Moderate fee increases - independent schools told
In the hope that the OFT’s investigation is now behind them, independent schools have been bluntly told to stop increasing fees in excess of inflation.
In a speech to the Independent Schools Council Conference, ISC General Secretary Jonathan Shephard told delegates that they needed to try and cut costs by 5% over 5 years. While this may seem a modest target in monetary terms when compared with the DfES who are trying to save £4.6b (a reduction of 2.5%), we suspect that it is more likely to be achieved in the independent sector.
Underlying this call is a concern by some in the sector that fee rises are pricing many parents out of the market. This ignores the fact that the most significant new players in the market (GEMS and Cognita) are positioning their schools in the mid-market with fees of £6000-8000 p.a. As we reported last year, ING calculate that UK parents are already saving £250m per month for their children’s education, and while excessive increases must be avoided this is still a sector where buyers have a significant amount of price elasticity.