Why VAT rules may drive growth in international private schools

A director at Wellington College International reflects on how private schools have expanded overseas to great effect over the last decade – and the growth that lies ahead
23rd October 2024, 6:00am

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Why VAT rules may drive growth in international private schools

https://www.tes.com/magazine/analysis/specialist-sector/why-vat-rules-may-drive-growth-private-schools-overseas
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Amid all the debates around private school fees, VAT and the risks to pupil places and school’s futures, the international outlook of many private schools remains buoyant.

As the latest data from ISC Research notes, there are now over 14,000 schools educating more than seven million students worldwide - that’s just two million shy of the pupil cohort size in England.

Educating all these pupils means there are now 700,000 teachers in international schools - many drawn from England. No doubt if Labour’s plans do come to fruition then some of those currently at private schools may, for one reason or another, find a new home overseas, too.

And as noted, with 14,000 international schools there is plenty of demand - especially as that figure is only going in one direction, with private schools a key drive of that growth.

Overseas appeal

For example, as Tes has written before, India is booming as many private schools open (or consider opening) campuses there, while North London Collegiate School will open a site in Kobe, Japan next year, and KCS Wimbledon will expand to Ho Chi Minh City, Vietnam in 2026.

Harrow International School New York began operations this September with its first cohort beginning next year, while one of our partners at Wellington College China is now working with us to open a bilingual school in San Francisco - our first in the US.

Meanwhile, Mark Smith, director of International Partnership at Haileybury, has told me the group has been approached to partner with investors in India, USA, South Korea, Sri Lanka and Portugal.

All this growth is nothing new. ISC Research data shows that of the 237 international schools associated with independent brands, 175 are British, under the banner of 60 different brands.

This has been driven by a huge surge in demand over the last decade: while international schools overall have grown by 50 per cent in this time, private international school brands have grown 182 per cent.

Not all about the money

Of course many will see this as private schools going after the money - and it can’t be denied that opening overseas brings an alternative and lucrative revenue stream (and some may even try to use this income to shield parents from any new tax burdens).

However, none of this is a private school cash grab.

There are numerous upfront costs to consider, revenue takes two to three years to be meaningful, and often only when two or three schools are operational, so economies of scale can be leveraged.

So yes money is there, but it’s a long-term game that must be underpinned by a true commitment to each school.

Aligned in vision and values

Indeed, to be truly successful in the world of international schools, private schools must be motivated by more than revenue. If that is the only driver, failure is almost inevitable.

Effective partnership requires such a commitment of people, time and resources from all involved that there must be an alignment on the sense of mission, ideals and ethos driving any partnership and new school opening.

When we are approached by potential new partners at Wellington College International, it is always the educational vision that we discuss first.

If this is aligned, and the values of the possible partner resonate with the College values of kindness, responsibility, respect, integrity and courage, only then do we continue the conversation.

This was the mindset we had when we opened our first international school in Tianjin, China, and we made the adoption of all five of these values a cornerstone of the creation of this new school - and have for each new opening since.

Partners that work with independent schools understand why this matters, too, because they are driven not by balance sheets and a bottom line but by bringing outstanding schools to the heart of their communities to help young people thrive.

How the impact of the VAT change in England plays out remains to be seen but, whatever the impact, it seems inevitable that the allure of international expansion will not be dulled - and indeed it may serve as a catalyst for others considering their future options.

Chris Woolf is international director at Wellington College International

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