Education: Labour’s Tax-Raid on Private Schools Should go Further

By Adam Peggs

This year’s Labour Party conference could see a major debate on the divisive role played by fee-paying private schools in society, with a motion around integration of private schools being potentially debated. The campaign behind the motion Abolish Eton has already been backed by numerous MPs, including Party Chair Ian Lavery, Rachel Reeves, Ed Miliband and former teachers Laura Smith and Thelma Walker.

The campaign and the potential conference debate could not be more timely. Britain’s education system is marked by sharp inequalities, with reforms to education in recent years among the factors driving poor outcomes for working class kids. The idea that all children might deserve equal chances in education, has always clashed with the structure of the UK’s school system. From middle-class dominated grammar schools, the relationship between academy-schools and class inequality and the dominance of private school alumni in the highest paid jobs, its clear that Britain’s school system is neither meritocratic or egalitarian.

At the top though, it is the role of private schools in shaping people’s economic chances that is key, with their former students an estimated 12 times more likely to get into ‘top jobs’. And private school alumni make more money each year than those with the same university education, let alone those who didn’t go to top universities. In practice the whole system of a minority of wealthy pupils attending elite schools, while the rest don’t, has helped to breed a society with ever-present inequalities in life chances.

The UK’s private schools are attended by some 6% of children, overwhelmingly from the very wealthiest households, with only among the richest 5% or so of households where a considerable number of children attend such a school. The idea that these children are simply more deserving should be called out as the nonsense that it is. The recognition that private education is causing social damage is far from fringe too, with nearly half of all voters believing private schools ‘harm Britain’ and only a small minority backing the status quo. However, the ‘nuclear option’ of scrapping all of the private schools appear to enjoy only slim levels of support.

A recently leaked document from the Labour Party purportedly advocated modest taxation of private schools, building slightly on the party’s existing commitments and raising an estimated £1.64bn a year in total. The plans were quickly decried as a ‘tax raid’ on private schools, ignoring that the revenue raised would be relatively small and that the tax reliefs further tip the balance in favour of elite schools.

The Times Education Supplement also published a piece which quotes the Executive Director of HMC (the Headmasters’ and Headmistresses’ Conference) at length, in which they mount a defense of the status quo. The quote lambasts the prospect of taxing higher education, arguing that it would be a ‘fundamental attack on parental choice’ before moving on to criticise policies which Labour has yet to advocate, such as reforming the university admissions system.

What Labour has discussed is effectively only a tweak to its existing plans to impose VAT on private school fees. The policy change in the leaked document only raises around £100 million more and does not exactly amount to a serious shift in thinking.

If we were to try to flesh out a policy agenda in this area, we might at least add ending the remaining subsidies worth over £200m to private schools – along with efforts to address the unfair advantage private school alumni have in later life. It might also involve questioning the idea that the standard rate of VAT – 20% – is a sufficient level to impose on private school fees. If elite schools are drastically tipping the scales in favour of their pupils why should they only be taxed at the same rate as consumer goods?

The idea of addressing the advantages of private school leavers has been covered in the work of Francis Green and David Kynaston who discuss the option of contextual admissions (at least for the leading universities). This would involve considering private education as something that gives a candidate an advantage over other applicants. But this ignores that many of the economic benefits of an elite education do not accrue at university, but later in working life. Even if a similar approach were applied to the best paid public sector jobs, it is not clear that this would level out the economic advantages of those with a private education. This would suggest there are good reasons to believe that more significant change is needed.

Taxing private schools should not just be about getting the privileged to pay a fairer share, but building an education system that doesn’t separate children on the basis of their parent’s class. Remunerating state schools for the far-reaching privileges enjoyed by private schools would be a serious step forward, but it should not be mistaken for a complete solution. A strategy which hinges solely on having normal levels of taxation for private schools could be one which is broadly accepting of the gross differences in quality of life between rich and poor.

There are other options, such as aping Finland’s ban on private school fees, passing numerous reforms to ‘balance out’ their advantages or imposing discouragingly high taxes on the independent schools. After all, why charge just the standard VAT on a form of schooling which entrenches inequality? And if we can tax their fees, why not tax their assets with a mansion tax for Eton College. If the great class divide in education is to be addressed these kinds of options surely ought to remain on the table.

The Labour government of ‘74-’79, the last Labour government to pursue an actively redistributive programme, made ultimately unsuccessful commitments to address the unfair privilege and ‘divisive influence’ of fee-paying schools. Though it should be noted that by 1976 they had begun the process of turning some 46 ‘direct grant’ private schools into comprehensives. Since those days the work of injecting some equity into the system has remained largely on pause, now it is surely time to resume that work.