Hammer blows to CH finances

Anything that doesn't fit anywhere else, but that's still CH related.

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Golfer
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Hammer blows to CH finances

Post by Golfer » Sat Oct 06, 2018 8:16 pm

Two things could hit the school's financial model for six.

1) The Treasury is proposing to increase the employers pension contribution by 42% from 16+% to 23+% . Given that staff costs are the biggest part of running a school I would suggest that this adds between 4-5% to CH's costs nest year. LEAs are being given central government funding to tide them over for a year, but wait for further slashes in local government spending in your area as a result. Austerity is not over yet.

2) EU rules did not allow VAT on school fees. But we are leaving the EU. Perhaps this is one reason why Corybyn was not a great campaigner for the EU in the referendum. And Michael Gove has suggested that VAT on school fees is something the Conservatives would also consider. 20% VAT on school fees would undermine CH's financial position.

The HMC (Head Master's Conference) was a very sombre occasion as they contemplated these twin dangers.

P.S. It is an intereating aside that for those of you working in the private sector the government actuaries are implicitly saying that you need to save 33% of your salary to provide a decent pension = 23%+ employer contribution and 10% employee contribution.

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Re: Hammer blows to CH finances

Post by cstegerlewis » Sat Oct 06, 2018 10:04 pm

Or, as is the reality of repealing the Default Retirment Age, you never fully retire but probably go part time until you are unable to continue
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J.R.
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Re: Hammer blows to CH finances

Post by J.R. » Sat Oct 06, 2018 10:26 pm

Or to put it another way, "Please die as soon as possible after stopping work. You are a drain on this country !"

Hang on a minute ! 'New Dep Head required by CH due to retirement.' Hmmm !!

I am SO very pleased I took early full retirement for health reasons on Union advice after winning an employment tribunal.
John Rutley. Prep B & Coleridge B. 1958-1963.

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Re: Hammer blows to CH finances

Post by sejintenej » Sun Oct 07, 2018 5:37 am

J.R. wrote:
Sat Oct 06, 2018 10:26 pm
Or to put it another way, "Please die as soon as possible after stopping work. You are a drain on this country !"

I am SO very pleased I took early full retirement for health reasons on Union advice after winning an employment tribunal.
To echo the Honourable Member's love of a great conspiracy theory perhaps this is why the NHS is so bad - kill 'em all, the long and the short and the tall... That means the Government can get their 40% of everything you had even quicker and stop paying you a pension.

I also retired early on full pension - my employer was bought out and I got redundancy on continental terms, not UK ones!
‘So, still happy you voted for my namesake who took away your health insurance, raised your taxes and should turn out to be a mental patient?’

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Re: Hammer blows to CH finances

Post by Golfer » Mon Oct 08, 2018 9:01 pm

I am just a little surprised that threat outlined in this thread - which could significantly undermine CH's ability to fulfil its mission - surely a concern to us all? - hasn't attracted any posts beyond comments on the pension system in general or people's own pensions.

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Re: Hammer blows to CH finances

Post by sejintenej » Mon Oct 08, 2018 9:57 pm

Golfer wrote:
Mon Oct 08, 2018 9:01 pm
I am just a little surprised that threat outlined in this thread - which could significantly undermine CH's ability to fulfil its mission - surely a concern to us all? - hasn't attracted any posts beyond comments on the pension system in general or people's own pensions.
I suspect that everyone is so browbeaten by the co*men in Whitehall that it is just another machination to allow them to swan around in jets to luxurious hotels and use expebnsive not-so English cars. Before we get complaints ftrom you-know-whom it was one of his side who had passengers shunted off a commercial flight to Carcassonne because he wanted more room - each is as bad as the other.
‘So, still happy you voted for my namesake who took away your health insurance, raised your taxes and should turn out to be a mental patient?’

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Re: Hammer blows to CH finances

Post by Foureyes » Mon Oct 08, 2018 10:54 pm

golfer said: "...I am just a little surprised that threat outlined in this thread - which could significantly undermine CH's ability to fulfil its mission..."

