The Government intend to slap VAT on school fees on 1 January next year. The policy is wrong; its introduction during the course of an academic year is monstrous. Alistair Lexden condemned it in a speech opening a debate on this serious issue in the Lords on 5 September.
I sought this debate because our country’s independent schools—of which there are some 2,500 in total—face an imminent and dramatic change in their circumstances, which will have serious and far-reaching consequences.
The Government are to put VAT on their fees, in fulfilment of a pledge given in Labour’s recent election manifesto.
This education tax, the first ever to be introduced in Britain—and, apart from a disastrous recent experiment in Greece the first in Europe-- is being imposed on schools with extraordinary haste.
At the very end of July, the Government announced, wholly unexpectedly, that their education tax would come into effect at the very beginning of next year. I January 2025 is just under four months away.
Schools and parents have made their plans for the academic year that is now beginning. How on earth do the Government imagine that these plans can be swiftly and easily rearranged? It is of course impossible, and it is quite wrong that schools and parents should have been plunged into such difficulties.
Acute concern has naturally arisen. Many parents are deeply worried. Many schools, particularly those of small size which account for the overwhelming majority in the independent sector, face an uncertain future.
I stress one point above all: the effect that the rapid introduction of the tax will have on thousands of children, their well-being and their life chances. They should surely be at the forefront of our minds—and our hearts-- during this debate.
The number of Peers taking part in it testifies to the strength of concern that exists across the House.
I declare my interests as a former General Secretary of the Independent Schools Council, and the current President of the Independent Schools Association, one of the Council’s constituent bodies. I naturally judge the issues which arise in this debate from their perspective, to which I will return.
Words matter. Labour’s leaders have become fond of saying that they will recruit 6,500 more teachers for state schools “by ending tax breaks for private schools.” This clearly implies that independent schools now enjoy some kind of special exemption from tax that they do not deserve.
The truth is that all those who provide educational services have always been exempted from VAT, as they should be. That exemption is now to be removed from independent schools—and from independent schools alone.
The current tax regime has helped independent schools to thrive, a state of affairs which the Prime Minister has said enjoys his full approval. Last September he told Jewish News that “we have got fantastic independent schools. I want them to thrive. ”With his VAT proposal, he is perhaps going a strange way about helping schools to fulfil his ambition for them.
No one, I think, doubts the excellence that abides in our independent education sector. It contains some of the best schools in the world. The majority of their pupils find places at leading universities.
They go out into the world well prepared for their careers in a meritocratic, multiracial society. They look to the future, not to a vanished class-ridden past, as is so often asserted by those blinded by prejudice against them.
Four out of ten places in the schools represented by the Independent Schools Council are filled by the children of ethnic minority families.
The Jewish and Muslim faiths are among those who run schools within the Council’s ambit.
Over 2,000 youngsters from Ukraine have been given places at member schools; for the most part their families remain in their war-torn homeland.
These are among the many valuable and socially beneficial features of life in our country’s independent schools today.
Nor should it be forgotten that independent schools make a significant economic contribution to our country. Research by Oxford Economics in 2022 showed that they add £16.5 billion to the UK economy, sustain 328,000 jobs, provide in one way or another £5.1 billion in tax, and save the education budget £4.4 billion by educating pupils who would otherwise be a cost to the state—a saving that must now be expected to shrink as pupils are forced out of independent schools by the imposition of VAT.
I referred at the outset to the two linked organisations, with which I am connected: the Independent Schools Council and the Independent Schools Association.
The Council represents some 1,400 schools, where around 80 per cent of the half million pupils in the independent sector are educated-- the children at the heart of this debate.
The Independent Schools Association has some 670 of those schools—a big slice of the total—in its membership.
It is among them that many of the small schools so prevalent in the independent sector today are to be found. Some flourish with no more than 200 pupils; others indeed with far fewer.
They include performing arts schools, bilingual schools and many special needs schools. They cater for the children of hard-working local parents who have struggled to have their needs met in the state sector. Many are virtually unknown outside their own local communities, where they are highly respected and valued.
The important point is this. The 670 members of this Association are far more representative of the true state of the independent sector than the comparatively small number of large, well-known schools—Eton, Harrow and the rest—which exert so much fascination over the media.
Those schools are the exception, not the rule. They constitute no more than ten per cent of the total.
