On a knife edge

Conference & Common Room article PDF

John Hutchison examines financial factors in education, published in Summer 2018 edition of Conference & Common Room.

With the recent news that wage inflation will again lag increases in the CPI and RPI this year; the pressure on the family purse is on a knife’s edge and decisions will need to be made. Already, parents who send their children to independent schools have begged, borrowed and acquired in order to meet the termly school fees bill. Grandparents have chipped in and re-gearing of mortgages has often already been employed. Some schools have also started to offer monthly direct debit to help parents spread school fee payments in line with their income pattern and to avoid the shock of termly bills that seem to crop-up unexpectedly. Others have started to offer payment by credit card. This double edged sword could result in both parent and school falling into the credit trap. With administration fees no longer being legal to add on-top of the cost of fees for using credit cards, schools will need to absorb the additional bank charges or raise all schools fees to account for the short-fall. However, it is the effect on the parent – desperate to continue their child’s education – that will find it simply unsustainable trying to service the debt at credit card interest rates.

The call to end the charity status of independent schools, and therefore related tax breaks, continues to mount pressure on parents that have chosen to invest their money in their child’s education.

The Scottish National Party (SNP) have recently announced their first step in reducing support for independent schools in Scotland. As reported in the Scottish Political Editor, the end of business rates relief for independent schools north of the border would wreck Scottish education by placing a huge financial burden on the state sector. The announcement in the Scottish Budget is reported to generate £5 million, however those in the education sector estimated it would end up costing the taxpayer £10.8 million to educate the additional children whose parents could no longer afford the resultant fee increases. According to the Independent Schools Council, the independent school sector currently educates around 625,000 (7%) of school aged children in the UK. Some commentators complain that the tax benefits received by independent schools amounts to circa £522 million. However, this should be contrasted to the cost savings to Government (and therefore all tax payers) that were estimated at over £3.9 billion in 2014.

What is not spoken about widely is that many UK independent schools are just getting by and any significant increase in school fees may start a domino effect resulting in mass school closures. The loss of 10% of student numbers, because parents can simply no longer afford to pay school fees, would result in schools operating at substantial loss. Thus 100% of pupils would need to be accommodated by the state as the schools close their doors.

The irony should not be lost here either. Firstly, the naysayers’ mystical £522 million would evaporate into the enigma of its own accounting ambiguity. Secondly, in the United Kingdom children that attend independent schools do not receive benefit from the pupil premium. Without independent schools the taxpayer would be required to foot over £3.9 billion in accommodating the additional pupils in schools, filling places that simply don’t exist. In short, this would be financially and educationally devastating.

Although I agree with Lord Adonis regarding the need to address the ‘social crisis’ in the UK where poor education is at the source, I do not believe that a Robin Hood tax on parents through a 25% tax on fees to raise a staggering £2.5 billion to fund teachers’ pay in hard-to-recruit areas and offer tuition for children to help them gain English and Maths GCSEs, is anywhere close to the right response. In fact, this would merely exacerbate the problem. In the aftermath of the collapse of the sector, independent school children will compete for limited places at state schools and Government attention and spending will be diverted from those that need it most. We will see further draining of the public purse; with all these lofty taxes on hardworking parents evaporating into the thin air that they were originally conjured up form.

The current funding policy within the maintained schools sector is also creating a perfect storm, driving teachers and school leaders out of the sector who have simply become exacerbated. Having to accommodate an additional 625,000 pupils may just send those still willing to persevere over-the-edge, and we could see the return of the aristocratic approach whereby only the very wealthy can afford to pay for their child’s education.

Instead of destroying what works and is regarded internationally as the hallmark of education provision, attention in the UK should be focused on emulating British independent education in the maintained schools sector so that more pupils have access to a quality education and education environment. However, this takes a long-view approach and a willingness to invest into the sector. If the Government and opposition are really serious about improving education, then a long-term bi-partisan approach needs to be employed. They must look further ahead than the next election – the Minister for Education change on average every two years for the past four decades – and even beyond general elections.

Politicians should also take an approach that embraces aspiration not mediocracy and make it available to all school aged children. Independent schools are contributing through sharing facilities, offering scholarships and bursaries, teaching partnerships and other forms of assistance – much of which goes unrecognised and is conveniently overlooked by those that would rather pull down than build up.

As we gaze down the barrel of an education Armageddon, preparing for the worse of all circumstances, independent schools and Government should not underestimate the financial constraints of parents. Making ends meet may override the need for a new indoor swimming pool or a school trip to Bolivia. Making parents aware that the school accepts childcare vouchers for clubs and boarding elements should also not be dismissed. And Government should not forget that these parents are paying out of post-tax income for their children to be educated, alleviating the burden to the public purse.  Let’s hope that reason prevails.