In the United Kingdom, it’s a bad time to be rich. In August, new Labour prime minister Keir Starmer warned that things would “get worse before they get better.” Almost certainly that means more taxes. No amount of Lexapro can minimize the teeth-gnashing among the nation’s 1-percenters agonizing over the possibility of increased tax on capital gains.
But far beyond the terrace of the Turf Club, the most consequential measure is the 20 percent V.A.T. (value-added tax) that will be applied to private-school tuition. Previously reserved for goods and services such as clothing, electronics, new cars, and hotels, the V.A.T. will affect 615,000 children at 2,600 institutions. The tax aims to raise $2 billion to hire 6,500 new public-school teachers. And it’s popular: the latest polling reveals that 55 percent of Britons support the plan.
It is also a not-so-subtle dig at previous, Conservative governments. Only 8 percent of Britons are privately educated, but the schools’ graduates composed two-thirds of Old Etonian Boris Johnson’s Cabinet. In Starmer’s, there’s just one. “I have nothing against private schools,” declared Starmer at a campaign event. Not everyone is so sure. “This is the politics of envy,” says Lucy Elphinstone, a consultant and the former headmistress of the highly sought-after Francis Holland School, Sloane Square, in Central London. “It shows a complete lack of understanding about how independent schools are run.”
Around 50 percent of private institutions have charitable status, which means that their sole purpose should be to benefit the public—like animal-welfare charities or arts organizations—and for which they’re exempt from taxes on most types of income. That generally means giving scholarships to disadvantaged children, but many private schools also share playing fields, musical facilities, and theaters with neighborhood public schools. “To imagine that this independent education is enjoyed purely by the very, very rich is so wrong,” Elphinstone says. “Even at a school in Chelsea, as mine was, most of the parents were making considerable sacrifices to afford the fees.”
It’s dramatically different from the wealthiest enclaves of New York, Los Angeles, and Washington, D.C. Most families at top schools such as St. Bernard’s, Harvard-Westlake, and Sidwell Friends are not only expected to pay whatever is asked of them—and be grateful their child has a spot in the first place—but also to contribute a few thousand dollars to the annual fund, which covers budgetary shortfalls. It may be even more than that depending on your income, which the development office is almost certainly tracking. Even the U.K.’s most desirable institutions are supported almost entirely by tuition, and their fundraising efforts are anemic by American standards. (Disclosure: my children have attended private schools in both New York City and the U.K.)
Many schools are cutting costs to avoid passing on the brunt of the tax, mostly out of fear parents will pull their children out. A 2023 report by the Institute for Fiscal Studies estimated that if fees increased by just 15 percent, as many as 43,000 pupils could be forced to withdraw.
Eton College is one of the few with a significant endowment, but it already announced that it will simply pass on the 20 percent rise to parents, bringing tuition to an eye-watering $80,000 a year. Because Eton is Eton, applications will continue to pour in, but the new chaps in tailcoats won’t necessarily be from the United Kingdom. Flush foreigners look likely to pick up the slack.
“To imagine that this independent education is enjoyed purely by the very, very rich is so wrong.”
Labour’s urgency in raising revenue isn’t unjustified. If London is removed from the equation, the United Kingdom’s G.D.P. per capita is less than that of Mississippi, the state with America’s highest poverty rate. But Duncan Swift, an expert in the sector and partner at the advisory firm Azets, estimates that between 10 and 20 percent of private institutions will shut their doors as a result of the V.A.T.
“The well-known schools, backed by the wealthiest parents and overseas families, will get by, but the less well-known schools in the private sector are the ones at risk, especially those away from London and the south east,” he told the International Accounting Bulletin. “It’s a mess, and it’s going to be highly unsettling and emotionally traumatic for the pupils involved.”
To say nothing of its effect on the national psyche. “Education is one of our national products which we do incredibly well,” says one parent of children at private boarding schools. “It’s kind of a hangover of Empire—we export our brains all around the world, and as a result, people from all around the world want to come to our schools. They will be happy to pay the V.A.T., but what we’re creating is kind of like global members’ clubs, which is not going to feed into [British] society.”
Answering such criticism—and it’s only becoming more deafening—Labour leaders refer back to those 6,500 new teachers. But no one knows exactly where they’ll find them. “It has proved so incredibly difficult to recruit young people into the profession,” says Elphinstone, citing low morale, heavy workloads, and lackluster salaries.
Indeed, Emily FitzRoy, founder of Bellini Travel and longtime trustee of a London public school, believes passionately that every child deserves a quality education. But she fears that the V.A.T. hike will hurt both public and private schools. “My gripe is the impact [the V.A.T.] will have on the state system,” she says. “If there were all the spaces in the world available, not to mention the teachers and means, then I’d be absolutely up for this. But from experience, the system is incredibly stretched. So, if [public schools are] going to suddenly get a deluge of families trying to move their children mid-year—which is already happening—it’s going to be very, very challenging for them.”
As the U.K. finds itself at this impasse, some can’t help but wonder what the unforeseen consequences will be. “I know a lot of this sounds like ‘Poor little me,’ but it is brutal to take a child out of their school,” says FitzRoy. “And, God forbid, you know families are going to regress to the 1950s and put their beloved sons through boarding school and do something very different with their girls.”
Meanwhile, the latest estimates suggest that all of this kerfuffle will raise less than half of what was previously estimated, given the expected reduction in tuition revenue from fewer pupils. It’s even irked the French. The Lycée Français Charles de Gaulle, in South Kensington, has denounced the plan as “an unfriendly cultural act” which could strain international relations. Still, Starmer’s government forges ahead. “Financially, morally, and legally?” says Elphinstone. “It doesn’t add up.”
Ashley Baker is a Deputy Editor at AIR MAIL and a co-host of the Morning Meeting podcast
