Another Crazy Theory.
A press item on Labours plan to impose VAT @ 20% on Independent/Private schools and made me reach for my calculator.
A little research soon supplied some numbers to crunch and although they vary slightly depending on the source, the order of magnitude remains similar. The facts are very interesting as the following shows.
In the UK there are2600 independent schools and they charge an average of £16,000pa per pupil and they educate 615,000 children which creates a market of £9.84billion. If VAT@ 20% is impose this will raise £1.968billion in revenue for HMRC. This is fine provided there are no repercussions from this action, which is improbable, since it is bound to force some parents to forego the private sector and revert to State funded education thus reducing the VAT while increasing the cost to the State. Additionally the existing school infrastructure would have to find new places for these pupils as well as teachers to teach them.
Let us now speculate upon the possible effects of this action. According to gov.uk figures (2021/2) the State spends £1,485’s per capita pa.so if we hypothesize that 10% of private pupils are forced from private to state education, then the loss of VAT would be£1.968million and the additional places required would 61,500. Further, if the exodus were to rise to 20% then the reduction in VAT become £393.6million and the required places to 122,000. We have members with teaching experience whose comments on the feasibility of this possible result would be welcome.
The Shadow Education Secretary, Bridget Phillipson, say that independent schools will not need to raise their fees as they could absorb the VAT by cutting costs, so let us examine the feasibility of her ideas. For simplicity let us treat the market as if it were one big school whose fees are £9.0billion, which at 20% would raise £1.8billion of VAT. Now if fees are not to be raised then the invoice value has to be reduced to £7.5billion. Now if the POR is say 30% ( reasonable) then the operating cost, including net profit must be £4.5billion or a reduction of 25%.
Seriously is this woman so stupid as to believe that any industry could survive with an inbuilt wastage factor of 25%? However the industry could make some cuts quite easily by withdrawing the £1.2billion that it gives in assisted fees and its involvement in partnerships with State Schools.
Surely anyone with half a brain would question the wisdom of such a cockamamie proposal but instead the electorate is allowing itself to be led around, by politicians, like sheep to the slaughter because they are failing to ask the question “what if” and do a few simple calculations to evaluate what they are being asked to vote for.
WE GET WHAT WE DESERVE, BY OUR INDOLENCE.
A little research soon supplied some numbers to crunch and although they vary slightly depending on the source, the order of magnitude remains similar. The facts are very interesting as the following shows.
In the UK there are2600 independent schools and they charge an average of £16,000pa per pupil and they educate 615,000 children which creates a market of £9.84billion. If VAT@ 20% is impose this will raise £1.968billion in revenue for HMRC. This is fine provided there are no repercussions from this action, which is improbable, since it is bound to force some parents to forego the private sector and revert to State funded education thus reducing the VAT while increasing the cost to the State. Additionally the existing school infrastructure would have to find new places for these pupils as well as teachers to teach them.
Let us now speculate upon the possible effects of this action. According to gov.uk figures (2021/2) the State spends £1,485’s per capita pa.so if we hypothesize that 10% of private pupils are forced from private to state education, then the loss of VAT would be£1.968million and the additional places required would 61,500. Further, if the exodus were to rise to 20% then the reduction in VAT become £393.6million and the required places to 122,000. We have members with teaching experience whose comments on the feasibility of this possible result would be welcome.
The Shadow Education Secretary, Bridget Phillipson, say that independent schools will not need to raise their fees as they could absorb the VAT by cutting costs, so let us examine the feasibility of her ideas. For simplicity let us treat the market as if it were one big school whose fees are £9.0billion, which at 20% would raise £1.8billion of VAT. Now if fees are not to be raised then the invoice value has to be reduced to £7.5billion. Now if the POR is say 30% ( reasonable) then the operating cost, including net profit must be £4.5billion or a reduction of 25%.
Seriously is this woman so stupid as to believe that any industry could survive with an inbuilt wastage factor of 25%? However the industry could make some cuts quite easily by withdrawing the £1.2billion that it gives in assisted fees and its involvement in partnerships with State Schools.
Surely anyone with half a brain would question the wisdom of such a cockamamie proposal but instead the electorate is allowing itself to be led around, by politicians, like sheep to the slaughter because they are failing to ask the question “what if” and do a few simple calculations to evaluate what they are being asked to vote for.
WE GET WHAT WE DESERVE, BY OUR INDOLENCE.
