Andrew Lewer (Northampton South) (Con) I beg to move, That this
House has considered independent school fees and VAT. It is a great
pleasure to serve under your chairmanship, Mr Henderson—I think for
the first time. I put on the record my thanks to the Independent
Schools Council and its superb chief executive Julie Robinson, not
only for the tireless campaigning that it does for the independent
education sector but for its work as the secretariat for
the...Request free trial
(Northampton South) (Con)
I beg to move,
That this House has considered independent school fees and
VAT.
It is a great pleasure to serve under your chairmanship, Mr
Henderson—I think for the first time. I put on the record my
thanks to the Independent Schools Council and its superb chief
executive Julie Robinson, not only for the tireless campaigning
that it does for the independent education sector but for its
work as the secretariat for the all-party parliamentary group on
independent education. I have been the chair of that group since
founding it in 2017, after moving from being an MEP to an MP. A
number of independent schools serve my constituents, including
Quinton House, Bosworth School, Northampton High School for Girls
and OneSchool Global.
More than 600,000 children are educated in the independent
schools sector in the UK, saving UK taxpayers more than £4
billion each year because those pupils are not educated in the
state sector. In addition, the independent sector has a total
economic footprint that amounts to £16.5 billion, supporting
328,000 jobs and £5.1 billion in tax revenue. Why is it that the
sector often gets bad press, despite its contribution to society
both economically and educationally? For many people, when they
hear the terms “independent school” or “private school”, they
immediately associate them with elitism, isolation and privilege.
Nothing could be further from the truth. Independent schools
today are modern, diverse and inclusive places that often provide
education and specialist provision where the state sector does
not go. Furthermore, independent schools are more connected to
society now than ever before, working with the state sector in
partnerships and widening access through bursaries.
(Penrith and The Border)
(Con)
I congratulate my hon. Friend on securing this really important
debate. Our independent schools do vital outreach work with
access bursaries and access to sports facilities. Many
hard-working families up and down the land make huge sacrifices
saving to send their children to independent schools. Does my
hon. Friend agree that the short-sighted Labour policy on VAT on
independent schools will compromise these schools, force some
parents to take their children out of them, and ultimately put
more pressure on our local state schools?
I thank my hon. Friend for that question, which is indeed the
major thrust of what I have to say. As chair of the all-party
group, I am delighted every year to sponsor the Independent
Schools Council’s annual “Celebrating Partnerships” report, which
gives parliamentarians and stakeholders from across the sector
the opportunity to come together to celebrate the fantastic work
that the independent sector does in partnership. Three quarters
of independent schools are now in partnerships with state
schools. That is not the old swimming pool every other Tuesday
afternoon for an hour or two; they are embedded, mutually
beneficial partnerships.
Given how influential and impactful the sector is for wider
society, it is in disappointment that I stand in opposition to
the Labour party’s policy position on independent education—the
introduction of a 20% VAT fee on independent school fees. I urge
the current Government and my Conservative party colleagues to be
robust in their stance of not imposing VAT on school fees. I look
forward to the Minister’s analysis of that, but given that the
Opposition are currently well ahead in the polls, and it is at
least possible that they could form a Government in the next
Parliament, it is important that this debate has been granted. It
is important that we take the time to scrutinise what I believe
is an ill-thought-out policy. Although I welcome the fact that
Labour’s plans for independent education under the right hon. and
learned Member for Holborn and St Pancras () are not as draconian,
undemocratic and questionable in law as they were when he served
in the shadow Cabinet of the right hon. Member for Islington
North ()—when it looked like the
party was trying to abolish the sector entirely—they are still
very worrying indeed.
The principle of parental choice is supported by article 2 of the
first protocol of the European convention on human rights, which
was incorporated into domestic law by the Human Rights Act 1998.
It says that
“the State shall respect the right of parents to ensure such
education and teaching in conformity with their own religious and
philosophical convictions.”
However, is that right to choose being assisted, if said choice
is made increasingly difficult by a huge tax rise? I do not think
it is. It is also a fundamental principle that we do not tax the
supply of education, and the Value Added Tax Act 1994 exempts
education, including nurseries and universities, alongside
independent schools. That principle is international in scope and
the UK would be an outlier if Labour abandoned that policy. For
example, EU nations, Australia and the USA do not apply sales
taxes to education.
