Money Box
Energy Costs and Private Schools VAT
Feb 1, 2025
Rudolf Eliott Lockhart, CEO of the Independent Schools Association, discusses the significant impact of a new 20% VAT on private school fees. He highlights how schools are responding with fee increases between 13% and 20%, which adds financial stress for parents already grappling with rising energy costs this winter. With typical household energy bills set to rise slightly, Lockhart examines coping strategies families are employing amid these financial pressures, while also touching on the broader implications for the education sector.
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Quick takeaways
- Households face rising energy costs this winter, with bills increasing by over 1% amid significant financial strain reported across communities.
- The introduction of VAT on private school fees is leading to steep price increases, impacting parents financially while generating funds for state education.
Deep dives
Rising Energy Costs and Household Struggles
Recent changes in energy pricing have led to increased costs for households, with a typical household facing an annual rise of over 1%, which translates to approximately £21 more per year. Many residents, particularly in areas like Hexham, report significant struggles with their energy bills, indicating a rise in monthly expenses by as much as £60 for heating alone. Prepayment meter users experience even greater challenges, as they tend to spend approximately £250 more annually compared to those on direct debit plans, primarily due to the need to top up frequently during winter months. As energy prices are expected to rise further in April, families are increasingly worried about balancing their budgets amidst soaring living costs.
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