Sir Peter Lampl: We’ve created a society for non-doms, but not for children in our schools

Sir Peter Lampl writes for The Observer on tackling social immobility.

I visited my old primary school in Wakefield a few months ago. The school looks remarkably similar to how I remember it; the generous classrooms with high ceilings and extensive playing fields brought back happy memories of growing up on a council estate in 1950s Britain.

My family moved south when I was 11 and I was lucky enough to go to two excellent secondary schools, one a private school that was state funded and another a state grammar school. I then gained a place at Oxford, eventually enjoying a successful career as a business entrepreneur and educational philanthropist. Little did I or my friends know it then, but we were riding the postwar wave of booming social mobility.

My recent visit, however, was tinged with sadness. For what was painfully apparent from talking to the head and visiting secondary schools was that few bright children from areas such as Wakefield now have a chance of making it to top universities. From the outskirts of Liverpool in the north to the coastal communities of Kent in the south, large swaths of the country have become educational wastelands – where children, despite their talents, face the bleakest of life prospects.

In London, meanwhile, where I now live, a very different phenomenon has transformed the capital’s most sought-after postcodes. The latest figures suggest that the rich from outside the UK now purchase the vast majority of super-prime property in London. Belgravia, Mayfair, Knightsbridge, Notting Hill, Chelsea and even exclusive enclaves in the home counties are becoming non-British zones.

It is not London’s weather that attracts the wealthy from overseas; for many, it is its non-domicile tax status. Among major countries, only in the UK do we allow wealthy foreigners to be permanent residents and not declare their worldwide income and pay tax on it. Instead, they make a one-off payment of £30,000 a year and pay tax on UK source income, which many do not have. At the same time, the UK is renowned for having the best private education money can buy. This is a powerful mix: estimates are that there are more than 200,000 non-doms living in the UK, and it’s increasing every year.

Understandably, there is little sympathy for the homegrown millionaires being priced out of the market. But it is the ripple effect that inflates all house prices that hurts everyone – from the family trying to secure their first mortgage to the fresh graduates (increasingly burdened by debt) renting their first flats. It also means that the UK’s already very high Gini coefficient, a measure of inequality, is understated because it does not include the effect of non-doms, which is why we have asked the London School of Economics to try and estimate the UK’s true level of inequality.

What do these trends in modern Britain have in common? Well, both are examples of the links between inequality, education and social mobility. When the Sutton Trust first funded the LSE to research Britain’s declining social mobility in 2005, it highlighted two driving factors: widening gaps between the rich and poor, and increasing inequalities in educational opportunities.

The latest evidence from an international summit the Sutton Trust is hosting with the Carnegie Corporation in London sheds new light on these drivers. It reveals how greater income inequality leads to a cycle of ever-increasing opportunity gaps between rich and poor. At the same time, educational qualifications have increasingly become the golden tickets to the professional elites and higher earnings. And so the cycle goes on. Income inequality and educational inequality reinforce each other in an endless generational feedback loop leading to an increasingly ossified society.

The signs of this social mobility arms race are all around us: higher school fees, inflated house prices around the best state schools, escalating levels of private tuition, companies coaching students on how to get into the best universities.

And the outcomes, as our research has shown, are clear. Despite making up only 7% of schools, the privately educated make up the lion’s share of the cabinet, high court judges, top journalists, even leading people in sports and entertainment. I agree with Michael Gove that this dominance is “morally indefensible”. It also highlights the huge waste of talent across the country that threatens its economic future and it comes at an economic cost.

The most pressing social and long-term economic challenge the country faces is creating a more mobile society amid a world of widening inequality. It is why our meeting of international experts and major politicians is focusing on the four major Anglophone countries – the United Kingdom, the United States, Canada and Australia. Wealth gaps in the four countries are, by international standards, similar. However, Canada and Australia are far more mobile than the UK and the US, which are the least socially mobile advanced countries. We want to find out the reason behind this and whether policies to improve mobility can be replicated in the UK and the US.

What is to be done in Britain? My view is that there are some simple things we could do, not least introducing the same taxes for the non-domiciled rich as for everyone else. But education reform holds the key to breaking the cycle of low mobility.

In the UK, education gaps between rich and poor widen as children age, the outcome of our highly socially stratified school system. To counteract this, I think we should introduce ballots for over-subscribed state schools.

We need to focus far more attention on teachers and far less on school structures. Improving the bottom 10% of teachers and making them average would dramatically boost the country’s education rankings from 23rd in the world to fifth. The trust is working on proposals to improve the impact of teachers, considering ways of developing and rewarding our best teachers, and dealing with those who continually under-perform.

We should also increase public spending on universities so that the average tuition fee is around £6,000 a year and is means tested, as in the US. We spend far less public money on higher education than other countries and the notion that a kid from a council estate and one who has been at boarding school should pay the same is ludicrous.

Last but not least, we should introduce means-tested fees to democratise entry to our leading independent day schools, so that bright children from all backgrounds can benefit. While we need to improve provision for able children in state schools, this should go hand in hand with opening up independent day schools. In fact, before 1976, 70% of these schools were principally state funded. This is the only way to enable children from places such as Wakefield to once again be given the chances that I benefited so much from.

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