Eton College is the principal fee paying school in Britain. Surprisingly, it’s also a charity. As a result, those who attend Eton are subsidised by the taxpayer. Charities in Britain have a number of finanacial advantages reflecting their charitable work: their contribution to the well- being of society. At first sight it appears odd that Eton qualifies but successive governments have let this anomaly stand. Fees are reduced by these special privileges to the benefit of those who will, to coin a phrase, ‘inherit the earth’.
Eton College is a very successful business. It has 1,300 pupils who pay fees amounting to circa £38.69 million p.a. ( 20% of their pupils pay less than the £33,270 annual fees.) VAT (UK transaction tax) exemption is worth circa £7.74 million to Eton. Additionally, Eton has property valued at £62 million and an investment portfolio of £213 million, both of which produce an income*. Each one of the the 1,010 pupils paying full fees are subsidised by £6,554 from VAT exemption. Full fees would be £39,924 if VAT exemption didn’t apply. An interesting comparison is with Harvard University (USA), which charges $67,844 (£39, 908) for its students. This is virtually identical to Eton- £33,270 + £6,654 (VAT exemption) = £39,924. The key difference is that Harvard is a private university. Harvard is also a world- renowned research university and Eton came 37th in the GCSE** league tables (2013) beneath many state schools.
Charities in Britain have many other benefits. Business rates are one fifth of the full rate and Eton pays no corporation tax. (I can’t calculate the impact of this for Eton.) Charitable Gift Aid legislation adds a further 28% to parental donations and fund raising activities creating a further income stream. Eton claims that a fifth of their pupils receive a discount. Pupils receiving this discount are an elite, selected to add lustre to Eton: they are cherry picked for Eton’s ‘charity’***. This appears to be ‘window dressing’ for the Charity Commissioners’ perusal. Eton provides subsidies for poor pupils. The state then provides (invisible) subsidies for the vast majority of its (very rich) pupils. The deal for parents is quiet clear. Those paying full fees are subsidised by the state to total of £6,654 p.a.
Put that £6,654 benefit in other contexts. The state allocates £5,086 per pupil for schools in the outer London Borough of Havering, which is £1,568 less than the VAT subsidy to pupils at Eton. The basic state pension in Britain is £5,881 p.a. or £773 p.a. less than VAT subsidy provided for the children of the wealthiest people in Britain. Unemployed people, under 24 years old, can claim Job Seekers’ Allowance (JSA) for six months amounting to £1,491, which is well below 50% of the VAT exemption given to pupils at Eton. JSA can only be claimed for six months, unlike five subsidised years for Eton pupils. Charitable status for Eton is a profitable anomaly to say the very least.
Invisible state aid to the independent education sector is unjust and inefficent. Parliament is dominated by a gigantic oligopoly of privately educated MPs lobbying for their old schools. In all 35% of MPs (229) were privately educated as opposed to just 7% of the general population. Astonishingly, 20 MPs were educated at Eton, a massive 3% of all MPs****. This is legislation by the rich for the rich. So the benefit culture is alive an well and living at Eton College.
*Eton College Financial Statement, 31 Aug 2013 (fees are for 2014)
**GCSE is Britain’s national 16+ examination sat by all pupils.
***Top six mathematician (aged 16) Warren Li moved from a York Comprehensive to Eton Sixth Form and will represent Britain at the 2015 Mathletics. Presumably he will forever more be known as an old-Etonian. Guardian 4th June 2015
****All figures are for MPs elected in 2010
The May 2015 British general election has seen 52% of the Conservative MPs, who were privately educated, elected to Parliament. The Conservative Party is the majority party and has formed a new government which will be in power until 2020. Doubtless they will continue looking after the charitable status of the private schools.