Beyond the core principles, there are many reasons why the policy
could be harmful and doomed to fail. First, parents residing in
the UK who make the decision to send their children to
independent schools already contribute to the state education
sector by paying their fair share of taxes. I have made that very
clear in the Main Chamber when debating this subject, and the
repeated use of terms such as “tax breaks” and “tax reliefs”
should be avoided. Independent schools are taxed in the same way
as other education providers and charities, and they provide more
than £5 billion in tax annually, which is more than three times
what Labour thinks it will raise from VAT. UK parents who pay
school fees do so from already taxed income.
Now that the Labour party has put this policy forward, I am sure
we will hear today that it has done so because it believes in
educational excellence for everyone and not a reserved few.
However, by introducing the policy a Labour Government would
simply make independent schools even more elite than Labour
already perceives them to be by pricing out hard-working parents
who can just about afford to pay the fees to invest in their
children’s futures. Those who can easily absorb the 20% will do
so, and perhaps that is what the Labour party wants: to make
private schools more elite so that it is more difficult for
politicians like me to make the case for them.
I will use the jacuzzi and private jet analogy to demonstrate my
point. Many of us will never have a jacuzzi in our gardens, but
could probably afford to install one if we chose to do so. On the
other hand, a private jet is, for virtually everyone, an
unobtainable fantasy for a distant elite with no connection to
our lives. That is what Labour wants independent education to
be—the private jet, not the jacuzzi. Of course, that is purely
figurative as a parallel and not related to the crucial
importance of educational choice.
It has been said that these are not issues we should worry about,
and that independent schools can simply absorb the VAT increase
so that they do not pass it on to parents. That is a naive view,
with many independent schools up and down the country being very
small, operating on tight margins and unable to do that. A
quarter of all schools in the Independent Schools Council have
fewer than 155 pupils. They are not wealthy institutions that are
able to absorb VAT.
(Woking) (Con)
I congratulate my hon. Friend on securing this important debate.
Several headteachers of independent schools in my constituency of
Woking have come to me and said that they are worried that many
parents will not able to afford to keep their children at their
schools with the VAT increase, and one or two are worried about
the future of their schools. My hon. Friend has had conversations
with the independent sector and the groups representing it; has
Labour taken into account that there might be a massive increase
in students having to go to the state sector due to schools
closing, which would completely kibosh any potential financial
gains it is claiming?
It would. My hon. Friend’s point leads me nicely into my belief
that the naivety of Labour’s position is underlined by a hidden
agenda to have smaller schools in the midlands and the north
closed and absorbed by the state. Underlining that is perhaps the
fact that the shadow Education Secretary, since taking up her
post in 2021, has not visited an independent school with at least
the aim or willingness to discuss the impact of her policy. My
hon. Friend has spoken to people in the sector, as have I and
many other people here.
The unwillingness to engage speaks volumes. Who would propose
massive changes to the chemical industry or the high street
retail industry without taking the trouble to speak to people
involved in that sector to assess the impact? It is quite
unthinkable. I also question why the policy is aimed only at
taxing the supply of children’s education, which is arguably the
most pivotal, and not at education for adults via universities,
for example, or other forms of education such as private
tutoring, which is the alternative private education leg-up
provision of extra advantage that many on the left as well as not
on the left utilise. There are no plans for VAT there; I wonder
why.
Perhaps most important of all is the effect that the policy would
have on independent schools’ ability to operate. If independent
schools cannot absorb the VAT increase or parents cannot afford
the fees, many of them would have to close. That would be
disastrous for two important reasons. First, we would see the
children go into the state sector, increasing the burden on other
children and teachers. The Opposition believe that that can be
offset by funds raised by the policy, but we are yet to see any
consensus on the true impact.
