What caught my eye this week.
Exciting news! Well, exciting as measured on our patented Government Bond Excitement Scale, anyway.1
The Financial Times reports that retail investors can now buy brand new gilt issues on the primary market, thanks to an initiative between government-appointed dealer Winterflood Securities and two online retail platforms – Interactive Investor and Hargreaves Lansdown.
The FT says that:
The platforms have started accepting orders for a seven-year gilt that will be issued on Wednesday 28 February with a coupon of 4 per cent. Retail investors will be given the average price of the auction and will not have to pay any dealing fees, unlike for gilts bought through platforms in the secondary market.
Some sites are saying this is the first-time that ordinary oiks like us have been able to buy gilts direct, but I don’t think that’s correct.
You definitely used to be able to buy gilts from the Government’s Debt Management Office. And I’m sure I recall reading that you could also once get them from other places too, from NS&I to the Bank of England – and even the Post Office?
Could any readers even more ancient than me confirm (Increasingly hapless Google isn’t showing me anything about buying gilts from Ye Olden Times of more than a few years ago.)
Soft launch
I haven’t seen anything on the two platforms themselves about how direct gilt buying will work.
An article from FI Desk quotes Hargreaves Lansdown outlining a summary of the process. But I can’t find the same on the site itself.
I’m sure the FT isn’t hallucinating, Chatbot AI style, so again, if you did put an order in please tell us all how it went in the comments below.
Assuming everything works fine, then buying gilts direct will hopefully become just another standard bit of kit in our investing armoury.
There are circumstances where buying gilts new and holding them until they mature is just the ticket. Being able to do so without fees would be welcome.
Shouting “buy, buy, buy!” as you rub shoulders with the big, swinging bond dealers in the primary market will remain purely optional.
Membership update
The Monevator membership massive continues to swell. We’re now within a dozen sign-ups of our initial target!
Hopefully waverers will join us soon. I think we’ve proven we’re sticking around, nearly a year in…
On that note, a reminder members can read all of our previous Mavens and Moguls missives via the ‘tagged’ archives:
Having recurring membership revenue at our backs makes it so much easier to commit to Monevator for the long-term. That’s especially true as our churn rate (cancellations) is very low.
Thank you for that too! I know this is partly because you’re signing up to support all our work on Monevator, not just for the premium articles. It’s appreciated.
The other relief is the technology – Stripe payments, subscription handling, and premium site access – has gone extremely smoothly.
However I am still occasionally donning my customer support hat:
- Cookie monsters: If you log-in as a member but still can’t access members articles, try deleting your cookies. Also turn off ad blockers for Monevator (the site is ad-free for members anyway). And maybe try clearing your cache.
- Premium emails: The numbers tell me a very few members are not email subscribers. In most cases this happens because you previously cancelled a Monevator email subscription. If you would like to get member posts by email and you don’t, try resubscribing. Be sure to look out for the system’s opt-in confirmation email.
- Bug busting: Finally, at least one member did that but a glitch meant they were only getting the free emails, not the members-only ones. If that’s happening to you, let me know by replying to this email or via the contact form. We can get it sorted.
Again, huge thanks to the several hundred of you supporting this site as members.
It’s the only long-term sustainable future for Monevator, and I believe for most other quality niche media. Every member counts.
Besides, we don’t want my FIRE-d co-blogger The Accumulator’s Werther’s Originals budget to be entirely at the mercy of sequence of returns risk, do we?
Have a great weekend!
