How can schools weather the storm of unaffordability across the country?

How can schools weather the storm of unaffordability across the country?

Let me be clear from the outset, I am not a rich man. I say that, not in case one of Her Majesty’s’ Revenue and Customs tax inspectors is reading this, but to make a serious point about the affordability of school fees.

Contrary to the beliefs of some media commentators and politicians, the independent school sector is not full of “rich kids”. According to some, the parents of these so called “rich kids” have their nannies dropping their pampered offspring off in the morning in “the 4×4”, whilst they’re holidaying in Gstaad or inviting friends for a week in their villa in St Lucia. Well, just to be clear, I sent my children to an independent school and I have never been to Gstaad, owned a villa or even been to St Lucia and “the 4×4” remains a dream.

As most of us who are involved in the independent sector know all too well, the overwhelming majority of parents and guardians who send their children to a private school are far from rich. For many, sending their child to a private school often means considerable personal sacrifice and stress. Some parents, if they are lucky, will receive financial support from close family members.

Some critics of the independent sector refuse to accept that for many it is tough sending their children to an independent school. Their view is simple; you made the choice so don’t complain – if it’s a problem, use the state system! Very rarely will you hear any parent or guardian complaining about how hard it is to fund their children’s education. As for choice, well hallelujah, at least we still have a choice! Sadly, that freedom to choose is under threat from those who propose putting VAT on school fees.

My children are now grown up, so I stopped having to pay school fees nearly 20 years ago and a lot has changed since then, sadly not for the better. Affordability is an issue not just for parents and guardians but also for many schools.

A recent annual census published by the Independent Schools Council said that in the last 25 years:

  • Average fees have risen 553%
  • Boarding fees are up 464%
  • Consumer prices have only risen 201%
  • Average wages are only up to 217%

Fees are rising well above inflation with average annual fees rising by 21% in the last five years. Many independent schools have been forced to significantly increase fees to fund investment in the state of art facilities, demanded by the lucrative international market. The bank of Grandma and Grandad was always seen as a reliable source of funding for many young couples. Today however, much of the cash normally earmarked for school fees now goes towards hefty deposits to get families onto the first rung of the property ladder. Many couples considered themselves extremely fortunate to be able to send their child to a private school but today that good fortune is seen as homeownership. Finally, there is Brexit and it has impacted on the independent sector particularly at the lower age intake. An uncertain future for many young couples has put forward planning on hold. I know there are many schools around the country that will welcome the promise of a return to some stability and normality.

There are many ways to spread fees across the year such as monthly or quarterly invoicing. Bursaries and scholarships are, of course, traditional ways of attracting and retaining pupils, but for many schools this option is limited. There are a small number of finance companies on the market offering a range of financial products aimed at easing the pain.

In my view however, “easy” payment solutions do not address the fundamental issue: how can we bring school fees back into the category of ‘affordable’ for a wider sector of society?

Too many schools are stuck in the routine of trying to “guesstimate” what percentage increase in fees to aim for next year? The sole objective is often focussed on simply covering increased costs in payroll and rising energy bills. This grinding and relentless annual increase in fees is slowly but surely driving more and more potential parents away from the independent sector. It is time, in my view, for schools to be more imaginative and innovative in controlling and reducing costs. I would like to see schools adopting a more collaborative and inclusive approach. It is extremely difficult, when juggling the day to day demands of a busy school, to step back and take a long, hard, objective look at the financial structure of a complex organisation – and schools are complex. My advice is to take advice. A trusted, professional advisor can be invaluable at unlocking new ideas and new ways of thinking.

A large number of schools around the country are tapping into the lucrative international market as a way of compensating for the fall in local intake but a word of caution: the main attraction for many overseas students is to experience a “British style” education which means schools with an overwhelming local cohort. If schools cannot attract local children in sufficient numbers, international interest will diminish.

We need to maintain the balance between local and international, but in order to achieve that we must make our independent sector affordable again for the indigenous population.

David Cardle, Managing Partner

 

 

 

2018-10-18T10:53:40+00:00January 17th, 2018|News|0 Comments