Bridget Phillipson’s lecture on private school growth is fantasy economics
After hammering the sector, the education chief now wants it to save Britain’s economy
Chutzpah is a quality that is far from rare among politicians. But Bridget Phillipson may just have taken it to another level.
The Education Secretary has seemingly waged war on Britain’s independent schools since coming to office in July 2024. Over the past 18 months she has imposed VAT on private school fees, scrapped the mandatory business rate relief for schools with charitable status while preserving it for all other charities, and announced plans for changes to special needs funding which will likely hurt the independent sector.
Combine this with the Government’s wider moves hurting all labour-intensive businesses on National Insurance, the minimum wage and employment rights, and it is no wonder that more than 100 independent schools have closed under Labour.
One might expect that, under the circumstances, Phillipson might hold off giving advice to private schools. But not a bit of it. She has now advised that they should be playing their part in Labour’s elusive quest for economic growth.
Phillipson has stated, “By expanding overseas, our… education providers can diversify income, strengthen global partnerships and give millions more access to a world-class UK education on their doorstep, all while boosting growth at home.”
A great pity, one might think, that she has also guaranteed that tens of thousands won’t be getting the benefits of “a world-class UK education” at home as they are priced out of independent education.
Skills minister Jacqui Smith – making a comeback in the Lords after her previous ministerial spell came to an end in 2009, when she resigned as home secretary after it was revealed the streaming of two pornographic films had been charged to her parliamentary expenses – has additionally opined: “Private schools already work internationally… If they can grow the amount that they’re earning and pay their taxes in the UK, that seems to be a benefit to everybody.”
Well, that is a very partial picture of what has been happening over recent decades. It is true that schools bearing the names of some of our great independent establishments have sprung up in China, South-East Asia and the Gulf. There are Dulwich Colleges in Beijing, Shanghai, Suzhou (China), Singapore, Seoul and Bangkok.
North London Collegiates operate in Dubai, Singapore, Hong Kong, Kobe in Japan, Vietnam and Korea. But unlike the London mothership, these overseas ventures are co-educational, not girls’ schools. There are Reptons in both Dubai and Abu Dhabi. There are at least two schools in Dubai with Winchester in their name, although neither appears to have any connection with the famous Hampshire college.
But, contrary to what many expat parents and indeed our ministers may be imagining, our great public schools are not pioneers who are venturing overseas and intrepidly establishing far-flung outposts. What we are instead seeing are licensing or franchising arrangements. Educational enterprises are paying for the use of a prestigious name.
Take a look at the schools’ accounts and this will be quickly confirmed. Dulwich College, a charitable trust, has a wholly owned trading subsidiary called Dulwich College Enterprises Overseas. Its purpose, the most recent accounts confirm, is “to license the use of the college’s name, branding and know-how in relation to independent schools”.
In the year to July 2024, these licensing arrangements brought in just over £3m to the school, a tidy sum but a fraction of the £46m received in fee income from the London school itself. The international schools are run by a firm called Education in Motion.
In the case of North London Collegiate, its accounts describe its relations with the overseas affiliates as a “franchise arrangement”. The namesakes are operated by various local businesses, and they bring in a similar income for the mothership as Dulwich’s arrangement. These funds can be used to expand UK bursary programmes or in other ways underpin school finances, but they are hardly transformative.
Baroness Smith’s statement about the schools “paying their taxes in the UK” is also wide of the mark. The income of these international schools will be generated from fees, which will remain in situ where the school is located; that is where salaries will be paid and taxes on profits collected. Some expat teachers may be employed, but they too will be paying their taxes and spending their salaries locally.
The only income that will be coming to the UK is the licensing fee – and since the UK institutions selling their names are overwhelmingly if not exclusively charitable, and thus exempt from corporation tax if they spend funds on charitable purposes, the revenues to the Exchequer will be extremely modest. (There may conceivably be some tax due from the charities’ trading subsidiaries, but it will certainly not be substantial.)
Labour’s forlorn search for an elixir to turbocharge our island’s economy will have to continue.
Overseas campuses of British schools are much less British than many imagine. Over 18 months, Phillipson has done vast damage to independent education. Many private schools are facing a financial crisis. But the schools at risk of closure are not the large establishments which have gone into the franchising game. Licensing income from abroad is not a panacea for the troubles faced by independent education, thanks to the efforts of this Labour Government.
[Source: Daily Telegraph]
