Brexit fears and viability of the independent sector

Friday 16 March 2018

The independent sector in the UK is facing several challenges over the coming years. And they appear to be tougher than any previous threats. Economically and politically, the sector needs to prepare to mitigate the risks posed, whether considering the prospects of Brexit and/or the precarious state of the global economy or try to second-guess the changing political landscape.

To measure the mood within independent schools, I have set up an ongoing survey of sector sentiment on Brexit and the sector overall. It includes these questions:

  • What impact will Brexit have on your school?
  • What impact will Brexit have on the independent sector as a whole?
  • How confident are you about the viability of the independent sector over the coming years?

From 67 respondents from a randomly selected group of 152, the initial results show:

Impact on my school: 41 per cent likelihood of impact

Impact on sector: 51 per cent likelihood of impact

Viability of sector: 66 per cent chance of a viable future

Perhaps the most worrying statistic here is the current confidence about the ongoing viability of the sector.

Comments from respondents:

There is little effect of Brexit per se; the impact is in the contraction of the economy that will result and the impact of jobs and confidence.”

“The uncertainty is probably the biggest impact: parents unwilling to commit to independent education as they themselves don’t know what their personal impact will be. There may be a greater impact for independent schools with overseas offshoots in EU countries as trading arrangements may change post-Brexit.”

“If England follow Scotland’s lead and abandons rates relief and/or introduces VAT on fees, there will be mass collateral damage.”

“It rather depends on the terms of Brexit – it is too early to tell.”

“Fewer schools in five years. I’m slightly more concerned about prep school and domestic boarding markets.”

“I am confident about the future of the independent sector in south-west London where we operate, notwithstanding the Brexit impact. However, I am not convinced that it will be as comfortable outside the M25. The political impact and uncertainty is the key concern at this stage which could result in a change of government in the UK, which would not be an easy passage for the sector.”

“Significant improvements in the maintained sector through academies intensify, leaving day schools more exposed – a problem exacerbated by increasing affordability issues. (If) the Tories are voted out (following what’s perceived to be an unsuccessful Brexit deal) then it could be that a Corbyn government wields a proper axe at the independent sector, including imposition of 20 per cent VAT; this adds to the already building pressures. The effects of VAT plus (the potential) loss of business rates relief plus expelling teachers from the Teachers’ Pension Scheme are likely to push most schools’ fees into the unaffordable bracket. All but either the best or the cheapest independent schools probably don’t survive.”

Not too confident for small schools as I suspect most families will find it difficult to raise the fees; although cuts in the state sector might result in families reassessing their priorities.”