They very first thing the Labour government did upon getting power was to smash private education with 20% VAT in a move that was ill-thought out and was driven by class warfare, but ultimately will go down as the harbringer of the government’s desperate search for cash cows. They are already eyeing up other pots of cash.
There is a clear “assumption” that anyone who can afford private schooling can afford anything at the drop of a hat. In reality it is not that unusual for the entire net income of one parent making good money to go on school fees, which by any measure is a major sacrifice. This involves planning years in advance and this includes making allowances for increased costs. In comparison the two months between official announcement and implementation is practically overnight and would be touch-and-go just for institutions to get VAT registered on time. The Etons and Wellingtons will survive but many smaller and newer institutions will not — even before the announcements around 85 institutions close per year.
But the subtle point is how uniquely this was implemented at the start of the calendar year rather than the traditional tax year like everything else, and this has meant pupils having to withdraw right in the middle of the school year. This is vindictive. Even accepting the government’s own estimate of 6% of pupils withdrawing from private schools, where will they go? In aggregate there are available places but the problem is where they are and how disruptive it is.
As an aside this is not the only tax hike aimed at private education, as exemption from business rates is being withdrawn due to the removal of charitable status. In many cases part of the charitable status deal was sharing facilities with local state institutions and very likely such arrangements will be discontinued. Being fed up with with previous moving goal-posts they are not going to mess around.
In summary this early move showed the government’s preparedness to heap huge rises in costs on parts of the private sector at practically zero notice as part of a budget that also pulled a fast one with election promises that tanked business confidence.