How soon might a Labour Government put 20% VAT tax on private school fees?

[jennylamb1]

That really. Given that an election date has been declared for July, how soon might a Labour Government set their first budget?

It all depends on how many people transfer to state which no one knows for certain. The Labour Party like to quote the IFS study but that doesn’t mean that it’s accurate. In fact, a recent response from the Edinburgh Labour MSP acknowledges that the cost of living crisis has brought many families to the edge of affordability.

“Thank you so much for contacting me about proposals for VAT on independent school fees. You didn’t include your full address in your message to confirm you live in the constituency, and due to parliamentary protocol I am usually unable to correspond with non-consitutents. However, in recognition of the fact this relates to Labour policy I will provide you with a full response, which is below. If you want to continue the conversation, please respond with your full address to confirm you are a constituent, or speak to your local Labour candidate. If you do not know who that is, please let me know and I will pass on their details.

I think it is worth saying that I am not against the principle of private schools. The Labour Party is not in the business of restricting parents' choices - that has always been part of my politics. Keir Starmer and Anas Sarwar have been clear on this too. The independent sector plays a critical role in the education ecosystem in this country and we don’t want to interfere in that.

I also know from personal experience and that of constituents that many send their children to the independent sector for specific educational needs such as dyslexia, that aren’t necessarily dealt with in the same way as the state sector.

Part of the problem is that the UK and Scottish Governments have made an unholy mess of our education system, with state schools underfunded and over capacity. The key strategic position of any politician must be to improve the state sector to make it as good as the private sector. As a former WHEC pupil myself, I know the power of good state education with inspirational teachers and opportunities for everyone.

I have been in constant contact with the Principals at George Watson’s College and George Heriots to hear their concerns but also their ideas on how to take this forward. I also had a very good meeting recently with SCIS (Scottish Council for Independent Schools) who acknowledged the need to see more funding into the state sector. They are coming back to me on some other ideas too. It is important to get this right. I am due to meet the Principals again soon to go through this in more detail and I’m currently linking the local independent schools with the education department at the council to explore this joint partnership working in more detail.

I will also be discussing with them the issue of how we can support those parents who are most “price sensitive” to these changes.

The independent sector does have the capacity to be of enormous benefit to our wider education system and our communities and we should find a mechanism to continue to support that wider community benefit. I'll also keep trying to facilitate the talks between the sector and the council to jointly improve education for all pupils in the city, like in the way they've come together in the local cluster to be able to provide Chinese language courses for local children and coding.

I also realise that there is some debate about how much resource this policy will provide. If you’re interested in the details, there’s a good analysis from the Institute for Fiscal Studies here: https://ifs.org.uk/publications/tax-private-school-fees-and-state-school-spending. 

However, I know recent inflationary fee increases, cost of living more generally and post-Covid costs have brought more families to the very edge of affordability.

I must stress again that Edinburgh does have unique problems and opportunities that are not comparable to anywhere else in the UK. I’m very lucky to represent a constituency with some of the best state schools in Scotland but there simply isn’t enough capacity - which has skewed the education and property market for a long time. Many parents must either pay additional capital costs for a home close to a good state school or pay the additional revenue in school fees to go into the independent sector. This is the reality and I absolutely understand this.

On the issue of the impact on state schools, education is devolved so it will be up to the Scottish Government to respond to the increased demand. They will receive Barnett consequentials from the money raised, however, we have no way to ensure this is spent on education. I am concerned that they may simply push the problem onto councils, as due to the Scottish Government’s large and persistent cuts to their budget many Councils are already struggling.

I have also written to Edinburgh Council to ask what contingency plans they are making in the event of a large increase in pupils to state schools. The education convenor has let me know that the Council’s Education, Children and Families Committee is currently preparing a report on the issue, to be considered at the committee’s meeting in April. Once the report is out, I will discuss the Council’s plans to ensure they are robust enough to withstand any potential increase in demand for places.

More broadly, as the VAT policy evolves (you'll have seen there are no plans to change charitable status) we shall see the impact on the city overall. I have also been feeding the specific issues of Edinburgh and ideas from the sector back into the Shadow Education Secretary directly. I've also been sending all the correspondence I have received to the Shadow team too.

I absolutely understand the arguments you are making and will work, as I have always done, with the sector to find ways to best implement the policy and alleviate the problems. I will also feed your thoughts back into the shadow education team as we continue the process of drafting our manifesto.

I will continue to work with all involved and I’m hugely passionate about how we can have all schools in the area working together to provide the very best education for all pupils, both in the private and state sector.

Kind regards,
Ian

Ian Murray MP
Labour Member of Parliament for Edinburgh South
Shadow Secretary of State for Scotland
Constituency Office: 0131 662 4520
House of Commons: 0207 219 7064

The link in the letter you've pasted doesn't work.

This is the full report, which is interesting.
https://ifs.org.uk/publications/tax-private-school-fees-and-state-school-spending

@Marjoriefrobisher I feel for you, this is such a spiteful policy that will not benefit anyone.