What all the diverse members of the Independent Schools Council have in common is a commitment to high standards for the sake of their children’s future, and to working in partnership with colleagues in the state sector in a whole host of different ways, from academic teaching to orchestral concerts, drama and sport.
There are now well over 9,000 flourishing partnership projects, typically involving several different strands of activity in and out of the classroom, in which state and independent schools work together to their mutual benefit---I stress mutual benefit. Full details can be found on “ Schools Together” website.
Meanwhile, independent schools themselves have been widening their intake through fee reductions. In the last year schools provided a total £1.1 billion , much of it in the form of means-tested bursaries.
How I wish it had been possible to induce our Governments over the years to back an ambitious wider access scheme with places being made available at all levels of ability co-funded by government, local councils, schools and benefactors. Winston Churchill sometimes spoke privately during the Second World War of constructing a great scheme of educational co-operation.
How Churchill would have jeered at Labour’s attempts to depict our independent schools today as the exclusive preserve of the super-rich, in defiance of the facts that I have set out.
Most independent school parents are not rich, let alone super-rich. Labour says blithely that schools will not need to pass the VAT on to parents; they can absorb it all themselves. They can’t. Only a handful have the endowments or reserves that would enable them to pay it themselves.
Today many parents up and down our country are looking at their family budgets and concluding that they will not be able to pay the higher fees that the Government will create for them. They will, with the heaviest of hearts, have to seek places in state schools.
Here is one example of what then will be the inevitable consequence. The head of a small school in Derbyshire with 80 pupils has written to tell me that “ it is clear from conversations I have had with parents that a significant proportion of our families will simply be unable to afford the increase. We could easily lose 17 pupils. This will have a devastating impact upon school income and will close us.”
Labour seems to think that school closures need cause no great concern. They say that over 1,000 independent schools closed during the fourteen years from 2010. But some were mergers rather than closures. Others were very small schools. Less than half were mainstream schools. Schools delivering specialist provision are always prone to fluctuations. Covid took its toll.
And there is a world of difference between sudden state-driven closures and the closing down of schools for reasons of their own, with new ones opening probably in the vicinity. Who will want to open new independent schools today?
The prospect of losing smaller independent schools is simply appalling. So much invaluable support is provided in them for a huge variety of special needs. Many, many parents have since the election been making clear their heartbreak at the thought of being unable to afford any longer the place where their child with a special need has been wonderfully cared for.
The Government-created fee rise will affect more than 90, 000 families with special needs. Only children with hard-to-come-by Education Health and Care Plans will be exempt from it.
A special needs co-ordinator who has worked in a state school for nearly 40 years writes that “ many private schools have been formed to cater specifically for special needs. They provide centres of excellence, often where there is a deficit regionally. Why risk losing them?” Why indeed?
The Government-created fee rise will make small community faith schools unaffordable for many Jewish and Muslim families. At present, some 370,000 children attend independent faith schools in England.
The prospect of this fee rise is a source of the greatest worry to our service families, who place our society so greatly in their debt. Some long-serving men and women in our armed forces fear that they will have to leave jobs they love. The 4,700 children for whom the Continuity of Education Allowance is being provided must not be made subject to VAT.
It is very far from certain that, by slapping VAT on school fees, the Government will get anywhere near the £1.5 billion it is seeking to recruit new teachers for state schools. The additional resources that state schools will need to teach more pupils could absorb much of the revenue gained from the VAT charge, and perhaps even exceed it.
Estimates of the number of children who will have to leave independent schools vary. The Government have not undertaken any assessment whatsoever. They are rushing ahead, without even waiting for the conclusions of the Office of Budget Responsibilty, which they have pledged to respect.
I invite support for the following propositions.All children with SEND should be exempt from the VAT charge.It should not be applied to service families receiving the Continuity of Education Allowance.Steps should be taken to protect small faith schools. Above all, VAT should not begin to apply before the start of the 2025-26 academic year. The date now proposed--I January 2025--has been widely and rightly described as cruel.
A full, independent assessement of the implications of our first-ever education tax should be carried out before it is introduced.
Is it not our duty to do all we can to protect the interests of children, all children everywhere?
One mother writes to me that “my child sat and watched an interview with Rachel Reeves, in which she stated that she is concerned with the 93 per cent of children in state schools and not the 7 per cent in independent schools. My child turned and asked why the lady doesn’t care about me.”
Is that not a truly heart-rending comment?
