I'm delighted to say that The Telegraph published another of my letters today (5th December, this time on the strategic issues surrounding VAT on school fees. It's actually the headline letter of the day, with rather a lot of prominence.
I tried not to be too political because we need rational thinking about education, not dogma.
What I have, however, attempted to do is to look at the impact of VAT, rather than the principle of it. Putting VAT on school fees will force lots of good private/independent schools to close, sooner or later, and I estimate it could be up to a quarter of them.
That is not just a finger in the air guess, but was based on my knowledge of the sector and my assessment of a sample of schools I have just looked at. Let me know if you'd like to discuss your own school and what its prognosis might be.
By 2025 parents will have had two years of steep fee increases because of current inflation, and another 20% will be the last straw for many. A quick glance at a selection of school accounts on the Charity Commission website will show just how modest many schools' margins are already, and how little schools have in cash reserves. A prolonged attack through the tax system will be unsustainable, because critical mass is everything when you have low margins and low reserves.
I've also tried to start people thinking about what widespread private school closures will actually mean at local level. Particularly in country towns or rural areas, it looks to me that large numbers of pupils will land on the local maintained school or schools, and without advance warning. They, their staff, their classrooms and their existing pupils will probably be overwhelmed, with horrific implications that do not seem to figure in anyone's thinking so far.
The other issue I have highlighted in the Daily Telegraph is that imposing VAT on schools relies on being able to define what a school actually is. But who do you tax when school fees include weekend sports and coaching, and a local sports club provides weekend sports and coaching? What about clubs and after-school activities in a school, versus those at Scouts or a local youth group? And what, for tax purposes, is the difference between charity-owned schools, when this category includes fee-charging schools, academy trusts that charge fees for some services, and free schools that do the same?
Not to mention special education, nursery education or pre-school childcare, all of which could be taxed as schools. These sectors have a large number of families who most definitely can't afford to pay 20% more.
Lots to think about and I hope all the political parties are doing that thinking.
Meanwhile every school needs urgently to consider their own position, not just with regard to VAT but more generally in the light of current and future economic and political factors.
As a consultant, I offer various types of support for those who want to plan properly, ranging from strategic conversations about the way the market and education are going, through to help assessing what might happen specifically to your school. This can be via private discussions with a Chair or a Board, and/or with a Head and Bursar, or I can provide preparation for and facilitation of a full strategy session. Please contact me for further details and I can tailor whatever you'd like.
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