Labour's VAT policy is out-of-touch
With all respect to the challenges of less affluent families, Bridget Phillipson's studious avoidance of families and low-paid employees affected by this tax leaves her appallingly out-of-touch
Fair bit of reaction, good and bad, to last week’s campaign launch by Tony Perry for Education Not Taxation (please sign petition here).
Hard-working taxpayers
For example here where Kimberly McIntosh makes up some stuff about parents considering themselves “uniquely” hardworking. No, Kimberly, what we’ve said is that all families have our challenges. Being a single parent on benefits is tough. Two parents working hard on average wages is tough. Working hard to manage private schools fees is tough. Making it even tougher for the latter might be a terrific jape for a bursary-funded class warrior, but does nothing to help anyone else.
Nobody ever claimed hard work was unique. But if you can’t see an “oppressor/oppressed” narrative, I suppose you just make one up.
Kimberly goes on to criticise parents for their perceptions of how “rich” they are relative to the rest of society; following her crowd in ignoring the much greater truths about
relative vs absolute poverty
career structure and age profile, where it’s insufficiently obvious to her that working-age parents’ earnings should be compared to other working-age parents’ earnings, not to the entire full-time workforce which is heavily skewed towards younger people like her who (duh) are just starting their careers; Tony might be a top-decile earner overall, but probably only top third out of people in their mid-40s
the role of progressive taxation and various benefits in significantly mitigating the alleged evil of inequality; Tony’s a significant contributor to the former
The role of school fees as a motivator to work hard and earn money; it’s not only “rich people can afford private school”, it’s also “if you want private school, work your backside off”; Tony can un-make that choice any time
An easy decision is to stop….to decide you can’t afford it…..so then you demand a non-existent unfunded state school place, before reevaluating your work/life balance and cutting back your workload and hefty tax contribution. I’d love Kimberly to explain how that helps anyone.
Who’s out of touch….?
“Out-of-touch” is of course easy to level at higher-earners.
But some of us are very “in touch”. We do “normal” things like serving in the Armed Forces, going to a local pub, working with and creating jobs for hundreds of lower-paid people, volunteering and donating to help the less well-off. We have relationships between “rich” and “poor” out of friendship, at work, and of course sometimes through kindness and charity.
When the “out-of-touch” charge is levelled at higher-earners by people like Kimberly McIntosh, it’s because they don’t understand these relationships. In fact they don’t want these relationships to exist - the only good relationship between rich-and-poor is one that has government standing in between, robbing Peter to pay Paul and taking a handful on the way.
….Bridget is!
“Let’s be the only country in the world to tax an industry delivering huge social benefit” is the pet policy of Bridget Phillipson (Shadow Ed Sec).
If I wanted to understand the reality of VAT on school fees, I'd be looking to meet and look in the eye the people whose education, lives and employment I’m putting at risk.
590k children in private schools.
Their parents who pay around £10bn payroll tax alone as they earn the school fees
180,000 employees, including decently-paid teachers and many much lower-paid support staff who pay around £2bn of payroll tax
Suppliers who generate £375m of VAT (yes, the schools will reclaim the VAT, but those suppliers and their employees are still vulnerable if schools cut costs or close)
Here we can learn how much attention Bridget Phillipson has paid to these people:
“I haven’t visited any private schools officially in my role, no,” Ms Phillipson said.
A class act indeed. Bridget’s MP salary is £85k plus expenses, doubtless looking forward to a large rise as Education Secretary. It looks as though hubby James is going to be a £100-150k earner or so. Household income, if my maths is right, to put them well in the upper-half of private school parents and about the top 1-2% of households nationally. Bridget affirms her commitment to send their children to a state school….something tells me they’ll find a top school that’s not in special measures, probably a grammar, and they’ll jolly well have a private (VAT-free) tutor any time they like.
So “in-touch”.
….and so’s Jess! (but maybe not Rachel)
The Education Not Taxation campaign is trying really hard not to be party political. We note the “growth-friendly” language coming from Rachel Reeves this week. They’ve backed down on banker’s bonuses, as though they recognise the Laffer Curve - Rachel Reeves said something sensible about the importance of finance to the UK economy, which she could also apply to our best schools.
Starmer and Reeves say they want an optimistic, pragmatic economy; Reeves says the way to better funding of public services is through growth not taxation. Education Not Taxation - and this blog - are asking for an education policy to match, and VAT isn’t it.
For another un-funny turn, here’s Jess Phillips MP (on £85k plus generous expenses) kicking down at Tony Perry on the independent education he works hard to provide, on a lower income, for his severely-dyslexic child who was let down by the state.
“I've got an idea that will save you 20k”
Hilarious.
Conclusion
In context of school fee VAT it’s not being in-touch with “poor” people that matters a dime. It’s being in touch with the choices and realities of high-ish earners just about affording school fees, and in touch with the economic reality if they stop doing so: the cost of unfunded non-existent state school places and the potential risk to highly-taxed highly-productive labour supply.
How does this ridiculous and spiteful proposal square with wealthy universities, whose vice-chancellors have salaries in the hundreds of thousands, catering to 30% students from China, having charitable status and not paying any tax on their earnings at all? They often earn fortunes from vast propert portfolios as well. If they didn't charge UK students tuition, they could legitimately claim charitable status to some extent, but they are enormous tax exempt businesses! How is this justified and yet its OK to squash schools that are legitimately educating our young?