The Conservative Party struggles to critique Labour’s proposal to recruit 6,500 “new” teachers because they are stuck in the outdated mindset that taxes fund government spending. Once you get beyond that, explaining the proposal is straightforward.
Redistributing Resources
Labour’s plan will make private education more expensive by ending tax breaks for independent private schools.
This policy shift aims to move teachers from the private sector to the public sector. The so-called “new” 6,500 teachers Labour promises to recruit are actually existing teachers in independent schools who will move to the public sector as demand in the independent sector decreases.
The VAT change is a strategic move to redistribute resources rather than to generate revenue. This shift could significantly transform the UK’s educational landscape, with more independent private schools becoming publicly funded free schools.
Necessarily, it means the pupils move across with these new free schools. You’ll note that Labour’s pledge never discounted that possibility. They never said the pupil/teacher ratio would improve. And, of course, no journalist has picked them up on that point.
The Correct Perspective on Taxation and Spending
The UK, which issues its own currency, doesn’t need to collect taxes to fund spending. Instead, the government credits bank accounts with payments, which causes taxation to happen as the money moves from hand to hand over time — like a stone skipping across a pond.
Mathematically, the total tax take is a geometric series, not a simple sum. In the UK, it will always be about 90% of whatever the government spends, largely regardless of the tax rates. (The other 10% is money people have decided to save, not spend.). This means that Labour’s proposed VAT change on private school fees will not “raise money” in the traditional sense. Tax changes on their own are distributional, not accumulative.
Instead, the increased spending on free school transition will cause an increase in the total tax-take, which will be about 90% of any increased spending. A Labour Treasury will mark the remaining 10% as “capital spend”, so it all neatly falls within their “fiscal rules” (which are similarly an act of misdirection Derren Brown would be proud of).
Conclusion
The headline-grabbing promise of 6,500 new teachers is part of a broader strategy to integrate private education resources into the public sector, presumably because Labour believe it will improve overall educational quality.
The VAT change will encourage independent private schools to transition into free schools, similar to the transformation of Batley Grammar School in 2011. Batley Grammar School moved from a fee-paying independent school to a state-funded Free School, becoming the first Free School in Yorkshire.
Labour wants more Batley Grammar Schools.
Always look beyond the headline. Everything in politics is cleverly designed to get you to jump to conclusions.
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