We realise that if you’re opening this a day late and Nigel Farage is in number 10, then this newsletter will have been slightly premature. However, if, as expected, it is Keir Starmer who becomes PM on Friday, then the only clear policy they’ve unveiled on their campaign – the abolition of VAT and business rate exemption for independent schools – will come into effect.
Since the announcement, we have been speaking to schools up and down the country to find out how they will adapt and, whilst there are some ultra competitive top-tier schools who insisted it would be business (+ 20%) as usual, here are some of the themes that we’ve noticed this year.
Some schools will absorb some of the extra cost of VAT. Many schools have been operating at a budget surplus for quite a few years and have built a buffer that they will use initially to soften the blow. We’ve heard schools mention everything from 5% to 12% of the extra cost absorbed.
Some schools will slim down their bursaries and scholarships. The grant of so many full bursaries, on a means tested basis and to include students from different backgrounds, was an unwritten policy to maintain charitable status. Eton currently has 8% of pupils on full bursaries, Latymer Upper 7%. With no need to protect charitable status, these may disappear. Similarly, we’ve spoken to schools with large property portfolios that have been partially used for charitable endeavours – these will now be used commercially, with revenues used to subsidise the VAT difference.
Some schools will offer improved services to compensate parents. We’ve spoken to some London prep schools that are going to improve their after-school clubs, so that working parents will be able to save on childcare.
The Labour party hope that the increased tax revenue can be used on 6,500 new teachers. However, there is a worry that the amount of students – and some sources have claimed that it could be as many as 40,000 students – moving from the independent to the state sector will cost the same as the extra taxes raised. We’ve certainly spoken to some parents this year – mostly those at the start of the 11+ process – who have included state options, when they wouldn’t have done previously. Moreover, we have a number of tutors on our books – excellent teachers who were driven by a mission to work in the state sector – who have left to independent sector, citing poor pay, poor working conditions and impossible targets as reasons for leaving. It remains to be seen whether 6,500 teachers can be recruited and what calibre they will be.
Happy Election Day!
