FROM 7% to 3%: British independent schools in free fall

Britain's independent school sector is in free fall. 

Since 2010, over 1,100 schools have closed and the pace is accelerating. VAT on fees, rising costs, and a co-dependency on international enrolments have pushed closures past 100 since January 2025, with some forecasts suggesting the sector could shrink from 7% of pupils to just 3%. For independent schools survival means charitable status, mergers, or acquisition. There's a solutions gap - correction - a solution being ignored.

Transcript

SPEAKER_01 0:11

We have Andrew Lua, previous MP in the United Kingdom and now working very, very closely with independent schools. Andrew, welcome to the show.

SPEAKER_00 0:22

Hello, and uh good morning to you and good evening for us.

SPEAKER_01 0:26

Good evening indeed. Andrew, you've been involved with independent schools for many years, not just in the UK but also within Europe. The EU was your stomping ground for some time. And the distinction between independent schools in Europe broadly and what's happening in the UK is quite concerning, isn't it? Well it's more than concerning. Your sector in the UK has is just about over.

SPEAKER_00 0:54

Yeah, I mean we we're having a a very uh difficult time of it and that's been uh brought to bear particularly acutely since the the general election in uh twenty twenty-four when um uh VAT, a uh a sales tax which uh had never been imposed on education of any kind uh before was imposed on independent education. And normally when taxes are levied they are on some sort of consistent basis, which you may or may not like as a citizen, but you can see the consistency. What's been particularly um uh uh wrong about this is that this tax has been imposed just on independent schools from the uh for um uh statutory education age. So there is no tax on nursery school education paid for privately, there's no tax on university education paid for privately, there's no tax on private tutors in your home, there's no tax on private sports clubs, it is purely a tax on independent uh education and and structured in that very clear sort of uh class warfare sort of structure uh uh i in a way that you know is difficult to see anything other than purely ideological.

SPEAKER_01 2:29

So when you say ideological, what really is behind it then if that's the case? You're saying it's only the K to twelve school sector that is affected by this VAT tax. What is it that the current government that came in in twenty-four you said, is aiming to achieve and why?

SPEAKER_00 2:50

Well look th the why bit uh I you know I I am very disappointed about because it is a pure and simple hatred and I don't like to use the word, but I think it it is a hatred of independent education. Um I spent seven years as the chairman, the founding chairman of the all-party parliamentary group for independent education, uh and I was chairman of various other independent uh uh all party groups and and various um select committees and when it came to a foreign affairs issue, when it came to something like housing, there were obvious differences between the political parties, but you could have a discussion with people from the Labour Party, you could talk about how to help the housing problems and how to get houses built and so on, but it was always entirely impossible to get an any Labour Party politicians to engage with independent education, and uh what particularly dismaying is that when you're uh proposing and now have carried out such a huge and swinging change to the structure of any sector in our uh in our economy, um there are uh consultations, discussions and an acquiring of knowledge before you do it.

unknown 4:10

You know, the the Labour Party wouldn't have imposed a a huge tax on the chemical industry or supermarkets, let's say, without actually talking to people in in those industries.

SPEAKER_00 4:20

Whereas the uh Secretary of State for Education has never been to an independent school to visit, either as a shadow minister or as a secretary um of state. And even when I arranged for pupils from independent schools to come to Parliament, and you know, most MPs tripping over themselves to get down the stairs to meet constituents and have their photographs taken, as soon as they found out it was someone from an independent school, even a a child, uh, they wouldn't come anywhere near it. So that's the why. What they hope to achieve, well I think there is a hard core of the Labour Party that would like to see independent education disappear altogether, but I think the more realistic objective I think is to see it reduced to a purely elite pursuit such that it's done by two, three percent of the population rather than the seven or eight percent, um, which rises in the sixth form, which is our final two years of of of education, um sixteen to eighteen, nineteen, r was getting up towards eighteen per cent of uh of British pupils, and and I think that the objective the the dream is to get rid of it altogether, the the more realistic objective I think is just squash and squeeze it down to a level where it's international pupils and uh a very small proportion of of high net worth individuals.

SPEAKER_01 5:49

If we took education out of it just for a moment, and what you're saying is quite clear that there is this narrow lens that education is K-12, and that's been the case, the narrative worldwide for some time, and this is what this show has been about, is breaking that down education we know is lifelong. However, that K-12 period has been that ultimate prize of control and command from all governments, uh consecutive governments for many, many decades, where that tends to be the way in which families are beholden to governments and issues like VAT. But if we put that aside for a moment, there's also the issue of you pointed out international students and it it also goes to international investors who are purchasing these schools when they are in trouble and then allowing them to close all the same because it's actually not the school they're so interested in or the education, it is the property and the land. Where does that sit in this context?