From Monevator
Pension drawdown rules: what are they? – Monevator
Tax avoidance versus tax evasion versus tax mitigation – Monevator
From the archive-ator: Holiday strategies to refresh a frugal soul – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
Notting Hill residents’ capital gains exceed population of ‘three cities combined’ – Guardian
Most UK firms that trialled a four-day week will make it permanent – Guardian
Hunt may offer a Budget bung, but Britain faces a ‘tax sandwich’ – Yahoo Finance
Middle class ‘struggling despite incomes of up to £60,000 a year’ – Guardian
The transition to cashless economies faces hurdles – Semafor
Tinder introduces passport scanning ID checks for UK users – BBC
Energy price cap to drop to £1,690 from April – BBC
Products and services
Sub-4% mortgage rates could disappear again as Santander hikes – This Is Money
Labour’s school fees VAT threat sends a chill through parents [Search result] – FT
Sim-swap fraud: How your bank account can be emptied by phone – Guardian
Last chance! Get between £100 and £5,000 cashback when you open a SIPP with Interactive Investor before 29 Feb. New SIPP customers only. Minimum £10,000 account value. Terms apply. Capital at risk – Interactive Investor
Kroo Bank review – Be Clever With Your Cash
Best downsizing locations revealed – This Is Money
Open an account with low-cost platform InvestEngine via our link and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
Five ways ISAs are changing from April 2024 – Which
The consumers scoring tiny wins, one company at a time – Guardian
Does bank switching affect your credit score? – Be Clever With Your Cash
Historic homes for sale, in pictures – Guardian
Comment and opinion
Millionaires don’t use astrology. Billionaires do – Of Dollars and Data
Four habits to manage impulsive spending – Darius Foroux
After 34 years, Japan just hit a new all-time high – FT via X
Tell Sid: Popular capitalism and the Thatcher revolution [Podcast] – A.L.T.I.F.
Why the UK property market isn’t working for anyone – Which
If I were a rich man – Humble Dollar
The key to personal finance planning? Be lazy – Morningstar
How much will I need? – Quietly Saving
Update on the silent UK property crash [Podcast] – Property Podcast
Faulty assumptions – Humble Dollar
Hinterland and FIRE – Simple Living in Somerset
The definitive history of private credit – Wall Street Fintech
Portfolio perspectives mini-special
You have millions of dollars. You still don’t need fancy investments – FlowFP
Herschel Walker syndrome – Mutiny Funds
Is your portfolio invested for you or for your advisor? – Forbes
How to use alternatives in your portfolio [US but relevant] – Morningstar
Stock picking is not the same thing as portfolio management – A.W.O.C.S.
Naughty corner: Active antics
Activist Boaz Weinstein is betting big on UK investment trusts – Bloomberg via MSN
Step away from CNBC – Slate
US tech: the most crowded trade on earth – Josh Brown
Venture capital and free lunch – Not Boring
Hermès: the complete history and strategy [Podcast] – Acquired
Want an S&P tracker except worse? Hedge funds have you covered [Search result] – FT
Sad state of the UK capital markets [Graph, a few weeks old] – Snippet
Kindle book bargains
How Not To Be An Antiques Dealer by Drew Pritchard – £0.99 on Kindle
I Will Teach You To Be Rich by Ramit Sethi – £0.99 on Kindle
The Tipping Point by Malcolm Gladwell – £0.99 on Kindle
Money Box by Paul Lewis – £1.99 on Kindle
Environmental factors
Why investors are betting big on geologic hydrogen – Semafor
Installing green tech could increase your home’s value by 15% – This Is Money
‘World’s largest’ renewable park powers up – Energy Live News
Global soils re running low on potassium, but there’s a fix – The Conversation
For sale: Shark jaw, tiger claw, fish maw – Hakai
Why African filmmakers aren’t making nature documentaries – Semafor
Robot overlord roundup
ChatGPT went temporarily ‘insane’ this week – Ars Technica
It’s only a matter of time before disinformation leads to calamity – Tim Harford
Off our beat
New five-day ‘fasting-like’ diet can reverse your biological age, study claims… – BBC
…though other scientists have put a ceiling on life expectancy – Huffington Post
Post-Brexit ‘Global Britain’ has failed. What’s next? – London School of Economics
We’re close to eradicating polio – Our World in Data
Could Viagra really be a viable treatment for Alzheimer’s? – The Conversation
Indexing the information age [Nerdy] – Aeons
Forget me not – Humble Dollar
The architects who built Palm Springs – Wallpaper
Solar storms, ice cores, and nuns teeth: the new science of history – Guardian
There is no future and that’s good – Raptitude
And finally…
“Do you need to be sitting in front of a screen all day? The answer is no.”
– Robbie Burns, The Naked Trader
Like these links? Subscribe to get them every Friday. Note this article includes affiliate links, such as from Amazon and Interactive Investor.
- This scale runs from ZIRP-ishly somnolent at the low end to Mini Budget Mayhem at the peak. [↩]
I received an email from HL and have put an order in for the new October 2031 4% Gilts issue.
