How a Labour-style attack on private schools ended in disaster

 As Sir Keir Starmer plots a 20pc tax hike, recent history offers a valuable lesson

Source - Daily Telegraph 30/03/24

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Almost a decade ago, the Coalition of the Radical Left in Greece tried to topple a third of the country’s private schools with a new 23pc tax.

The move by the party, also known as “Syriza”, was much like Sir Keir Starmer’s promise to add a 20pc VAT tax bill on private school fees if Labour wins the next general election.

Syriza’s proposals were part of a series of relief packages designed to ease the pressures of Greece’s then catastrophic debt following the 2009 financial crash. Schools that refused to cough up were to be threatened with hefty fines.

“It was one of the very few times all the unions worked together,” Dr George Christopoulos, president of the Federation of Private School Teachers of Greece – known by the abbreviation “Oiele”, recalls.

It was 2015 and private schools were already on the brink. Thousands of parents had lost their jobs and countless small businesses had collapsed. A tax rise of such magnitude would have rendered many of these schools unsustainable.

Student outflows had already begun. In Piraeus, The Michalopouleion – a school founded in 1931 which lived through German occupation and the Greek Civil War – was forced to close after its student count nosedived from 600 in 2011 to 200 in 2015.

Owner Evangelos Plafoutzis told local news outlets that the prospect of paying VAT on fees “was the straw that broke the camel’s back”.

Bigger schools would be less affected. Athens College, akin to England’s Eton, already charged high fees and targeted the elite. It was the middle class students who were set to suffer.

What soon became clear was that Greece’s tax raid on private schools, put forward instead of a tax on meat, was a wholly unrealistic and poorly calculated one.

Trade bodies and unions, as well as parents and teachers, banded together in an effort to stand up against the proposals.

Dr Christopoulos, who describes himself as a “modern socialist” and sends both his children to independent schools, said: “We managed to show that it wouldn’t generate more than £34m, against a target of £300m.

“We also showed that if fees went from €6,000 to €8,000, this would have put 7,000 of the country’s 12,000 teachers at risk of losing their job – and it would have forced a third of independent schools to shut.”

Labour plans to generate £1.7bn from its VAT raid on private schools in England, five times what Greece mistakenly thought it could generate over a decade ago.

Just a few months after proposing the policy, the far-left party in Greece was forced to row back on its promise – which Dr Christopoulos puts down to bodies like his galvanising the press to fight back.

He added: “Even in England, a country of enterprise, private education is demonised. This surprises me. People should have the opportunity to send their children to private school. If private education works then this is what the state should be interested in – not whether it’s right or wrong.”

Around 7pc of Greek children study in private schools today, and more than half of them are middle class kids from urban areas.

Another barrier which foiled Greece’s VAT plans was a problematic EU directive. George Linardatos, of the Hellenic Association Of Independent Schools, said the directive helpfully does not include education in the services for which levying VAT is mandatory.

He added: “In reality, it does not prevent governments from imposing VAT on education services. But we were lucky because the leftist government at the time did not understand that the decision was at ‘its discretion’.

“By the time they understood it, we had managed together with parents and teachers’ associations to create havoc against the government using the media.

“Eventually, they had to expend too much political capital for too little financial revenue and they gave up.”

In England, nearly all private schools are planning to increase fees under Labour’s VAT raid – according to a Telegraph poll of 350 independent school leaders. Average annual fees of £16,656 per year are expected to rise to nearly £20,000.