Labour’s threat  to end “generous state subsidies” for private schools may be well meaning, but will end up harming the least well off

It was only a matter of time before Labour launched an attack on the independent sector. The general election is just months away, and given that several senior Tories have recently blown the dog whistle on grammar schools, the only surprise is that it has taken this long. Shadow Education Secretary Tristram Hunt duly delivered this week, dusting off boilerplate threats aimed at private schools that fail some unspecified test of social value.

What interests me about the policy is not whether it’s a good or bad idea (you’d be surprised how many people on the right, as well as left, are sympathetic), but that – if implemented – it would perfectly demonstrate the law of unintended consequences that affects even seemingly straightforward proposals. Here’s how.

With the independent sector increasingly catering for foreign students and providing “finishing schools for the children of oligarchs”, its traditional users – the British professional classes – are being priced out. In these circumstances, any government would be tempted to look again at the tax breaks these private schools enjoy.

Hunt proposes ending business rate relief, which would have a small but significant impact on school budgets, perhaps 3 per cent a year on average. Not a game-changer, but enough to threaten the bursaries and other support that many private schools offer, forcing them instead to focus on the bottom line. This will annoy the government even more and, the thin end of the wedge having been inserted, it would start to look at the other advantages these schools enjoy as charities. Labour has form in this area with the 2006 Charities Act, and an Ed Miliband-led government would be much less sympathetic to private schools than Tony Blair ever was.

Instead of raising prices, the average independent school will aggressively chase market share”

The threats will continue and the punishments for failing a beefed-up public interest test will increase. A few schools, the really big ones with plenty of money, will play ball and continue with their outreach work. The Etons and Wellingtons will not change. But your average private day school will be different: if they have to forgo their charitable status to stay afloat, their behaviour will be utterly transformed.

I’ve always found it curious that no one ever asks why the proportion of children educated in the independent sector has so stubbornly remained at abouy 7 per cent. The middle class has been growing and, when polled, at least half of parents would choose a private education if they could afford it. Yet the sector’s response to this increased demand has not been to increase supply but rather to raise prices. In a lightly regulated industry this is odd — and it’s because most private schools are charities. The usual incentives that businesses face are not there: these schools have a fairly fixed number of places and no requirement to expand. But shorn of charitable status, turned into companies and made answerable to investors, this changes overnight.

Instead of forever raising prices, the average independent school will aggressively chase market share. They will cut fees and sweat assets, expand places and open new schools, desperately hunting down the middle classes currently squeezed out. This is what’s happening in the developing world, where mid-range private sector providers are rapidly gaining market share.

The days of bursaries and ISSPs will be long gone and many aspirational parents will leave the state sector. Not only will the chances of disadvantaged pupils getting into independent schools – already tiny – vanish, but these young people will be exposed to fewer higher performing peers in their state schools. We know from the experience of selective local authorities that this will have a detrimental effect on social mobility.

So this is how it ends: a well-meaning policy that removes subsidies to the rich ends up harming the least well off. But at least we can take comfort that, like most pre-election grandstanding, this recycled policy will probably never happen.

James O’Shaughnessy is on Twitter @jamesosh



James O’Shaughnessy is Managing Director of Floreat Education, and former Director of Policy to Prime Minister David Cameron