I’ve read the report and the others that are out there. There is no way to accurately assess how many pupils will leave but the fact that admissions are already down this year by 2.7% means that a significant drop out is possible. If it reaches 10% then no revenue will be generated. It is interesting the the Labour SMP acknowledges the affordability issue. The report is almost a year old and more people have been impacted by mortgage increases etc since then.

Yes, this is my worry

The IFS report has been challenged by ASI and EDSKreport.
The authors of IFS report now admit they underestimated the SEN element and behaviour change.

https://amp.theguardian.com/commentisfree/article/2024/may/20/vat-private-schools-labour-low-income-kids-tax-bursaries?fbclid=IwZXh0bgNhZW0CMTEAAR12w6i1_lbnxHUlc11CTYvLBmDL7KBBB2CZm_FvqYz32X7-a_AqY7Bm4vs_aem_AQn7wjtL_fo7ZLIeNzmgvJfiE-JqLi9VjcqOObT7jGmqDEBh620Ejn_9BRO8YkUmhES2CFDNw-O5uJQTSs1dmESU

https://www.asian-voice.com/News/UK/EDUCATION-PRIVILEGE-OR-RIGHT

@PocketSand You may be surprised to hear that the percentage of privately educated SEN children is very high compared to the national average. This chart, provided by the ISC for 2023 shows how these children are spread across independent schools. Unfortunately the Government's figures are woefully out of date so I can't provide a full comparison but only 12.75% of state educated children are currently receiving SEN support (according to House of Commons Research Report published in February this year) against the independent sector's 18.6%.

The state sector can't cope with the demand for SEN now, I dread to think what will happen if parents of SEN children can no longer afford private.

Sorry, chart didn't load.

Does this include independent special schools (which will be exempt from VAT) or just mainstream independents?

@hamsterno1 This is mainstream independent schools - members of ISC.

Another interesting point made in the report is that there is a substantial number of Ukranian children at private schools in the UK, funded by the schools themselves.

"Independent schools are also key contributors to the national and their local economy through employing staff and buying goods and services from local businesses. Research from Oxford Economics highlighted in the Census shows that, as a whole, independent schools in the UK contribute £16.5 billion to the economy, supporting 328,000 jobs and £5.1 billion in tax revenue. They save the taxpayer £4.4 billion every year by providing for hundreds of thousands of pupils who would otherwise be competing for state school places, often in the most oversubscribed areas of the country." ICS Report Feb 2024

Special schools are not exempt according to Labour.
what they have said is that there maybe exemption for children with an EHCP in any private school.
Good luck anyone about to start that pathway now - it’s already taking 18 months in some areas.

Probably. They are mostly keeping fees as low as possible and just keeping themselves covered. A small number of children leaving, or simply not enrolling, makes a big difference.

People imagine schools rolling in money, millions in reserve etc. Stupid really, a quick look at companies House tells different story.

God they are such arsewipes

The problem is many kids in private schools don't have EHCPs because it doesn't develop any purpose in a private school where the parents pay for SEN support.
This is just going to encourage the parents of those kids without EHCPS to get one in place.
It baffles me how such an intelligent person ie Starmer couldn't identify these issues himself. Or, he did and he is just capitulation to the radical left of the party (which is a more logical conclusion). His language today was very carefully chosen to avoid being pinned down to a timetable/deadline for this.

So we were advised to ensure DS retained his EHCP even though we were covering all costs. A good move because now we’ve gone back to the LA to ask for them to fund some of the specified provision, because we saw what was coming. We’ve got it no problem. Well done Keir.
always get an EHCP and keep it in place if you can. You never know what’s round the corner.

And the reason Starmer didn’t think of this is because he isn’t very intelligent and doesn’t understand the complexities of the sector. Only a fool fiddles with what he doesn’t understand

I did think that but now I'm wondering whether he was fully aware and just went along with it knowing he would have to water it down along the way. The phrase "parliamentary timetable" stuck with me. I may be grasping at straws but that did hint at knowing it wouldn't be a simple enactment.

Or, he did and he is just capitulation to the radical left of the party (which is a more logical conclusion).

That’s the reason I think. Same as hunting.

This! Exactly. The state schools are full to the brim, there are not enough teachers and those that are there are not properly trained and then there are Sen children which there are at least 3/4 if not more in each class to which teachers have to dedicate time so how will the schools cope? How much attention will children get when all private school children join? So I have no idea why those whose children are in a state schools are celebrating this news… this is terrible idea all around.

Because all they hear is "tax the wealthy" or "stop tax breaks for privileged people". They don't look beyond that.
It is the Brexit bus all over again.
This is what happens when politics is reduced to populism

Bollocks. Whatever Starmer is or isn't, he's clearly intelligent.

Not enough for the job he aspires to, I’m afraid. A competent lawyer with no skills beyond that.