At last – someone has come up with an interesting take on VAT on school fees. And I say this as someone who has commented on the subject more than I ever could have wished or imagined this year.
In Monday’s Guardian newspaper, Professor Mike Harris advocated giving independent schools a choice: charge VAT on fees, or commit 20 per cent of revenues to providing full bursary places. By his estimation, if all schools chose the bursary option, it would directly benefit about 100,000 low-income students, “improving education outcomes for many”.
Let’s deal with the difficulty with this argument first: it assumes that all independent schools are in a position to see it as a meaningful proposition and not as a further scenario in an existential crisis.
The jury might be out on whether or not levying VAT will deliver any value or even be a burden to the state sector, but no-one, not even the IFS, is suggesting the independent sector can absorb this order of cost and sail on regardless.
“We don’t want VAT to mean 20 per cent fewer children on bursaries.”
The devil would be in the detail but Harris’s idea is an interesting proposition because it is a creative one. It is also one which doesn’t have the whiff of class war grapeshot about it, even if the sub-editor used one of the familiar images of boys in boaters who are obviously too posh to carry their belongings in a bag. Harris recognises both that independent schools do offer means-tested support, and that pupils who attend those schools go on to make a positive difference in the world, and to GDP.
The most recent ISC census shows that around £1.4 billion is being spent on providing fee assistance. This is an increase of 10.2 per cent on the previous year, and one that outstrips fee increases driven by inflation. Around a third (33.5 per cent) of all ISC pupils receive some help with their fees. Every head I know would love to offer even more fee assistance than we already do, and many of us have energetic campaigns in order to increase such support. We mourn that VAT would inevitably mean that our funds will have to go further. We don’t want VAT to mean 20 per cent fewer children on bursaries.
Harris might also have pointed to the Sutton Trust, and Peter Lampl’s Open Access Scheme. This is a campaign to spearhead a species of return to the Direct Grant scheme via a pilot of ten schools. They would see a blend of pupils on full and partially state-funded fee assistance alongside our own bursary and full-fee paying pupils.
Given that Labour presided over the end of the Direct Grant in the late 90s, such thinking feels braver than ever; but if I were a current or potential Labour MP in Scotland in particular, I would be looking at both state and independent schools and wondering if there might be a better alternative to VAT.
The ISC census shows that partnership work with state schools has also increased. 9,248 partnerships were reported in the calendar year of 2023, compared with 8,793 the previous year. Independent schools thrive because they are by nature as diverse as their intake, and what public benefit looks like for one does not fit all.
If Harris’s idea became policy, some schools would heave a sigh of relief and be VAT-free, while some would feel caught between the rock of not being wealthy enough to give the support they’d dearly love to, and the hard place of facing cuts or closure owing to VAT.
Many, however, would find themselves somewhere in between, and that opens some interesting avenues of thought.
In the past, the Government has got round the table with the sector to the benefit of the communities which independent schools serve: the 2018 Joint Understanding between the ISC and the DfE is testament to that. I hope it will do so again.