There maybe scaling back and the price paid will be the average of the institutional sales.
Be interesting to see how it works out !
I did buy gilts via the post office in the late 90’s my recollection is the yield was around 8%, it was an easy process as I recollect.
On gilts, has anyone already used AJ Bell’s new online system? It seems that you no longer need to call to trade, even for linkers.
https://www.ajbell.co.uk/our-services/investment-options/gilts/prices
HL have info on the direct gilt sale under their “IPOs and new bonds” page: https://www.hl.co.uk/shares/ipos-and-new-issues
My father was an investor and involved me from a young age in his investment choices. As I recall in the 1960s, and maybe for a good while after, it was possible to buy gilts on either the Bank of England register or the National Savings register. You bought gilts on the Bank of England register through a stockbroker (or in practice for a small investor through your bank, who passed the order on to a local stockbroker). These gilts would have tax deducted from the coupon distributions at source. On the other hand, gilts on the National Savings register, bought through the Post Office, did not have tax deducted from the coupons and so were more suitable for non-taxpayers. Indeed my father bought a small holding for me on the NS register shortly after my birth with a maturity around my 21st birthday, I think.
Aha! Good stuff, I think I was looking under gilts not IPOs.
Thanks for the extra info, all.
It’s a useful addition being able to buy Gilts in primary but I cannot see myself using it. The dealing fees for buying Gilts are already negligible. Plus I want to buy the precise Gilt I want, when I want, at the price I want. Not the Gilt the DMO wants me to, when they want me to buy it, and just get the average price.
Interesting little titbit in the BBC article linked from the energy price cap piece. “The regulator will also add £28 to everyone’s bill over a year to cover the cost of dealing with £3.1bn of debt that customers owe to suppliers”. Do any readers know how this works? Is the £28pa covering the interest on the debt and/or is some debt being written off? A quick google shows that according to the ONS there were 28.2MM households in the UK in 2022. So that is £790MM being paid by bill paying households on behalf of households that haven’t paid their bills. Just seems like the energy suppliers are legally picking our pockets.
A Reuters article (dated 9th Jan 2024) reported that a newly auctioned 4.75% 2043 Gilt was massively oversubscribed and it ended up being sold at an average yield of just 4.391%, so i’m a bit hesitant about applying for any new issue at the moment without being better informed about the issue price.
Knowing what the issue price is upfront seems pretty relevant to me, especially when it’s easy to purchase existing gilts and you know what you’re buying.
If i’ve overlooked something obvious here if anyone can enlighten me i’d be grateful.
Seem to recall buying gilts directly in the 1980’s via forms in the paper ( Daily Telegraph). They were all very much sub par in those days. To sell anything you had to find a broker, in my case usually a branch of Barclays.
https://en.wikipedia.org/wiki/War_bond
Victory bonds anyone? According to Wikipedia they were sold at retail.
While it wasn’t a gilt, I do remember buying a National Savings Index Linked certificate back in the 1980s that was a few percent over inflation. It did very well indeed.
@DrexL My understanding is it’s mainly because suppliers were banned from forcibly installing pre-payment meters – their primary means of minimising bad debt. Also a symptom of the now tightly price-regulated nature of the business. Ofgem decides what’s fair. Their formula already had a component for covering bad debt (so more than £28). However the £28 is *extra* because of exceptional pandemic and energy inflation impact and the sensitivities around denying people warmth in winter.
In any market-priced sector paying customers indirectly cover bad debt simply as a by-product of businesses raising prices to cover costs, so Ofgem have to come up with some figure. I don’t envy their job deciding what’s fair. Especially as the ‘cap’ has silently almost become the de-facto price we all pay.
Just sampled ‘The Property Podcast’:
‘The economy at the moment is doing ok… Although a recession could happen this year, I think it’s more likely not to happen. I don’t think many people are forecasting a recession this year…’
Oh dear.
@Rich (10) Interesting Wikipedia article. I well remember the government finally redeeming outstanding War Loan but had thought it was not as recently as 2015. I always assumed it had been issued as part of financing the Second World War – and not as early as 1932 with origins back to the First World War.