The Institute for Fiscal Studies states that the policy will
raise half a billion pounds less than Labour has committed in
spending pledges. The education specialist think-tank EDSK puts
the likely revenue even lower, leaving Labour more than £1
billion overdrawn on its spending plans. Most worrying is the IFS
finding that the evidence of impact on children and families is
“quite thin”—alongside 30-year-old data, it relied on the
experience of Catholic schools in America—so it is tax first and
repent later.
I am sure we will hear that this is a bogus claim and that there
might not be a mass exodus, and that might be evidenced by the
fact that as inflation has risen and independent school fees have
gone up, we have not seen many children leave the sector.
However, the ISC has found that 20% of parents who currently send
their children to independent schools say they will be priced out
and have to educate their children in the state sector. Those are
the parents who will be making a difficult choice and might be
forced into pulling their children out of the schools they have
been educated in, and when they are at a key stage in their
education. Perhaps most strikingly, the Baines Cutler report has
calculated, using real data from schools and parents, that the
predicted income-related drop-off if the policy is enacted would
be nearly 100,000 children—one sixth of all the children educated
in the sector who need somewhere to be educated.
Even more crucial is the impact on independent schools that
provide specialist provision where the state sector does not
go—independent specialist schools with small budgets that educate
children with particular needs. Department for Education data
shows that there are more than 100,000 pupils receiving special
educational needs support in independent schools, some with
education, health and care plans and some without. Moreover, many
independent schools provide specialist faith schooling or
provision for military families—something I saw the benefit of in
my own education.
When it comes specifically to special educational needs and
disabilities provision, what we will see is that parents who can
no longer afford to pay the fees will seek out an EHCP if they do
not have one, which will lead to more pressure on families, on
local authorities at tribunal and on local authority budgets. I
am interested to know whether there has been any realistic impact
assessment of that.
If schools were to close as a result of the policy, the children
would not have the provision they need. It will very much be the
case that the schools will have to stop the excellent partnership
work they do in order to cover their costs, or reduce their offer
of bursaries to disadvantaged pupils, thereby reducing social
mobility and making these institutions even more elite. That is
the point. Such a regressive tax will seek to harm independent
schools on the tightest of margins.
Even if the policy’s impacts are not seen immediately, I fear
that the long-term negative consequences will be dire. It is the
schools that Labour are not thinking about that will be hardest
hit—small faith schools and special needs schools. That capacity
sees some special needs support for 96,000 children who are not
on an EHCP. Labour has exempted the EHCP pupils from VAT on fees,
but not other students with special educational needs. That is
96,000 children facing disrupted education, with state provision
further stretched and worse for all those who need it. Families
are therefore incentivised to apply for EHCPs. Labour should
exempt all pupils with special educational needs from VAT on
fees. If it does not, the pressures will be laid at its door.
Similarly, small faith schools up and down the country could not
be further from the stereotype that has been presented. They
often charge low fees—often lower to the taxpayer than the cost
of local state schools, because they are supported by local
congregations and voluntary efforts. They are frequently very
small, they cannot absorb VAT, and their families and supporters
cannot find 20% more at a moment’s notice. They will face deficit
and closure, and will be harder hit than the better-known schools
that I am sure many have in their heads when proposing this.
There is a slow-burn issue as well, whereby parents perhaps
persist for an extra year or two for a child who is in the
middle, but then decide not to go ahead for a child who has not
entered the system yet. There is also a danger of smaller schools
becoming insolvent—having to assess that the increased risks of
becoming technically insolvent prevent them from struggling on
and pushing through. This needs to be considered in the round and
not just as a standalone. Given that we have heard hardly
anything else about supporting education from the Labour party, I
am not sure voters are being presented with very much.
To conclude, independent schools play a vital role in educating
our children. They provide specialist provision and excellent
partnership work. The Labour party wants to pull all that up and
put it at risk, for the sake of raising a questionable £1.5
billion, which is not enough to offset the damage it will
inflict. I hope those listening who are in positions to influence
this will take these points away. I look forward to the Treasury
Minister’s further thoughts about the VAT details. We need to
ensure that this ill-thought-out policy does not put unnecessary
strain on hard-working families who want a better future for
their children.
