I am spending this week in the UK enjoying some unseasonably warm weather across London. More shocking that the weather was the startling new addition to the list of exhibitors at the Boarding Schools Association Heads of School conference here in London; it was a debt collection agency.
This new educational service is a sign of the times and the fear for private education in the UK.
Independent schools are not as widespread as they are in Australia with only about 6% of the UK’s wealthy families making up the independent school population.[i] This sector has long enjoyed exemption from Value Added Tax since 1972. However, a 50-year reprieve is possibly at an end. The Labour Party in the UK has confirmed that it intends to remove the VAT exemption on independent school fees. The plan is to reallocate funds to public schooling and raise £1.7bn to spend on lifting educational standards across the state sector.[ii]
With VAT tax meaning an additional 20% tax on school fees, schools are running scared about what it will mean for accessibility and affordability for English families. Additionally, any idea that the “boarding side” of boarding schools would be exempt were also quickly dashed. These boarding fees would also incur the 20% increase to fees.
A survey of parents by the Independent Schools Council (ISC) found 20% said they would “definitely” withdraw their children from private school. [iii]
The international response from expatriate British citizens sending their children to boarding school will also have impact. Mark Lankester, chief executive of Epsom College in Malaysia, said: “Our research suggests that if the VAT policy is implemented, many British parents would have to look at other types of schools and many would have to consider overseas schools as well.[iv]
As an immediate response, English private schools are rushing to open satellite campuses where possible. According to the ISC, “as schools look for ways to reduce their reliance on fee-based income, some have taken up opportunities to establish international campuses and partnerships. The money generated is invested back in education in the UK, usually through bursaries and scholarships.”[v]
Cambodia, Bangladesh and Vietnam are among the latest targets for English private schools aiming to expand overseas, in many cases in partnership with property developers looking to build luxury developments or even entire cities.[vi]
Back in the UK schools are seeking to attract more overseas students as they prepare for the prospect of a new high tax. Pushing for new international students is one of a number of ways independent school leaders are looking to shore up their finances and ensure a steady supply of students in the next academic year. Some headteachers are examining where bursaries and scholarship offerings could be cut back, while others are allowing parents to pay fees several years in advance before the proposed policy kicks in.[vii]
Overall, it is very much a ‘wait and see” for what impact this will have on the school sector in the UK for domestic students, expatriate students, and international students. With the UK becoming more expensive, there are sure to be some other countries that may benefit from being a more affordable option. If the Australian government can work out way to finally throw out the welcome mat instead of the stop sign, our schools could benefit from this the way that American schools already are.[viii]
[i] https://www.theguardian.com/education/2019/jan/13/public-schools-david-kynaston-francis-green-engines-of-privilege
[ii] https://inews.co.uk/news/politics/labour-vat-plans-hit-private-schools-next-year-starmer-prepares-immediate-rollout-2640753
[iii] https://www.theguardian.com/education/2023/may/31/small-independent-schools-on-labour-private-school-tax-policy
[iv] https://www.ft.com/content/13aaa35a-67a9-44cf-8a90-a587a80dd919
[v] https://www.theguardian.com/education/2023/mar/12/uk-private-schools-rush-to-expand-overseas-as-profits-soar
[vi] https://www.theguardian.com/education/2023/mar/12/uk-private-schools-rush-to-expand-overseas-as-profits-soar
[vii] https://www.ft.com/content/8867cf98-9c8f-48de-b8fa-2a4ed8002132
[viii] https://www.cognitivemarketresearch.com/k-12-international-schools-market-report