Edit to add: As for my Index-Linked Savings Certificates, I hang on to them grimly. Although they now pay only a tiny fraction of a percent over CPI, they couldn’t be bettered during the recent high inlation.
@Faustus — Okay, not the finest bit of verbiage but I think they’ve been out in front in flagging up the real terms property correction.
I haven’t seen it explicitly discussed much elsewhere, at least by the standards of the UK’s property obsession haha.
From memory, real terms UK property prices are back to 2012 or 2013 levels.
That’s pretty significant and I think most would be surprised to hear it.
@tetromino I’ve used the AJ Bell online offering. It just seems to be a way of giving an electronic instruction to their dealing desk as you would with dealing with a unit trust. it works but you have to wait for them to complete the deal. The Hargreaves Lansdown system appears to be an automated system akin to share dealing so you get instant results. I think both systems just quote clean prices rather dirty, so that’s something to watch out for,
I don’t normally comment, but I just saw the link for ‘geologic hydrogen’. I was personally involved in the due diligence of one of these geologic hydrogen projects. Currently, it’s all hype. As the article notes, the only producing hydrogen field is in Mali, where all the production numbers have been conveniently hidden. Natural resources are not like technology, you cannot innovate and build better tech to get what you want. If the hydrogen isn’t in the ground, then there is no hydrogen. Some companies have found concentrations of hydrogen, but they have not found hydrogen as a free gas.
Don’t get me wrong, I would love for this to be true play, as it would mean more opportunities for me. My skillset is highly in demand and investor money is pouring in. But geologic ‘ gold’ hydrogen is more a tech-feel-good story. No commercial deposits found anywhere, and no plays confirmed, and it’s not clear whether the hydrogen would ever be trapped in sufficient concentrated quantities for commercial production to be realised.
@DavidV
These ones stuck around for a long time too, although all fully redeemed by 2015:
https://en.wikipedia.org/wiki/Consol_(bond)#:~:text=Consols%20(originally%20short%20for%20consolidated,have%20now%20been%20fully%20redeemed.
Ditto re my NS&I ILSC’s!
@investor
Yes you could buy gilts from NS&I alongside their investment bonds and you used to be able to buy NS&I products at the post office, which was the main way NS&I products were distributed pre-internet plus advertisements in some of the broadsheets (Telegraph, Times and FT, obvs).
Its sort of funny that no-one has any records of anything that happened before 1995 ish these days unless its a secondary source available on the internet.
One might almost think people who know nothing of history are doomed to repeat, or something.
VAT on school fees cements the post code lottery. People with unearned wealth in homes near great state schools avoid the taxes to pay for the services that make their home valuable. People who earn and are priced out of the better neighbourhoods get to pay VAT.
Socialism for unearned wealth.
In an honest system, the UK would buy 60% of the places and hand them out by lottery subject to a state exam.
Redistribute the education, not the bill for tax free residential land.
@Lee (#16) I had the same reaction to the gold hydrogen article. We are definitely in the hype phase. Lots of articles appearing that are mostly puff pieces for one investment opportunity or another. No real numbers and lots of arm-waving extrapolation.
Like you I would be delighted if it were true. We are going to need a shed-load of H2 to decarbonise industry, especially chemicals and steel. But we are a long, long way from practical mapping of recoverable reserves, extraction and, critically, safe transportation in bulk. Local production from low-carbon electricity is already commercial and has a significant lead https://www.hydrogennewsletter.com/top-commercial-electrolyser-for/.
Thank you for the great round-up as usual.
VAT on school fees is interesting and I have a personal interest.
I first baulked at the notion. But reflection made me welcome it. One Lefty article changed my mind (not as it intended) by pointing out private education is a bastion of privilege. Increasing the entry price drives out those who can’t afford it, thus concentrating the privilege of those remaining further still. I want my kids networking with society’s elites – not property developers from Paddock Wood – for their Oxbridge places and work experience. The more privileged, the better. I’d happily pay double. Or even triple. That’s the whole point. If you can’t afford it, it’s not for you. Irrespective of how morally reprehensible that may seem to some.
People who already foot 6 figure (post-tax) private education bills aren’t going to be priced out. That’s a laughable thought. But it’s a great way Labour can say “we tax the rich” while scoring a societal own-goal. In fact, it’s such good elitist policy I’m surprised the Tories haven’t done it already – probably a few MPs with stakes in private education providers, I imagine.
