VAT on Private School Fees - Adam Smith Institute submission to HM Treasury consultation

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Table of Contents

• Written Evidence Submitted by the Adam Smith Institute Applying VAT to Private School 1
• Fees and Removing the Business Rates Charitable Rates Relief for Private Schools 1
• Introduction 1
• We urge policymakers to reconsider this policy given the arguments outlined below. 1
• Precedent for VAT on Education 2
• The Economist 2
• We urge policymakers to consider these examples when reviewing the proposed VAT policy. 3
• Concerns with IFS modelling 4
• We urge the Treasury OBR and 4
• Department for Education to review these papers. 4
• We urge policymakers to consider the best 0 and worst 25 scenarios for this policy. By considering both policymakers will avoid accusations of negligence if the policy were to backfire. 4
• This has not been considered by the government nor the IFS. 5
• Policy makers have intentionally ignored this point leading to further concern by policy analysts such as the author. 5
• Figure 1 High student migration capacity in Surrey. The Telegraph. 7
• Figure 2 Backward-Bending Supply of Labour Tuition Tensions Adam Smith Institute 7
• Concerns with sole reliance on IFS modelling 8
• We urge policymakers to have an honest and open review of the IFS paper given new evidence and analysis. 8
• An explanation of the Ministers statement would be welcome from the Government. 9
• Effects on small-medium sized private schools 10
• 4. The imposition of a tax which interferes or prevents the exercise of this right is wrong and in breach of Article 2 of the First Protocol how few or how many are penalised. 10
• 5. Any enforced change of school is bound to cause disruption in a childs education and pupil and parent distress. The announcement of a new start date of 1 January 2025 10
• 7. While the number of likely school disclosures are not known except 12 18 in Wales it is certain pupil migration will be coupled with school closures throughout England. 10
• Because of the particular structure of the VAT Tax regime this VAT proposal is the least 11
• Figure 3 Size of School by pupil size Independent Schools Council Census May 2024. 12
• Effects on state schools 13
• Short Term Thinking n1 n-1 13
• Such a risk given the uncertainty of student migration rates given household finances high mortgage rates and savings rates is difficult to justify from a public policy standpoint. 13
• There is no evidence that higher participation rates in public services drives higher quality outcomes. 13
• The argument in favour of school choice 13
• Conclusion 15