The world's smallest violin plays on...

This week I have mostly been enjoying the people on twitter arguing about how VAT on school fees is wrong or immoral.  The arguments advanced to defend the public school fee VAT exemption are hilarious.

Firstly, they argue that the Institute of Fiscal Studies report is wrong because it underestimates the number of children who will leave the state sector.  By my back of the fag packet calculations about 40 per cent would have to leave for HMRC to lose money.  Then they argue that the cash raised will be minimal – but a profit is still a profit. 

However, according to these Tories all these people who spend all their hard earned money on improving their children’s education are somehow going to become complete misers if they have to take their children out of private education and will not spend the money on any other commodity – squirreling it all away in private pensions and high interest Cash Isas…

As the IFS observes: “The share of pupils across the UK in private schools has remained around 6–7% for at least the last 20 years (or about 560,000–570,000 pupils in England). This has occurred despite a 20% real-terms increase in average private school fees since 2010 and a 55% rise since 2003”

I’m sure we all remember the 2005 Fees Fixing Scandal (see here)

But, the wingers opine, what about the effect of people who are “only working to pay school fees” stopping working because they don’t need to.  One would suspect that those at the top of Maslow’s hierarchy of needs would have other motivations for working than just paying school fees or indeed just spending…

Another whopper that’s wheeled out is that not all private school parents are rich and that many are in fact working two or three jobs in order to pay the fees.  To send one child at the headline average price would cost £18000 (see here)

In order to pay this on the National Living Wage of 11.44 you would have to work 1573 hours a year or 30 hours a week and that would leave no money to live on.  Therefore you would have to work another 37 hours a week to make your normal living expenses.  A single working parent with one child at public school would have to work a 67 hour week… and for two children 97 hours a week.  Psychologists and Doctors recon that we psychologically and physically deteriorate if we regularly exceed 50 hours a week.  As one progresses to a 70 hour week the chances of strokes and heart disease become high.  If such individuals do exist it’s likely that taking their children out of public school would be good for their health… etc

The next argument advanced was all the children with SEND needs in public school.  I was thrown out of public school at 16 for being dyslexic and dragging all the exam results down but it seems these days public school is where all the SEND kids hang.  Apparently they cost the state lots of money these days as things have moved on from being told you’re “Remedial” and made to play with plasticine.  There’s some quite decent wonga state schools can claim for having SEND children but that doesn’t mean they ALL claim it ALL.  Many SEND people are just mildly affected like myself… There may be something in this argument but it’s still most likely HMRC will turn a profit.

Another odious argument is that parents of private school children shouldn’t have to pay VAT because “they’ve already paid twice”.  This is a lie.  I have no children at all – where’s my tax rebate for not using the service?  Actually payment for state school provision is spread throughout the entire taxpaying population using simple Income Tax collection mechanisms.  Therefore if you’re Boris Johnson with 9 or more children or Anthony with 0 you pay the same tax percentages banded by earning power…?  As the single person who has been in the 40 per cent tax band if anyone’s going to be put out by this it should be me…

Then there’s the question of VAT on school services.  Now I remember that when my mum was a teacher the private schools could buy equipment tax free.  But, the defenders of public schools told me, when public schools buy things it’s just like when I buy things after going into Sainsbury's.  But it isn’t – that’s a business to customer transaction.  VAT has to be charged.  If I was in charge of buying Eton’s food or pencils I’d be darn stupid to be buying them from Sainsbury’s or W H Smith … I’d buy them from a wholesaler and then it’d be a Business to Business transaction.  There are different rules depending on whether you’re supplying services to consumers B2C or business B2B and they are complex……now I’m not saying public schools are actively avoiding VAT at the moment but it isn’t clear what they do or don’t pay particularly given the different statuses of different institutions? … some being for profit businesses and others declaring themselves charities… knock yourself out…

According to VAT expert Steve Chamberlain (the kind of man who makes you realise why tax returns have to be so painfully complex) "Other “closely related” goods and services other than boarding (i.e. goods and services that are provided by a private school for the direct use of their pupils and that are necessary for delivering the education to their pupils) will remain exempt from VAT. The note gives examples of school meals, transport, and books and stationery."

Paying VAT is the least one could expect public schools could do given the charitable status many enjoy… These schools will of course pass all the increased expenses onto parents directly despite that fact that, for example, Eton has a reserve fund of £542million according to that loony left publication The Telegraph.  Clearly they’ve got the raising money part of being a charity right …just not so good on the giving it away part.  

Even the Whitgift Foundation has reserves running to £197 million… I believe

I could go on but you get the idea…