@JCS You are assuming that they will stop with the VAT increase. I’m assuming they have an education system similar to Finland in mind, where there is no private system.
Personally I hope they succeed.
@21
“People who already foot 6 figure (post-tax) private education bills aren’t going to be priced out. That’s a laughable thought.”
Most private schools are nowhere near 6 figures (per child) for a day school – usually a fifth to a quarter of that so the danger of “pricing out” is actually quite high.
With regard to VAT on school fees, I’m currently seeing a forecast of 8-9% increase at my childrens’ school (day independent) since both are currently replacing buildings and spending heavily in tech which can be offset. Plus, I’ve been involved in setting up a prepayment fund so parents are invested in a low coupon linker ladder. You have a ring-fenced amount in liquid govt securities. No risk, can take the money out, get RPI etc. You’ll just lose the coupon which will be around 0.25%/annum as a “platform fee”. Many are keen just prepay the whole amount for their child’s education.
Running the numbers it seems that it might raise perhaps £0.5-0.75bn/annum net once you’ve considered additional funding for state schools at around £7.6k/annum/child. A rounding error.
Those who are wealthy such as myself don’t really care and will avoid it. When the strivers find they cannot get a decent state school, which they won’t since they don’t live in the right catchment, they will be pissed. Many will choose home schooling which is now a great option post COVID. This won’t raise any money and it won’t level the playing field.
If Labour would consider radical change to the comprehensive system so it actually doesn’t discriminate against smarter children they might get somewhere. Or confront teaching unions about the significant minority of poor/lazy teachers who seem to be passed around the system. Instead, they fiddle while Rome burns.
@CB thanks for the comments on AJ Bell, it’s helpful to know it’s still a relatively limited system. I may yet be ‘lazy’ as per TI’s Morningstar link and avoid the extra complexity of individual linkers.
As cash ISA rates are 5% now and the above gilts return less, what are the advantages to getting the gilts?
– Long term guaranteed fixed return?
– Be able to put in new money (more than a years 20k)?
– Greater protection than the fscs?
II details on Gilt offer here: https://www.ii.co.uk/ipos/t31/documents
miner2049er #26
For me, the advantages are that I know the return I’m going to get when I hold to maturity (ISA rates will fluctuate) and the fact that I can hold a significant amount in a General Investment Account, with little or no tax to pay (CGT free and low (taxable) coupons). And the protection above the FSCS limit doesn’t hurt either. Liquidity is also an advantage as is the option to sell up if there’s a spike in prices. And theres also the option of inflation protection with linkers.
I really like GILTS these days.
@Ducknald Yes, full nationalisation is precisely the imperative of the hardline Left. Be careful what you wish for, though. While at a level this level of privilege is abhorrent morally, I’m unsure the opposite situation is a panacea or will remove inequality either. It certainly isn’t merely a matter of money, but rather moral and societal will. No country or system is perfect.
@Jojo
> Most private schools are nowhere near 6 figures (per child) for a day school
You’re misinterpreting my words; I didn’t say per child. But I know personally people who have 3+ children in private education and at £30k+/child p.a. making it not hard to get into 6 figures once you factor in all the after-school/holiday clubs, trips etc. This is a world of London privilege and I assure you that it very much does exist. Like ZX says, such people don’t care.
Ironically, I think the best thing Labour could do to destroy private education would be to lower the bar rather than raise it. Offer scholarships and state bursaries. That would have moral effect intended – to dilute the privilege. Good luck selling that at an election, though.
@29
Yes of course that world does exist, I agree. However there is a vast swathe of people who send their child/ children to private schools who do not exist in that world. Unfortunately, those are the ones who will be hurt the most by this change, if it happens. They may be scraping together on two salaries, working all hours just to get the fees together. Jacking the fees up by 20% up will take them out of the game. So the idea that it is taxing the rich is a bit misguided – as you say the people who are really wealthy will not be bothered by it. But the people who are trying to get on and are making sacrifices could well be swept out of the system. Thus actually increasing inequality and making the system more elitist, as someone mentioned earlier.
Not to mention the extra weight on the state system from those pupils who leave the private system and go there.
