck it up and pay, so that there is “net gain to public finances of £1.3 to £1.5 billion”, only just shy of Labour’s £1.7 billion.
It only briefly mentions risks, but they are buried deep in the report and omitted from the press release, which is probably the only bit journalists will read. It certainly doesn’t quantify them as in “…and if we are wrong, the net tax impact could be neutral or strongly negative”, which is ironic given the power of the “worst-case scenario” in climate and lockdown politics.
The author opines:
I remain convinced this policy is crackers. It is more likely to lose billions than raise them and it will harm not help state schools (as well as harming or closing private schools). We should expect the departure of significant numbers of children from private schools and their (disgruntled) arrival in the state sector, demanding places that are not funded and that physically do not exist; the “second- and third-order effects” that I indicate here are strongly tax-negative and remain ignored.
Who is the author?
Disclosure – I’m a private school parent. But I’m also a taxpayer and an economist, of sorts, and I care very much about the state education that taxpayers buy for other children. I can also see the logic in robbing Peter to pay Paul, even when I oppose it. But when Labour wants to rob Peter to punch Paul in the kidneys, we’d all really rather they didn’t.
My own disclosure ... my early years were independent nursery, then state (LEA) primary years, independent first two years of secondary, public school from there on in, various tertiary institutions after that. 'Public' here does not refer to being public, which makes sense to Brits but maybe not to non-Brits.
Aside from a brief stint teaching in a state school on a short contract, all my subsequent work in educational places was independent school until overseas teaching, which could be described as "sort of grammar-schooly" through to independent.
You may have noticed my avoidance of the dreaded word "private" which itself is a dead giveaway quite frankly, just as the godless love to lump everything they don't like under "religion", be it pseudoscientism, deathcultism, whatever ... or someone starts rabbiting on about "diversity and equality", another dead giveaway ... or "love one another", meaning tolerate all sorts of vileness, nowt to do with real love in the least.
Back to this biz of removing charitable status ... parents will bear fees up to a point but there really is a point beyond which they won't ... or rather can't ... and once there's any sort of exodus, then along with the massed influx of invaders to these shores, it simply adds to the pressure on places ... there's very little positive effect.
Yet there'll still be resentful clowns clinging to their ideological "anti-anyone-attempting-to-improve-their-lot" carying on with their "rob the rich, steal anyone's nest egg if they show the slightest sign of having improved their lot" ... the weasel word here is "wealth".
"Wealth", to the envious and feckless, is some nebulous object of desire out there ... you have it, I want it, therefore I want the state to rob you and give it to me. The moment you let that sort of thing take root, then no one can ever improve ... we then become the Eloi.
See, what is lost in this "drive privates and grammars out of existence" is that those parents with children in independent schools are not only already paying through the nose for the privilege but they're just as much taxpayers as those outside are, just as much as the "steal that person's wealth over there and give it me" zealots.
And once you drive them to rejoining the great mediocrity, you kill incentive. Remember that word "incentive"? It was the hallmark of a free society, as distinct from communism. Someone with the incentive to improve his/her lot and that of his/her family should never be demonised imho.
Only once they start thieving from you in return.
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