Several hon. Members rose—
(in the Chair)
Order. I remind hon. Members that they should bob if they wish to
speak. I will have to impose a time limit of three minutes, as I
will have to call the Opposition spokesman at 5.15 pm.
4.47pm
(Hastings and Rye)
(Con)
It is a pleasure to serve under your chairmanship, Mr Henderson.
I congratulate my hon. Friend the Member for Northampton South
() on securing this important
debate.
Labour’s plans to charge VAT and end business rate relief for
independent schools is based on the politics of envy, from a
party that wants to crush aspiration and ambition. Labour says
its primary motivation is to generate revenue to invest in the
state education system and that the policy might raise £1.7
billion for that purpose. Well, Labour had better get building
more schools, because it intends to implement the policy as soon
as the right hon. and learned Member for Holborn and St Pancras
() enters Downing Street, with
no consultation or risk analysis. What a nonsense. The policy
will harm both the state and the independent sector, and there
will be an exodus of pupils into an increasingly stretched state
system, with some independent schools closing altogether.
We must not trust Labour with our schools. About 12 years ago,
the OECD “Education at a Glance” report found that expenditure on
schools as a percentage of GDP increased from 3.6% in 1995 to
4.5% in 2009. The OECD average was 4%. Billions of pounds of
spending went into schools under the last Labour Government, but
that huge increase in spending led to no improvement in student
learning outcomes. UK teenagers slipped down the league tables in
crucial subjects, while our schools became the most segregated in
the world, with Britain’s immigrant children clustered in the
most disadvantaged schools. Primary school class sizes were
bigger only in places such as Turkey and Chile, and there was an
alarming rise in children not in education, employment or
training. Taxpayers failed to get value for money and Labour’s
policies had little impact.
Labour will never understand that it is not just about money; it
is about leadership and structure. We have some amazing
headteachers in Hastings and Rye. I will not name them, but they
know who they are, and they work best with the support of
positive and effective Government policy, and with the support of
their academy trusts. In Hastings and Rye, 32% of schools were
rated as being good or outstanding in 2010, compared with 82% in
2022. There is more work to do, but it can be done, as we have
seen from the Conservative Government’s record, without
destroying our valuable independent sector.
I have two independent schools in my beautiful constituency of
Hastings and Rye: Claremont and Buckswood. Buckswood boards about
50 pupils from 48 different countries and has 200 local
day-school pupils. Both schools have lower fees for local
children, and they have a diverse mix of children, which
contributes to a rich cultural environment—one that would not
normally be expected in a coastal community. Thos schools enrich
our communities, to the benefit of all our residents.
(in the Chair)
I apologise to and for calling them earlier.
4.50pm
(Twickenham) (LD)
Thank you very much, Mr Henderson; it is a pleasure to serve
under your chairmanship. I congratulate the hon. Member for
Northampton South () on securing this debate.
My Liberal Democrat colleagues and I aspire to a scenario in
which the offering in all our state schools is so high—so
superior—that parents do not feel compelled to send their
children to the independent sector. It would be an education
system that enables every individual, no matter their background
or their needs, to flourish, succeed and fulfil their potential,
wherever they are educated. But as liberals, we are also a party
that has always championed choice, and it is important that
parents are able to choose where their children are educated, and
independent schools should always be one of those choices.
Let me be clear: we do not support ending the VAT exemption for
independent schools, for the very simple reason that we do not
support taxing education. As we have already heard, all education
provided by an eligible body, including university education,
music lessons and tutoring sessions, are exempt from VAT, and we
would not want VAT or any other tax to be charged on any of these
things. However, there needs to be a quid pro quo. Independent
schools should give back to their local community, in order to
retain that right; and, as we have heard, many already do. There
are many excellent examples of collaborative work around the
country. In my own constituency, Hampton School and Lady Eleanor
Holles School have an exemplary partnership with Reach Academy in
Feltham, sharing staff time, and mentoring and coaching of pupils
for medical school and other university places. The relationship
is about partnership and sharing not just swimming pools and
theatre spaces but, as I have said, specialist teachers and
specialist facilities.