@ZX Spectrum. You wrote ’Those who are wealthy such as myself don’t really care and will avoid it.’
Can you elaborate. Do you mean by prepayment? Having done some research, the legal position appears unclear as to whether or not it will be deemed that you have paid at the relevant term time or when the fees were actually pre-paid.
I have toyed with the idea of prepaying the lot but a) we might move b) you can make 4% tax free anyway, which is a partial offset c) conservatives might win lol.
@Seeking. Our school’s legal counsel think it would be hard to challenge any payments made prior to the introduction of the VAT. The school does not need to charge termly. They can bill me tomorrow for a bullet payment representing the whole remaining 9 years or so of fees for my two kids. I pay it the next day. If it’s not enough, I may have to pay further increments with VAT at a later stage.
Clearly parents have concerns about prepayment due to moving location or the school going bust etc. You can get around that with the correct escrow structure. You can then invest the proceeds in a tax efficient manner via something safe like low-coupon linkers. Parents can be repaid without much opportunity cost if their children leave the school. They will take modest duration risk and the redemption period may be months to a year, rather than instant.
There are less savory alternatives. I lend £500k to my school via a multi-callable securitized loan written out of my offshore trust and they magically decide to increase the academic scholarship both my kids get from 20% to 100%. What a coincidence! No fees, no VAT.
Honestly, Labour will create a whole new niche for tax avoidance with this one. Just what the UK needed. What about just giving us proper norm referenced exams, selective state schools and decent teachers. It’s not as though I want to pay another £500k.
ZX Spectrum. Thanks for the info. Seen some alternative views. Opportunity cost is not massive to pre-pay though anyway as you say. Will put some marginal schools under a fair bit of pressure. Need to adjust business model to international boarders in many cases. Overseas people who have more dough than many of the getting poorer middle class!
@JoJo
> Thus actually increasing inequality and making the system more elitist, as someone mentioned earlier.
That person was me. And absolutely, yes. Being on the “right” side of it, I don’t care. I agree with you that it does not encourage a meritocratic society or mobility. This is the society we already live in and this Labour policy – if it ever came to fruition – would entrench further. (Perhaps they’d make up for it other ways?).
The other comments about selective state schools, post code lotteries etc. while being accurate are insufficient. Even then, I wouldn’t send my children to state school while I could afford private education. Nobody would; the idea is ridiculous. So while you may (rightly) considered me a hypocrite in that regard, in my defence, no sane person would do otherwise. Just as it’s always a good idea to tax the rich more… until you happen to find yourself one of them.
I’ve known a few people that have sent one or more of their children to private schools, but only after trying them in state education first, where they fared badly (due to their own limitations and/or behavioural issues). Consequently, I was content that my children attended state school instead. Not that I had the financial wherewithal to choose otherwise.
>Yes, full nationalisation is precisely the imperative of the hardline Left.
@jcs I’m not sure I would describe this as a hard left policy, perhaps keeping it in place could be described as hard right though considering the tiny number of people it affects.
I think there is a fairly strong argument that you can’t fix the state system while the great and good are all sending their children to privates schools. I’m sure you would pay more attention to your local secondary school if you thought your children were going to end up there.
I was a bit surprised at the opinion that everyone would send their children to private school if they could afford to. The truth is that there are some good private schools, and a lot of mediocre ones. And good state schools as well as mediocre ones.
Clearly there are benefits to the much higher funding of private education, especially with sports facilities and extracurricular possibilities. And there are a few children with problems of their own who might do better in a mediocre school with low class sizes. But they also lose something by not having their friendship groups live locally, and becoming dependent on parental taxi services.
I became a governor of our local state comprehensive when our daughter was there, and have continued that role. In the paperwork for tomorrow’s meeting I see that five pupils have offers from Oxford or Cambridge out of a final year sixth of 104, the local private schools don’t offer better academic outcomes.
@Jonathan B — I have a chip on my shoulder about private/public schools, partly as an axiomatic remnant of my long-long-ago ‘proper’ lefty student days, but more so because I got bored through my 20s and 30s meeting pretty mediocre former privately educated people who were making a fortune / starting companies / often (when younger especially) being incredibly arrogant and dismissive about the advantages their education had given them, versus the likes of the 2,000-pupil strong state school where I, predictably, hailed from.
