Two years ago, in the Autumn of 2022, I found myself making a case for independent schools like Bradford Grammar (BGS). I closed one particular blog with the following words:
‘Present quarrels about ‘private schools’ are largely ideological in foundation and seemingly blind to context and nuance, including economic. I wonder when the subtleties of risk and benefit will be weighted dispassionately before national policy decisions might once again herald far reaching consequences, intended or otherwise.’
Go back further, to pre-pandemic times, and it’s clear that BGS’s Headmaster has, like many of his peers, been making this case for some years, see for example A generation of school children need to be put before ideology:
‘Abolition, by virtue of legislation or punitive taxation, would be in direct contravention of the Convention … [European Convention on Human Rights] … which protects plurality in education in the UK and across Europe – initially conceived to provide a check on the power of the state and the messages that might potentially be commutated through classrooms.’
The imposition of VAT on fees paid by parents who choose to send their children to an independent school has been debated extensively, and the nation spoke emphatically on this matter at the ballot box. BGS and our peer group schools will naturally respect the outcome of the election. VAT it seems will be paid from January 2025, an early start date in the estimation of many.
Sir Keir Starmer has repeatedly reassured us that this policy is not, however, driven by ideology. Instead, it represents a ‘difficult decision’ to raise vital revenue, £1.7 billion is the often-quoted Government calculation, which will be used to recruit an additional 6,500 teachers and address undeniable staff shortages. To be clear, everyone wishes to see high standards of education and the best possible start in life for all children in the UK. We unequivocally support the Government’s ambitions in this regard. The voracity of the claim that VAT revenues on fees will, both in the immediate and longer term, be part of the solution to present problems is however, we feel, questionable. Moreover, the unintended consequence of erosion of our sector’s public benefit partnerships and means tested bursary programmes, that have demonstrable benefit, but which come with a price tag for our schools, is already happening and likely to deepen.
For a balanced view of the economics of this policy it is wise to keep in view the existing contribution that independent schools already make to national coffers. In the most recent Oxford Economics analysis, the annual contribution of the +1000 schools of the Independent Schools Council (ISC) is shown to be £14.1 billion to Gross Value Added nationally, £4.3 billion in tax revenues to the exchequer, with a saving to the taxpayer of £3.8 billion by virtue of pupils not taking up a place at a state school. Continuation of this positive impact, and the employment of 281,980 staff, is conditional upon maintaining the size and health of our sector.
BGS plays its part in contributing to UK plc. Using a methodology prescribed by Oxford Economics we can show that, per annum, our school generates £21 million towards national Gross Value Added, of which £11.4 million benefits our local economy, £6 million in existing tax revenue, saves the taxpayer £6.4 million and employs 250 full time equivalent staff.
Many now perceive the contraction of our sector to be inevitable, thus jeopardising these local and national benefits and potentially shunting the £1.7 billion target, conditional upon a stable independent sector pupil population, out of reach.
The Government is confident, however, that independent school parents will not remove their children from our institutions in significant number. Mrs Bridget Phillipson, the Education Secretary, says parents have had ‘ample time’ to prepare for the changes (anticipated for January 2025). But independent school rolls are already dropping, and pupil retention is a live concern. The annual ISC census identifies a 2.7 per cent fall in new pupil recruitment to the sector between 2023 and 2024, and BGS is not immune to such threats. Many parents will strain domestic finances even further than they have already to provide continuity of education for their children. But as national data are beginning to illustrate, we expect that fewer families will be able to choose fee paying education going forwards. Where does this leave the expected VAT dividend to pay for future teachers?
Others have chewed over these arguments in greater depth than the outline above. But let’s assume for a moment that the Government is right. (And let’s ignore the voices of the teaching unions who argue that the VAT pot, even if realised, would be inadequately small to address the key educational challenges of the day). What if the independent school populations hold up? What if VAT on fees at BGS, for example, yields something in the region of £2.4 million. Will Bradford and our catchment benefit fairly, equitably from that revenue, combined with others from our neighbouring peer group of independent schools? Or will any such funds, raised locally, migrate out of our catchment? Is there a danger that those areas of the UK where educational need is greatest find themselves subsiding potential improvements in localities where the requirement is less pressing or where spending on education is already proportionately higher – Robin Hood economics in reverse?
Per pupil spending on state education is already uneven. Research published in 2023 by the Child of the North Group found that, on average, pupils in London received 9.7 per cent more funding than those in the North and that ‘schools in London received an average of £6,610 per pupil compared to £6,225 in the North East and £5,956, and £5,938 in the North West, and Yorkshire and The Humber, respectively.’
This finding resonates with an annual Institute for Fiscal Studies report for 2023, funded by the Nuffield Foundation, that commented ‘areas with the highest levels of spending per pupil are located in inner London, particularly Westminster, Lambeth, Southwark, Haringey, Tower Hamlets, Islington, Camden and Hackney. In these areas, spending per pupil is close to 20 per cent or more above the national average’ and that ‘We also see relatively high levels of spending per pupil (10–20 per cent above the national average) in other relatively deprived areas of London, such as Lewisham and Hammersmith & Fulham.’ The argument is made that this higher degree of spending reflects greater deprivation and need, although the authors of the research go on to note that ‘many local authorities with relatively high levels of deprivation, such as Stoke-on-Trent, Wolverhampton, Newcastle, Hull and Sheffield … in the most deprived 20 per cent or 10 per cent of areas’ experience ‘spending per pupil close to the national average (i.e. within about 5 per cent). Unfortunately, the reason for this is not entirely clear.’
A more granular treatment of these issues is beyond the scope of this blog; however, the national pattern of per pupil spending is unambiguous, as are the higher levels of pupil attainment in London compared to the rest of the UK.
We believe the Government is sincere about addressing perceived structural inequalities in the UK. Might a case be made therefore for a distribution of projected VAT revenues to smooth out per pupil spending and teacher recruitment and retention disparities? Perhaps some detail and reassurance might be forthcoming in these regards?
A related question could also be asked much closer to home and put to Bradford Council who will soon receive £320,000 annually when Business Rates Relief is removed from BGS. Will these monies be earmarked for education, or the charitable public purposes that BGS currently supports, rather than other areas of council debt and cost pressure?
I suspect the electorate of Bradford and our corner of the north would wish to hear from our Government how any benefit derived from the VAT levy might make a difference to the children in the schools and homes on our doorstep, communities where the need is clear? Perhaps any forthcoming national pot could be shared equitably to address regional disparities. Or will any new funding simply map onto the already uneven allocation of existing resources? If indeed those new funds are realised at all?
“BGS and our peer group schools will naturally respect the outcome of the election.”
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