SPEAKER_00 6:55

I mean that that has certainly been a uh a suspicion expressed as this has gone on in the sector, and there has been a shift between uh independent schools that were uh charities, uh that the most sort of famous schools that you've come across, you know, sort of Harrows and Eatons and so on, have always been charitable, historic charitable uh uh organizations, but there has been a larger number of purely for profit um uh school groups coming in, and there's an interesting duality within the sector itself there where some people just accept that as a different model, and if it delivers reasonable value and good education, then fine. And then there are other people, and I always find this quite fascinating, who are quite often successful private enterprise business people themselves, and yet when it comes to them being on a governing body of an independent school, somehow don't want to see the sort of sane free market profits that enable them to have their life and afford to to have their children attending the school to be the um organizational mechanism of the school itself. I mean it is quite difficult for uh a company to come in asset strip a charity and then sell the sort of school and the land off for housing or development.

unknown 8:22

Uh it's not impossible.

SPEAKER_00 8:24

Um, but what has also been a phenomenon has been uh some of the school groups within the UK looking at an area that's struggling to justify, given the pressure that's been placed upon it, two or three independent schools and s and trying to suggest that that two or three of them get together and have a charitable merger. And those either take the form of economies of scale of those schools staying open but having a more integrated management structure and therefore being more viable, or um closing one site and using the the proceeds and the asset for that from from that to help fund and support uh the other one. The obvious problem with that is that raising money for capital to support revenue only usually has a fairly limited lifespan, and if that's taken on the basis that there's a storm to be weathered here, then that you know makes a certain amount of sense. But if but if it's uh if it's intended to be a permanent state of affairs and then the independence sector in Britain is is permanently repressed and reduced because of this, then you know, capital can only fund revenue for so long as anyone who has a credit card or an overdraft knows.

SPEAKER_01 9:42

Yes. You're on eighty-eight point nine Win FM, the Cheryl Acey show, talking to Andrew Lewis from the United Kingdom on independent schools and the way in which they are rapidly closing. Seven per cent down to three per cent is the prediction of the number of independent schools that will remain in the UK in uh coming years and who knows what happens after that. Andrew, this whole notion around the investors and successful business people moving into a school sector and not being able to see things the same way. Where is the impact of the operational component of schools on that thinking and vision that they tend not to have?

SPEAKER_00 10:30

Well, I I mean I I I perhaps entertain a slightly more optimistic view of it that that there is a there is a s a good investment case to be made for a well-run independent school in that if you have uh a pupil coming into your school at an early age and they're happy and comfortable with it, you've got a you've got a return on that and a revenue stream from that uh from that young person's family for um seven or even thirteen years. So there is an argument against asset stripping if uh if you run the business well, and and that actually produces a longer term revenue rather than a one-off capital gain. So, you know, I I know quite a lot of people who run uh independent schools on a purely uh private, non-charitable basis in the UK, and I think some of them are uh very successful and very effective. But what must be set alongside VAT and also the loss of uh uh charitable relief on business rates and an increase in national insurance on employers, and obviously uh schools particularly are uh labour-intensive uh operations, and you know, a lot of people overheads come on two legs as this as the saying goes. Um you know that that uh that has very much happened in the last two years, but uh across a longer curve, independent school fees have gone up generally in line with grandparents' property asset values rather than parental income. And we've had the situation in the United Kingdom where uh the longest period for 250 years, there's not really been an effective increase in GDP per head in Britain for since about 2007, 2008, and you know you have to as I say you have to go back 200, 250 years to see that, and given what's happening in uh the Middle East at the moment and worries about um fuel prices and the effect on of inflation, that certainly doesn't seem in the short to medium term to be likely to change. Now that could possibly create demand for a different sort of independent education um where it's uh more affordable and less about status and less about sort of uh menages and adjustable floor swimming pools and what have you, and is just about a sort of more um robust method um of education and given the national curriculum.

SPEAKER_01 13:10

Please enter the number you wish to dial, followed by the hash key. You still there, Andrew. We have just lost Andrew Lewis. I'm sure you heard that uh telecom. You have entered an invalid number. Please enter the announcement. That was coming from Andrew's in. That was very interesting there. It's certainly not at our end. So what I'm going to have to do is take us to a break and see if I can get Andrew back to continue this conversation. You're on 88.9 Win FM, the Cheryl Lacey show, where curiosity meets courage, and that was a courageous little moment there, wasn't it, where we have to now drop everything, move to a break, and try and get Andrew back with more in just a moment.