How parents will sidestep Labour’s private school tax

    24 September 2019

    So, Labour wants to ban private schools – or perhaps we ought to say ‘integrate them into the public sector’ by seizing their assets, forcing them out of business by removing charitable status and other such measures. A legal and political battle, needless to say, will follow. But while that is raging it is worth reflecting on the question: would abolishing private schooling actually achieve the objective which has been claimed for it: removing educational and social advantage enjoyed by pupils of private schools?

    What Labour hasn’t explained is how it would eliminate that other form of selection in education – that practiced through the housing market. It is pretty clear that it isn’t just through private schooling that parents buy educational advantage for their kids. They do so by driving up house prices close to good state schools. A study by the Centre for the Economics of Education in 2012 found that house prices in the catchment areas of top performing state schools were 12 percent higher than those of the lowest-performing schools. Parents were paying an average premium of over £20,000 to get their kids into those schools – equivalent to about two years’ worth of school fees for the average private day school at the time.

    Last year, Santander conducted a very similar study which suggested that the premium might be increasing. Houses in the catchment area of the top 100 state schools, it concluded, were 12 percent or £27,000 higher than in the average school. In London the premium was 15 percent or £70,000. These figures would suggest that it is still cheaper for parents to search out a good state school than it is for them to cough up for private education – average fees at private day schools are now £17,000. But how much would that premium grow if Labour had its way and private schools would be merged into the state sector? No-one can really know – and it would depend of course on other Labour policies, such as where it set the upper rate of income tax. But it is a fair guess that many of the former private schools would continue as de facto private schools, with well-off parents driving up the price of nearby housing to ensure that their children would have continue to have access to the best education. Freed of paying school fees, they would have extra money to invest in the housing market, exacerbating the problem. Well-off parents might find their children continuing to access pretty good schools – but with the taxpayer paying the fees.

    There are possible ways that Labour could tackle this – such as by abolishing catchment areas, allocating places randomly and bussing children large distances to make sure they were achieving a social mix at every school. But that might not prove very popular with all sorts of parents – not just the ones who are currently paying for private education. It seems pretty inevitable that any attempt to abolish private education would lead to a significant boom in prices of homes near good schools, possibly negating altogether and gain in social mobility.