I even got the impression that 50-75% of the UK-originated founders I met in the pre-Covid crowdfunding pitching days were privately educated. It became boring and I started paying more attention to those who weren’t… (mixed results haha).
Since my 20s/30s I’ve seen friends put their kids through private schools, and the difference in these children versus state-schooled ones is pretty notable, especially when they are very young (under-12 say). They often hold themselves differently, they’re confident with adults and strangers, more can have proper conversations with you and so on.
Of course some of this is down to their excellent parents (my friend set is obviously skewed) but the (few that I’ve met) friends of their children seem similar.
Admittedly not all the older of these privately educated kids seem to me to be on the path to becoming captains of industry/finance by 30 etc. And I have seen some of the traits more over-represented in selective grammar schools children too (another thing I didn’t encounter until I left the provinces for London/the SE) though not the huge self-confidence.
What I’m saying is IMHO the education/facilities benefit is secondary.
As best I can tell the private (and especially core public) school benefit is about confidence, instilling ambition, and the peer group it gets you, both when in the school and later when you enter the workforce.
I’ll say this for the couple of very candid comments on this thread — at least they are honest and straightforward about securing this paid-for benefit.
Rather than waffling on about family tradition or their child needing access to some special after-school archery classes or whatnot! 😉
Funnily enough, I have just become a governor of a local state secondary school. Very interested as to how it pans out, i.e. how I can help and what I learn.
On a horrendous tangent, I think I just discovered you get an interest payment type rebate on early SA tax payments? Currently 4.25%. can anyone corroborate this and suggest how you actually get it in practice?
@TI ‘school benefit is about confidence, instilling ambition, and the peer group it gets you’ – I think this sums it up well. I’d add the contacts it gives you. Academically inclined children may not fare worse gradewise in a good state school, but for the rest, it makes a difference, including later in the workforce (particularly London I suspect, depending on line of work). Its a sad state of affairs, but I am not sure how it can be sorted if there continues to be insufficient investment in state schools.
As a parent of a child, which has clinically diagnosed special needs that are now materially impacting the child’s learning, the private provision just blows apart the state offering where we live. And even that’s not perfect in any sense. But that’s why we are doing it. It’s just much better. I am aware of other children who have a similar clinical diagnosis who are being state educated locally and they are at a material disadvantage. It’s not really fair but with a dog in the race you have a natural inclination to do what you can. Couldn’t care less what anyone thinks either.
>It’s not really fair but with a dog in the race you have a natural inclination to do what you can.
@SF I don’t think anybody is criticising you for acting in your own child’s interest. To expect anything else would be delusional.
>Rather than waffling on about family tradition or their child needing access to some special after-school archery classes or whatnot!
I clearly remember attending an open evening at my future state secondary school where they were advertising archery lessons amongst other things. I also remember how I felt when I tried to enrol and discovered it was a fiction.
@Rhino In my experience you get interest from HMRC only if they instruct you to overpay, for example you’re doing ‘payments on account’ based on previous year’s tax bill but your bill falls. Voluntarily overpay, early pay, reclaim tax deducted at source, etc and they just keep their perk.
I’m interested to know if it’s changed in these high interest times though. For logistically unavoidable reasons I typically have cash building up in a no-interest current account destined for the treasury. It would be nice – and also sensible for them – if they gave at least some credit for having use of it prematurely.
@JCS (34) We sent our eldest to grammar school in preference to the top performing independent school nearby in spite of being able to easily afford it. She went on a taster day to both and preferred the grammar. If she hadn’t got in, on the other hand, things would have been different; I have no faith that the local comprehensives would have suited her in the slightest.
@Roland I definitely get interest from paying my corporation tax early but don’t ever remember getting it for income tax. I guess I shouldn’t be surprised about that.
@DD, Roland, yes, possibly I’m wrong on this, maybe corporation tax specific? I was looking here -> https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates
As ever, clear as mud with HMRC. Maybe I will keep paying as late as possible after all.
“I think there is a fairly strong argument that you can’t fix the state system while the great and good are all sending their children to privates schools.”
And yet in the fifties and sixties before Antony Crosland and Shirley Williams decided to bugger up the state school system it thrived even though the rich sent their children to private schools.