To give people slight encouragement, C.H. has a long tradition of financial crises - often self-infllcted - and then overcoming them. There was one in the 1890s which the Foundation overcame by started to charge fees on the better placed parents. Then, when Livingstone became Mayor of London he discovered that the GLC/ILEA paid for some 100 children at an 'elitist' school and immediately cancelled the whole scheme, which caused some severe headaches for several years. (He did so,by the way, without visiting the school or talking to anyone about his plan - ignorance is bliss in such circumstances). Then in the late 70s/early 80s another crisis was overcome by selling the Hertford site and moving the girls to Horsham,

So, if this VAT scheme is implements I have no doubt that the Almoners will come up with something, although, that said, I would rather that they were not about to spent £14 million on the sports plan.

David :shock:

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Re: Hammer blows to CH finances

Post by scrub » Mon Oct 08, 2018 11:38 pm

Golfer wrote:
Mon Oct 08, 2018 9:01 pm
I am just a little surprised that threat outlined in this thread - which could significantly undermine CH's ability to fulfil its mission - surely a concern to us all? - hasn't attracted any posts beyond comments on the pension system in general or people's own pensions.
Might be because we, or at least those of us who're either older/more cynical, have a fairly good idea of what will happen and the way in which it'll be rolled out.

Finances under stress = appeal from the powers that be (with heavy heart, after deep deliberation, and so on) that an alteration of the number of full fee students, with a "consolidation" of scholarships/gifts/etc will be needed to allow the school to continue it's good work (or something like that).
I imagine it'd be phrased something like "while the mission has not changed, we cannot ignore that the world has and the deprivation seen during the foundation has been diminished by the good works of those ... etc etc etc".

Bottom line, less charity, more full fee (or 95% full fee in order to keep up the good PR of 'limiting full fee places to X%').

I mean, it's been happening slowly over the years anyway this will just speed it along.

To comment on the individual points in your first post;

1. Pay peanuts, get monkeys. Reputation is the currency for schools. Your staff are the most crucial part of that, not shiny buildings or a freshly rolled green but the people who help fulfil your stated mission (the school that is, not you personally). Ask anyone who has fond memories of their time at school and it is always the people, friends and/or teachers that they talk about. We've always been told that salaries and pensions of the top brass have to be high to entice the best and compete with industry yet when it comes to the lower downs, it's always "cut costs to be competitive". Either the school decides it's worth soaking the cost up to keep/attract as many of the best staff as they can or they replace them with cheaper models.

2. Given the current political climate I can see that if you're after an easy vote winner, saying you'd put VAT on private school fees (which they would say will only affect the top 7% and international students) would do. If the tabloids called it 'the toff tax' and quote 'undisclosed gov sources' saying it will fund the NHS or state schools, you could put that in any party's manifesto; just tweak the headlines 'cos the fine print would be the same.

Over the last year we've heard the phrase "the school will continue/endure" so many times it's virtually a mantra. The same will happen with any finance issues. If a load of historical abuse scandals (some more recent than others) haven't dented enrolments, any gradual bump in fees (or to be more accurate, a gradual rearrangement of the number of people who pay towards the higher end of fees) won't either.
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Re: Hammer blows to CH finances

Post by cstegerlewis » Tue Oct 09, 2018 1:00 pm

Golfer wrote:
Mon Oct 08, 2018 9:01 pm
I am just a little surprised that threat outlined in this thread - which could significantly undermine CH's ability to fulfil its mission - surely a concern to us all? - hasn't attracted any posts beyond comments on the pension system in general or people's own pensions.
Tim

I don't underestimate the risk to the finances, although I do fall in line with the general consensus above that the almoners/foundation will find some way of dealing with it should it happen, however my two observations on your original comments and subsequent reply:

