VAT on school fees may create a ‘two tier system’

LAST month, March, is a very anxious time for households with 11 year-olds as the results of their applications to secondary/high schools come in.

We have seen huge disruption locally with schools waiting for new sites to be built and pupils being unable to get into their first choice of school. The Labour party’s plans to tax parents for educating their children is only going to exacerbate the issues.

Whilst the immediate impact of taxing parents twice for educating their children by imposing VAT on independent school fees is likely to cause some 7-10% of pupils (using the Labour Party’s own figures) to have to leave immediately and enter the state sector, many more parents will struggle by until the next, logical break point – eg the end of GCSEs or junior school. The biggest impact on independent school numbers will be a fall in the number of families who feel able to afford the new fee structures. We have already seen, nationally, families delaying sending their children to independent schools. That means that there is going to be even greater competition for spaces at the best local schools.

Within Newcastle, all the independent schools have large bursary programmes which subsidise or provide free education to between a third and a fifth of their pupils. This funding is going to shrink as schools’ income reduces and full fee-paying parents press for schools keep fees affordable. What may unfortunately happen is that independent schools will become elitist as only those for whom a 20% tax on top of school fees makes no real difference can afford to stay. Many ‘local’ independent schools may be forced to turn their backs on their traditional market place or even close their doors as they become unviable. Their pupils are not likely to go to an alternative independent school as their parents will have (a) chosen not to send their children to the other schools for very good reasons or (b) have been priced out of the remaining market. Those children are likely to be high on the ‘attractiveness list’ for many state schools.

Bridget Philipson, shadow education secretary, has said that there is ‘ample space’ in the state sector for the increased numbers of pupils that will come from independent schools but these pupils are not going to be attending evenly across all schools.

There is already a house price premium around the best secondary schools of somewhere between £18 and £50,000 and this is likely to increase as parents who previously were affording independent school fees now use the savings to move house to ensure that their children get into the best state school they can. In turn, this selection by family income means that catchment areas around good schools shrink and become more exclusive reducing the opportunities for others to get a place in the school. Parents who understand, and are willing to play the system will ensure that their children are high on the scale for acceptance into their school of choice.

The Sutton Trust, an educational charity which aims to improve social mobility and address educational disadvantage, have conducted research which shows the ‘further back in the queue’ argument for admission into the best schools is highly likely. The study looked at the top 500 comprehensives schools in England ranked by GCSE exam results. On average, comprehensive schools have 22% of students eligible for free school meals (FSM); for the top 500 schools this was just 13.3%. The research also found the FSM intake rate in comprehensives with the highest attainment was 5.8% lower than the overall FSM rate in the catchment area. Levels of social selection vary widely across the country, the research found, but the North East has the most socially selective top comprehensives in the country already – it also has the highest proportion of FSM pupils, overtaking London in recent years.

We are likely to see a two tier ‘comprehensive’ system developing as the best schools attract more, affluent, middle-class families, reducing their mix of pupils alongside the choice of schools for families within the city.