Socio-economic mobility and the UK government's plan to impose value added tax on school fees
Dylan TP
The UK undoubtedly has a social mobility problem. In Canada there is a 14% probability of moving from the bottom fifth of the income ladder to the top fifth; in the UK the probability is just 9%. 1 Additionally, the percentage of children whose family income was higher than their parents' family income at the same age has been steadily declining since the 1970s, indicating a worrisome downward trend in absolute mobility. Considering the growth of the UK’s economy over the same period, it is clear socio-economic mobility in the UK has been undermined. Whilst unequal distributions of growth and labour market polarization can be attributed to the stagnation of the UK’s relative and absolute mobility, the determinant of education in many ways is the foundation for a country’s ability to improve the socio-economic mobility of its individuals. After all, 44% of the Sunday Times UK Rich List attended private schools, despite just 7% of the overall population being privately educated. 2 How then can the government’s implementation of VAT on private school fees change the socio-economic mobility fortunes of the UK? As well as removing this exemption on VAT at the beginning of the year, in April private schools had to start paying full property taxes. Thus, private school fees were 22.6% higher on average in January compared with a year ago. 3 The main motive driving increased taxation was to raise revenue for state education, with Chancellor Rachel Reeves saying that ‘every single penny’ of the estimated extra £460 million being raised in the 2024/25 financial year will go to state schools. 4 The hiring of more teachers, provision of better facilities and reduction in class sizes are just a few of the benefits this funding may provide and importantly will look to level the playing field between state and private education. Increased funding on public education could potentially echo the stance taken by the Scandinavian countries, whose investment into public education systems allows all students from all backgrounds equal opportunity in education. In Norway, 97.8% of spending on school education is public expenditure 5 and university is free, encouraging and not limiting socio-economic mobility. We should remember, though, that the impacts for Norway may not apply in the same way to the UK. 1 Blanden, J. and S. Machin, (2008) ‘Up and Down the Generational Income Ladder in Britain: Past Changes and Future Prospects,’ at https://www.researchgate.net/publication/247749029_Up_and_Down_the_Generational_Income_Ladder_in_Britai n_Past_Changes_and_Future_Prospects. 2 Sira, N. ‘The Truth About VAT on Private School Fees,’ Naked Politics (2024) at https://www.nakedpolitics.co.uk/the-truth-about-vat-on-school-fees/ . 3 Clarke, V. and K. McGough, ‘Private schools say fees have gone up by 22% in last year,’ BBC News (2025) at https://www.bbc.co.uk/news/articles/cre9z3133v8o. 4 Shearing, H. and V. Clarke, ‘Why was VAT added to private school fees?’ BBC News (2025) at https://www.bbc.co.uk/news/articles/c033dp0z1edo . 5 Pickett, K. and R. Wilkinson (2009) coller The Spirit Level: Why Equality is Better for Everyone . London.
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