1. The country as a whole, and my generation in particular, has 'sleptwalked' through two decades of blatant theft of pension rights by successive governments, which has taken the UK from near the top of the pension welfare league to pensions provision being an after thought, hence my comment that we will all be working until 80+ if we live that long. The tax take, starting with Gordon Brown's raid on pension reliefs through to the removal of any tax releif for high rate earners now (which creeps down each year) was designed to take money from those who won't notice it (ie the young and early contributors) while protecting the 'greyer vote' and those nearing retirement. Hence as my generation hits it 40's and 50's we now find that our defined contribution pensions are massively below the value of our parents and grendparents defined benefit schemes, and there is not enough time to accrue sufficient savings to do anything about it. Therefore I for one am not that bothered about Treasury mandates on pensions, as we are all in it together, and you either take cash now or accrue hoped for benefits later

2. Governments since the 70's have said they will charge VAT on school fees in election campaigns, and never do so, as the state probably could not cope with the influx of privately educated children returning to the public sector, and nowadays (as CH talks about regularly) it is a good bit of hard currency and soft power to encourage overseas pupils into our major public schools, so I don't think it will happen yet.
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Re: Hammer blows to CH finances

Post by Golfer » Tue Oct 09, 2018 7:29 pm

Thanks for some proper and more meaty responses!

I do think that the pension increase will be challenged. After all a) the pension is paid out of tax and does not have to invest in ultra low bonds (which have suspiciously just risen anyway) and b) when the government was negotiating with unions three years ago about employees' pension increases they didn't have this nuclear figure on the table. Where has it come from.

Craig is right to say that that VAT on school fees has been discussed before. I agree with him that it is unlikely that the Conservatives would implement it but this new Labour Party (Old Labour with knobs on) certainly would - and there is every chance of them coming to power depending on the outcome of Brexit.

Foureyes - I am not as optimistic as you. There might be a long tradition of CH overcoming crises but the net result is a halving of the number of full bursaries. A further turning of the screw, whether it is 5% or 25% will surely reduce those bursaries further. Not to mention the loss of money from wills in the light of the abuse scandal.

Scrub - you at least expect it to result in more fee paying pupils.

I personally hope for a fightback in the courts re the 7% extra pension contributions from both the LEAs and the Independent Schools and that we will not get a Labour government. But I am not supremely confident on either outcome.

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Re: Hammer blows to CH finances

Post by scrub » Tue Oct 09, 2018 8:40 pm

Golfer wrote:
Tue Oct 09, 2018 7:29 pm
Scrub - you at least expect it to result in more fee paying pupils.
Seems like the most likely outcome to be honest.
I'd first expect there to be some fudging of the definition of 'full fee-paying' so that while the number of non fee paying students stays (initially) relatively the same the overall income would increase with higher cut-offs. Nothing too blatant, just a gradual increase till the mean is above the median in fees paid. Then, as needs dictate, a slow reduction in non fee paying places. All very gradual in both cases, but it has an inevitability about it in my mind.
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Re: Hammer blows to CH finances

Post by DazedandConfused » Tue Oct 09, 2018 9:12 pm

VAT on fees is ridiculous, so many families will be priced out of private education which would then put extra pressure on state schools with a sudden influx of pupils. Most parents who privately educate are not hugely wealthy but make big sacrifices to pay the fees. My son is at a private prep school where most of the parents are middle earners- nurses, teachers, police etc. I am fairly sure the school would close if the fees were sudden VAT-able and I know there are many other schools in the same position.

Charging VAT on education is a slippery slope- what about educational activities outside of school, what about university tuition fees?

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Re: Hammer blows to CH finances

Post by Foureyes » Tue Oct 09, 2018 9:20 pm

I totally agree that VAT should be a non-starter for British students, but I have sometimes thought that foreign students should not be similarly exempt.
:shock: David

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Re: Hammer blows to CH finances

Post by Golfer » Tue Oct 09, 2018 9:41 pm

No doubt this would be possible once we leave the EU.

But also 20% VAT on school fees becomes possible once we leave the EU.

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Re: Hammer blows to CH finances

Post by DazedandConfused » Tue Oct 09, 2018 10:00 pm

Interestingly, our local MP has just removed his daughter from my son’s school and put her into state. Either he’s due a promotion into DofE and a privately educated child would be bad for his reputation or he knows something we don’t :lol:

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