That sort of ingrained partnership work benefits both the state
sector and the independent sector, and it needs to become the
norm for all. Removing the VAT exemption from independent schools
would reduce partnership work and also hit parents who have felt
that, for whatever reason, the state sector cannot meet their
children’s needs, especially if they have additional needs but do
not have an EHCP. I know of many examples of parents who have
scrimped and saved, or used a little bit of inheritance that they
may have had from their own parents, to send their child, who is
not thriving in a state school, to the independent sector, where
they are able to thrive. As we have heard, many independent
schools are not the Etons, the Winchesters or the Harrows; many
are small schools with fewer than 400 pupils.
We should all aspire to make the best investment we can in
education and to make every school as good as possible. Taxing
education is not the way to achieve that goal.
4.53pm
(Sutton and Cheam) (Con)
It is a pleasure to serve under your chairmanship, Mr Henderson.
I congratulate my hon. Friend the Member for Northampton South
() on securing this debate.
I draw the attention of the House to my entry in the Register of
Members’ Financial Interests. I will declare an interest of three
types: my partner is the headteacher at a prep school; she also
owns a house that backs on to one of the best-performing state
schools in Surrey, so inevitably her house price will go up when
selection for that school becomes selection by house price rather
than by academic achievement or fees; and I myself went to an
independent school—my father paid a fortune for this accent.
I would say two things about this. Economically it is not
sensible, and educationally it is not sensible either. Prep
schools in particular are already a fragile ecosystem, and most
have around 150 to 250 pupils. My hon. Friend the Member for
Northampton South talked about an impact assessment of what
happens if a few pupils drift away. I will tell hon. Members what
happens if 10 or 15 pupils leave a fragile prep school. That
school is perhaps not paying market price for its teachers’
salaries, and it has already opted out of the teachers’ pension
scheme, which accounts for around 28% of salaries.
Independent schools are the only ones paying in—it is a Ponzi
scheme—and some actuaries predict that that figure will go to 40%
because there will be more failures. If 10 or 15 pupils leave
that sort of school, it collapses. There will then be 150 pupils
who have to get educated under the state system in that area,
which may be a rural area with a small state school. There may be
1.1 million vacancies in state schools around the country, but
they are not equally distributed: something like 20% of secondary
schools are over capacity. Those are the best ones—the ones that
people want to get into.
Prep schools are already fragile. Those that go up to 13 are
already having to change their business models. This policy would
be another nail in the coffin of pupils’ aspiration, as we have
already heard. It would not lift life chances; it would just set
one group of children over another. The small amount of money
that that broad change will raise will not be as meaningful as
the Labour party thinks. It is better to look for other, more
collaborative ways, but let us not destroy the partnership
working that we have heard about. Let us not destroy the work
around using different sites, sporting facilities, expertise and
skills.
The IFS report states that private schooling tends to be
concentrated among those with the most income and wealth, but
“tends to” is doing a lot of heavy lifting there. A lot of people
struggle to ensure that their children get a better education,
and we should reflect on that. The shadow Secretary of State for
Education, the hon. Member for Houghton and Sunderland South
(), should go out and meet
some headteachers.
4.57pm
(Strangford) (DUP)
Congratulations, Mr Henderson; it is a pleasure to serve under
your chairship. I also congratulate the hon. Member for
Northampton South () on raising the issue.
In Northern Ireland, schooling is slightly different, in that we
still have a transfer test that allows entrants into grammar
schools. For that reason, there is not as great a preference for
private schools as there would be were grammar schools to be
removed. However, I am thankful that the DUP, with a now-working
Assembly, has a Minister in place to protect the education system
and retain grammar education for people of all classes and
backgrounds.
To declare an interest, back in the ’60s—I probably go back
further than nearly anybody in the Chamber—my mum and dad sent me
to a boarding school in Coleraine, which gave me five years of
good education. I am incredibly indebted to my mum and dad. In
the ’60s especially, we had no holidays, and our car was an old
banger that was kept forever—just so that their sons could have
an education. I thank them for that. It gave me a great chance in
this world, and I appreciate it.
Taxing private schools out of existence is not the route to take.
