Over the past decade, I ran two standalone independent schools, consecutively.

During that time we faced the impact of the pandemic, Teachers’ Pension Scheme consultations to cap pension costs to schools and tussles with unions, the arrival of VAT on school fees, an uplift in employer national insurance (NI) contributions and the removal of business rate relief from schools registered as charities.

Meanwhile, wage stagnation, rising mortgage rates and the general increase in the cost of living added an extra dimension to parental decision-making about if, when and how to educate their children privately.

The hue and cry over VAT

For school leaders and their boards, then, the past decade has been a challenge, and the hue and cry over VAT, in particular, has brought the “business” of fee-paying education much more into the public sphere.

VAT, some claim, has been the death knell for some schools, and minority angry voices continue to gnash their teeth about its introduction.

There is much to say about the ethics and morality of paying for education, its disproportionate impact on social advantage and whether or not it should be taxed.

There is also an argument, particularly in specialist education, in favour of a co-dependency model, in much the same way that the NHS buys in specialisms from the private healthcare sector.

Either way, paying for education is unarguably a positional good, and there will continue to be defenders and detractors of independent schools.

Taking the long view, once a Labour government was installed, VAT was an inevitability.

Triple financial shock

As such, the decisions that schools made, not just over the triple fiscal shock of VAT, NI and business rates but over at least the previous two decades, determined whether they were in a strong position or whether VAT would knock them over - slowly or quickly.

Because until very recently, all the sector knew was growth - and many struggled to consider that this may ever change.

Using Independent Schools Council data, which reports for about 85 per cent of independent schools, the number of pupils educated independently increased by just over 5 per cent over the past 10 years, despite fee increases well above inflation.

Independent schools were able to offer something that the state could not - smaller class sizes, amazing facilities and a life-long connection to a network of influence - for a fee: education as a long-term investment.

Covid prompted a sudden dip in the number of fee-paying pupils and then there was a sizable rebound: despite a fall in overseas pupils on the one hand, there was a significant uptick in disaffected parents moving over from the state on the other.

A lack of long-term planning

My own experience of the uptick is that these new post-Covid parents were often at the bottom end of the affordability scale and destined to struggle to maintain their commitment to fee-paying education.

Indeed, roll forward to after the introduction of VAT, and pupil numbers are in decline, from an all-time high watermark in 2024 to back to 2020-21 levels, wiping out any Covid gains. It’s beginning to look like a market correction.

Look even further back to the early 2000s, and persistent above-inflationary fee rises - funding ever-more-ambitious capital projects and more generous teacher-pupil ratios - began to decouple the traditional professional classes of academics, doctors, lawyers and accountants from being able to reasonably afford private education.

In short, the aspirational UK parent who moved heaven and earth to buy something they couldn’t quite afford has now been all but priced out.

School closures, then, despite appearing to some as a litmus test that proves the devastating effect of VAT, are actually not surprising nor out of the ordinary.

Department for Education data over the past five years shows school closures and school registrations have remained fairly stable.

However, smaller, standalone schools are more vulnerable to the killer intersection where costs outrun the ability of the school to demand ever-higher fees, or where they are unable to keep pupils on roll against shinier competition.

These closures have generated headlines - but a cursory look at such casualties usually reveals red flags that were present years before VAT: persistently falling pupil rolls, offsetting bursaries from fee income, deficit budgets, inability to maintain often ancient estates, challenges with maintaining bank covenants, and with some receiving government warning notices.

Same old story

In short, for many schools, hard as it is to countenance for chairs of school boards, market forces combined with optimism bias and weak governance have meant - or will mean - demise.

For all that, the sector overall maintains a reasonably consistent and buoyant market, educating between 6 per cent and 7 per cent of school-aged children. This is against the backdrop of a decline in birth rates and a rise in wealth dependency, where families draw on assets other than income.

And let’s not overlook the reality that amid the uproar over closures, the bigger and more nimble schools continue to race with unseemly haste towards foreign markets to backfill bursary buckets and fund capital projects.

A few years ago, brand extensions in China were all the rage, whereas now the attention is in the Middle East. Private education is global, and investors quickly move with the money.

As ever, the very wealthy continue, as they always have done, to enjoy a level of access to private education that will not only endure but will likely become even stronger as smaller schools dissolve and wealth concentrates.

Plus ça change for social mobility and the corridors of power.

Simon Larter-Evans is a former private school headteacher

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