Politics of envy is driving Labour’s disastrous private school VAT tax pledge - Murdo Fraser

To many, the notion of a “public school” conjures up images of boys in top hats and tails in exclusive institutions such as Eton and Harrow, in scenes reminiscent of the old children’s favourite “Tom Brown’s Schooldays”. These schools are seen as the bastions of exclusivity and privilege, only available to the landed gentry and the super wealthy.

In reality, the independent schools sector is something very different. There are 70 independent schools across Scotland, collectively educating nearly 29,000 pupils annually, and employing nearly 8,000 staff. The economic value to Scotland is substantial, generating over £500 million Gross Value Added each year. The impact is particularly significant in Edinburgh and the Lothians, with a GVA of over £200 million.

These schools are also contributing to our international balance of payments, bringing in £39 million annually in international exports due to their attractiveness to families from outside the UK. It all adds up to a very significant economic contribution.

There are a number of reasons why parents choose independent education for their children. Some of it is driven by a perception of falling standards in the state system, particularly since the introduction of the Curriculum for Excellence. Some of it is about the smaller class sizes, the greater variety of academic choice and the extra curricular activities on offer. Some of it is simply based on a family tradition of attending a particular school.

Some independent schools offer specialisms, for example in science, music or the arts, whilst others are focussed on pupils with additional support needs. They can provide a more tailored approach to a young person’s education and social development than is often available in their local authority equivalents.

It is simply wrong to characterise the parents who choose independent education as all being wealthy. The large majority of pupils in Scottish independent schools will attend on a day basis rather than be boarders. And their parents are likely to be in an income bracket where meeting the cost of the fees, out of already taxed income, is a stretch.

These families will forgo the brand-new cars, or the expensive family holidays, in order to find the money to fund the independent education they value for their offspring. In some cases it will be grandparents or wider family members who help contribute to the growing cost of the fees, already rising in excess of inflation.

Against this backdrop, we now have the threat of the Labour party promising to impose 20 per cent VAT on school fees should they be successful in the General Election. The impact of this on the independent sector in Scotland is likely to be severe.

According to a report by Biggar Economics, commissioned by the Scottish Council of Independent Schools, some 6,000 pupils face having their learning disrupted by being forced out of the sector. Those with additional support needs will be affected the most by this disruption.

Biggar has calculated that the amount generated from VAT on schools in Scotland could be around £51 million. But if, as anticipated, 20 per cent of families are forced to withdraw their children from schools in the independent sector and send them instead to their local authority equivalent, the cost of educating those children in the state sector would actually be higher than the VAT revenue.

In Edinburgh, for example, there are simply not the places available within state schools to accommodate those who might move from independent education. And there is no indication from Labour that the money raised from the VAT raid will come back to local authorities who have to provide the alternative option.

Indeed, it seems that Labour have already spent the money they expect to receive from raising VAT on fees a number of times over. Already this has been committed to funding 6,500 extra teachers, additional mental health counselling in schools, and now converting 3,334 classrooms into nursery, adding 100,000 new nursery places. This is a classic example of a policy which sounds on paper like it might raise revenue that can be spent elsewhere, but is likely to be entirely counterproductive in its impact.

That there will be consequences for the independent sector in Scotland if VAT on fees is introduced seems undeniable. For a family with two children in secondary education attending as day pupils, this will drive the likely cost annually to over £40,000, to be paid out of taxed income. For the average household of professionals, perhaps a lawyer married to a teacher, or an accountant married to a doctor, that represents a huge proportion of overall disposable household income. That there will be a significant dropout in terms of the numbers attending independent schools seems undeniable.

And this will all come at economic cost. Independent schools will merge, or close altogether, with a loss of jobs, both direct and indirect.

From Labour’s perspective it is perhaps easy to see why imposing VAT on school fees seems an attractive policy. Why should, in their perspective, a wealthy elite not be asked to contribute more when that money can be spent elsewhere?

In practice, however, this is likely to be a self-defeating tax raid on those already paying high levels of tax on their income. Its net benefit to the Exchequer will be much less than what Labour predict, and indeed, could end up being negative.

It all feels like a policy driven by the politics of envy rather than any objective analysis of its benefits to society. Those considering voting Labour next month in the General Election should think very carefully of the implications of their choice.