The education of children is charitable in the extreme, and the
only profits that are made are found in well-rounded children and
well-paid teaching staff, which should be the goal of every
school. That is what we should be looking at—nothing else. We
should not achieve that goal by raising fees to such an extent
that only the most elite can afford schooling, as in schools in
Switzerland, for example.
The boarding school on the periphery of my constituency of
Strangford is Rockport School, in North Down constituency. It
draws a number of international students to its doors. That can
only be good for the local area. It also generates money,
cultural exchange and social engagement. I would hate to see that
great school—its headteacher, Mr George Vance, cut his teeth at
our local grammar school, Regent House, in my constituency —left
in a position in which fees rise at an exorbitant rate and the
benefits of the school are lost. That would be a tragedy.
There are 16 private schools registered in Northern Ireland, and
there is a role for the sector. The work that they do deserves
support; we should not set out to tear the sector down by stealth
taxation. I am a believer in the public school system. My boys
all went to Glastry high school, my granddaughters go to the
local integrated school and my grandsons are in the local primary
school. I have faith in the schooling system, but that does not
mean that I want to abolish the smaller subsidised schools. The
VAT proposal is not only aimed against the ultra-wealthy. It will
go much further than that, which concerns me. With great respect
to what Labour is putting forward, I am concerned that it will
have a detrimental effect on the education and economy of this
great nation of the United Kingdom of Great Britain and Northern
Ireland.
5.00pm
(Broxtowe) (Con)
It is pleasure to serve under your chairship, Mr Henderson. I
thank my hon. Friend the Member for Northampton South () for bringing forward this
debate.
I will focus on the consequences of removing the current VAT
exemption for independent schools. It is clear that this change
would lead to a rise in school fees, as schools are forced to
pass on the cost to parents in order to keep running. That would
immediately mean that many parents, who may only just be able to
afford the fees as they stand, would no longer be able to
continue sending their children to private school. In fact, I
calculated that one of my local Nottinghamshire high schools
would lose around 20% of its children. Smaller schools would
struggle to survive at that rate and may close. That would mean
job losses and loss of choice for local parents regarding their
child’s education.
I was recently contacted by my constituent, Dr Sharmini, a local
school governor who is incredibly concerned about the potential
change. She emphasised that it is not the most wealthy and their
children who will be affected, but parents who work incredibly
hard and make sacrifices to send their children to independent
schools.
It is important to emphasise that this change would also have a
knock-on effect on non-fee-paying schools, which would see an
increase in pupils. That could mean larger class sizes and
greater resources being required in non-fee-paying schools. It
may also result in children having to move schools in very short
time spans.
I am a veteran, and this is the sort of thing that would affect
military families. They may have to move mid-school year, and
they make good use of independent schools and boarding schools
because of that. This change will have a large effect on the
lives of children who will have to move. We are removing children
from their teachers and friends, and for many that will be very
distressing.
My team spoke with the head of a local private school in
Nottinghamshire today. He had huge concerns about the use of the
school’s facilities. As it stands, sports facilities and
facilities such as halls are given over to a huge variety of
local clubs at no cost. He stated that if VAT came in, the school
would be forced to look at more economical ways of renting out
those spaces and would not be financially able to continue
lending them out for free.
That head also emphasised the difference between the big private
boarding schools and smaller independent day schools. It is the
small independent schools that will be hurt most by this change,
and many may not survive the loss of students. The focus of all
Members in this House must be on ensuring that every child has
the best possible education; that is what I will be focusing on
in Broxtowe.
On a point of order, Mr Henderson. I neglected to say earlier
that I might have an interest to declare, as my husband is a
governor of an independent school.
(in the Chair)
Noted. Thank you.
5.03pm
(Ruislip, Northwood and
Pinner) (Con)
It is a pleasure to serve under your chairmanship this afternoon,
Mr Henderson. I, too, congratulate my hon. Friend the Member for
Northampton South () on securing the debate.
I represent a constituency with five thriving independent schools
of the traditional private school variety; state schools that, as
academies, are independent schools; a significant number of
private special educational needs and disabilities schools; and
private nursery provision. My children have benefited from state,
private and privately funded state provision over the years, so I
have a direct interest in the subject the debate.