@dearieme As long as the pupils didn’t want to go to university or climb the social ladder.
I’m not a fan of the state system in that era, I entered it in the late sixties so I know how crap it was.
We have moved a long way forward since then.
@TI, fair enough, some while ago the Sutton Trust did a proper study on private versus state education and concluded that what the private sector was good at doing was “social capital”.
But what one person sees as self-confidence another sees as arrogance; one of the private schools in our area has a reputation for its stuck-up kids. To be fair though, one of the others is more about nurturing children and might certainly be a good choice for certain kids who tend to struggle in school – but its academic outcomes would easily put it in the lower half of state schools.
@Jonathan — I hear you and agree. My antipathy for the Johnson regime (and to an extent Cameron’s complacency before that) is well documented and reeks of public school Common room politics and machinations, for example.
At the same time it’s hard to argue with the results of private (/grammar) school via a count of the holders of that high office.
We could have easily afforded private education for our kids but chose not to. The eldest got into a top local comprehensive by getting a very high score in the local authority (Wandsworth) exam, the other 2 followed because of a sibling policy.
All 3 went to their first choice universities, 2 going on to masters and PhDs, the other studied medicine. One is running a biotech startup, one still in academia applying AI to genetics research, the third a junior doctor and when not on strike she is specialising in paediatric cardiology.
I am very proud of all 3 and really cannot see how private education might have helped them. Their peers that we know of who were privately educated have turned out quite a mixed bag, and there is only one I can think of who may have attained a place at a better university than he might otherwise have done. He got a 2/2 though, so just because you can lead a horse to water…
I went to a poor comprehensive and succeeded despite that. My kids comp was way better in comparison. My wife went to a private school, but only because her mother taught there and she got a full scholarship. Her experience was critical in our choices for our kids as the private school hype did not blnker us.
Just my experience, everyone is different and I would not want to claim that there are not those who would not benefit from private education. Other aspects to bringing up kids are likely more important though and for those who cannot afford private education, I would say don’t worry about it too much and don’t put yourself in penury to pay for it. The chances are the cost to you will not be worth it in the long run.
@TI, I don’t think holders of the office of Prime Minister is a representative sample to base analysis of educational systems on!
The Sutton Trust analysis I mentioned above started with the proportion of those in elite professions who had attended private or grammar schools, or Oxbridge/Russell Group universities. However while I agree with their identification of “social capital” added value from private schools, some of their comments were ill thought through. For example High Court (or above) judges are only appointed late in a legal career, it is hardly surprising that they having entered secondary school 50+ years previously would have been to a grammar school (if in the State system) or private. And because the Russell Group began life as a “club” of universities with medical schools, it was inevitable that analysis of education of senior hospital consultants revealed that most had attended Russell Group universities.
@Naeclue, our experience was similar, our daughter went to the local comprehensive and got a place to study medicine. I don’t think private education would have “improved” on that. However I do see that it is important for state schools to encourage their best academic students to have high aspirations – and one of the reasons I have remained a governor is to do what I can to support that mentality locally.
In fact, rather as you say, those kids who went to the same local primary school but then their parents sent to private schools certainly didn’t do better than their peers who stayed in the state system – in fact if anything they underperformed compared with their potential at age 11. They might be more likely to become Prime Minister though!
“As long as the pupils didn’t want to go to university or climb the social ladder”
You must have been unlucky. My state secondary schooling was flawed but overall very good; when I met private school old boys at university there was no doubt. I was much better educated.
@JCS “…… I wouldn’t send my children to state school while I could afford private education. Nobody would; the idea is ridiculous…..”
Having taught for 20 years in an extremely good state grammar school, I can assure you that this statement is incorrect.
The motives of the wealthy parents were not financial. I cannot judge whether the real-world experiences these students gained outweighed the private schooling privilege their parents could have purchased, but I do know that they went on to prestigious universities.
Really pleased to hear about the success of the paid memberships. You guys really do deserve to make something from this as you have provided so much good content over the years and have played a huge part in getting me to where I am now and in having the prospect of reaching FI in 10 years time (Would have been laughable and dream like when I was younger!). I will happily contribute towards some of TA’s werthers originals and to help you maintain your somewhat still eternal student lifestyle. :D. TFJ