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Private schools and British society

How far will the proposed VAT levy on private school fees go towards greater social integration on the road to a more meritocratic Britain?

School boy taking test. Image credit: Shutterstock.

29 November 2023

Britain’s private schools have often been in the news in the last five years. Concerns are frequently expressed that state school spending has declined, and that private schools remain socially exclusive, with their alumni occupying too high a proportion of positions of influence in Britain’s public life.

Most recently, the opposition Labour Party has said that, if elected, it will not remove the charitable status that most private schools enjoy but instead it has pledged to levy VAT on school fees.

In the run-up to a general election in 2024 and the possible implementation of these proposals or something similar by a new UK government, an informed and rational debate is needed. Programmes of research and policy analysis at IOE and at the think tank Private Education Policy Forum have been unravelling the pros and cons.

So what does the research show?

Key findings

The proportion of private school pupils in England’s schools has remained between 6% and 7% for decades, but they take up a greater share of the nation’s educational resources. While private schools are diverse, on the whole they are very much better endowed in both income and assets than the average state school. The extent of this is yet to be precisely measured but it is estimated that, taking into account fees, property and donations, private schools have a per-pupil resourcing level between two and three times that of state schools2. Enrolment at private schools remains highly skewed towards the rich (see Figure 1), and so, with exceptions, children from affluent households are often segregated by social class from those who cannot afford the high fees1,7.

Figure 1: How private school participation varies over the income spectrum

Private schooling delivers, on average, moderately better performance in tests and comparable exams, and thus has helped private school pupils gain access to higher-status universities6,8,10,11. That university education, combined sometimes with access to helpful networks, guides privately-educated people into better paying jobs and higher incomes later in life3,4,5,11. Private school alumni also gain a disproportionate share, relative to their small numbers, of highly influential jobs in British public life and in business5. 

To move towards a more meritocratic way to allocate places in British society, any successful reform would need to reduce the resource gap between private and state schools, and to reduce the segregation of pupils according to their social class and parental income. It is unlikely that levying VAT on private school fees would achieve this. 

In fact, the proposal to levy VAT has a more restricted objective: to raise resources for state education. The best estimates, from PEPF research and simultaneously in more depth from the Institute of Fiscal Studies, suggest this reform would raise about £1.6 billion gross and between £1.3 billion and £1.5 billion net, adding about 2% to the state schools’ budget12. In other words, it would be a modest plus, as long as this is used as a supplement to, rather than a substitute for the regular budget.  

However, judged either against a wider reform agenda or against the prospective financial prosperity of independent schools, the research shows that the policy would not make a large difference. The VAT could raise fees by an estimated 15%, which over the long term would shrink private school pupil numbers by between 16,000 and 41,000 pupils – or between 3% and 7.5% of the sector, thereby causing a small proportion of private schools to close. To that extent, the overall inequality of schooling would be reduced but only marginally. Against that, the pupils remaining in private schools would be drawn from marginally more affluent households, thus having a small adverse effect on the remaining schools’ social exclusivity. The large majority of private schools would continue to operate as normal.

Main recommendations

  1. The proposed VAT levy on private school fees could be supported as a modest contribution towards increasing resources for state schools. Despite the likelihood of a small proportion of pupils moving from private to state schools, thus adding to the call on the schools budget, the levy will raise between £1.3 and £1.5 billion to augment somewhat the amount spent on state school pupils.
  2. The VAT levy is unlikely to meet wider reform objectives to reduce the social segregation associated with private schooling and, in the long run, to ensure a more meritocratic society. To achieve that, policymakers would need to consider alternative strategies to ensure greater social integration of private schools9. These could include:
  • policies for the government to pay for state school pupils to access a third of private school places on a non-selective basis at the going state-school rate,
  • policies to substantially strengthen the social obligations that come with charitable status, and,
  • policies to support further opening up access to good universities. 

Images

Top: Michael Jung / Shutterstock.

Figure 1: Henseke, G., J. Anders, F. Green and M. Henderson (2021). "Income, housing wealth, and private school access in Britain." Education Economics 29(3): 252-268.

Professor Francis Green
Centre for Learning and Life Chances in Knowledge Economies and Societies
Department of Education, Practice and Society

References

  1. Anders, J.,  F. Green, M. Henderson and G. Henseke (2020). “Determinants of Private School Participation: all about the money?”. British Educational Research Journal.  46(5): 967-992.

  2. Green, F. and D. Kynaston (2019). Engines of Privilege: Britain's Private School Problem. London, Bloomsbury.

  3. Green, F., Henseke, G. and Vignoles, A. (2017) "Private schooling and labour market outcomes". British Educational Research Journal. 43 (1), 7-28.

  4. Green, F., G. Henseke, S. Parsons, A. Sullivan and R. Wiggins (2018). "Do private school girls marry rich?" Longitudinal and Life Course Studies Journal, 9(3) 327-350.

  5. Green, F. (2022) Private Schools and Inequality. In Inequality: The IFS Deaton Review. Institute for Fiscal Studies.

  6. Henderson, M., J. Anders, F. Green and G. Henseke (2020). "Private Schooling, Subject Choice, Upper Secondary Attainment and Progression to University." Oxford Review of Education. 46(3): 295-312.

  7. Henseke, G., J. Anders, F. Green and M. Henderson (2021). "Income, housing wealth, and private school access in Britain." Education Economics 29(3): 252-268.

  8. Parsons, S., Green, F., Ploubidis, G.B., Sullivan, A. & Wiggins, R.D. (2017). "The influence of private primary schooling on children's learning: Evidence from three generations of children living in the UK." British Education Research Journal, October 2017, 43(5), 823-847.

  9. PEPF (2023). Fact Check “VAT On Private Schools”.

  10. Sullivan, A., S. Parsons, R. Wiggins, A. Heath and F. Green (2014). "Social origins, school type and higher education destinations." Oxford Review of Education 40 (6), 739-763.

  11. Sullivan, A., S. Parsons, F. Green, R. Wiggins, G. Ploubidis and T. Huynh (2018). "Educational attainment in the short and long term: was there an advantage to attending faith, private and selective schools for pupils in the 1980s?" Oxford Review of Education 1-17.

  12. IFS (2023). Tax, private school fees and state school spending.