I want to focus particularly on the impact that the VAT change
would have on the very large sector of small independent schools,
on which so many parents rely. Ofsted has a rule that any setting
with two or more children present for the purposes of their
education must be registered as a school. In my constituency, I
have a stables—an equine centre—that provides equine therapy for
mute, autistic children. Those children are reliant on it,
because it is an environment in which they can gain educational
benefit. They have been placed there and funded by the local
authority, and that is simply not to be found in any other form
of schooling.
Across the country, there is a huge number of such schools, which
are legally registered, with an Ofsted number, and privately
funded. Many are not charitable trusts; in some cases, they are
businesses providing a particular type of apprenticeship or
educational experience for a specific set of special educational
needs. The impact of introducing VAT on the fees paid by local
authorities and parents for that huge variety of provision would
be absolutely enormous. A number of my constituents who have
children with quite profound special educational needs are deeply
concerned about the impact that this change would have on not
just their household budget but the availability of the specific
specialist provision on which they depend.
I have some sympathy with the argument that the element of
education that is hotel costs in boarding schools is not strictly
an educational purpose, and I have heard it advanced across the
sector. However, it is clear that the availability of highly
specialised private provision would be jeopardised profoundly by
imposing a policy of putting VAT on all fees. The cost would
directly hit the taxpayer and mean that so many of our
constituents who feel that they have at last found the right
setting for a child with profound needs, often after many years
of searching for it, would see that put at risk by a policy of
introducing VAT. I commend the Government on strongly resisting
such a policy, and I hope the Minister will restate that
resistance this afternoon.
5.06pm
(Fareham) (Con)
I thank my hon. Friend the Member for Northampton South () for leading the debate.
Frankly, this Labour party policy is a viciously cynical ploy to
allow Labour to masquerade as class warriors and as the
working-class heroes taking on the elite. However, the reality is
that they are champagne socialists pretending to be social
justice champions. This policy is not about education, outcomes,
the welfare of children or supporting the British people: it is
about division and removing choice. It will harm educational
outcomes and cause hardship. Far from being the class warriors of
our age, Labour will become the party that kills off social
mobility through this tax on aspiration, personal choice and
responsibility, and social mobility.
There are three reasons why the policy is misguided. First,
independent schools are positive for the economy. They contribute
£16 billion to the economy, support 300,000 jobs contributing £5
billion in tax revenue, and save the taxpayer £4 billion by
educating pupils outside the state sector. All of that would be
put at risk by this ill- thought-out policy. Secondly, special
education schools will be hard hit by this punitive policy. There
are 96,000 pupils at SEND schools who are not on an EHCP and,
simply put, they will be put at risk by the policy. Where will
those children go when these special schools are put out of
business? Many specialist schools in the state sector are already
over-subscribed. Lastly, this tax on aspiration will simply push
many poorer pupils out of good-quality schools, and parental
choice will be destroyed.
I feel passionate about this policy. I stand against it because
of my own personal educational journey. We will all have personal
experiences and views informed by our own education, but mine is
apposite. My parents were working-class people; they were
migrants who came here with nothing. They themselves had poor
educations in Mauritius and Kenya, so they valued the opportunity
to give me a good chance at getting educated. I started in a
local state school, where the teachers would go on strike every
week, outcomes were poor and discipline was bad. However, my
parents had a choice. Through scrimping, saving and sacrifice,
they got me into a small independent private school. From that
school, I got into Cambridge, I practised as a barrister and I
made it to Parliament. I would not be here if it were not for
their sacrifice and the great small private school that my
parents had the choice to send me to.5.09pm
(Worcester) (Con)
I congratulate my hon. Friend the Member for Northampton South
() on securing this important
debate. I speak in my capacity as the Chair of the Education
Committee.
This is slightly awkward, because we do not, of course, look at
policy proposals that are not from the Government. However, we
had a debate about a year ago in the Chamber of the House of
Commons where the Labour party proposed to bypass my Committee
and appoint their own to look at this policy proposal. What was
interesting in that debate, as in this one, was how few Labour
Back Benchers turned up to support what is supposed to be their
flagship policy. This issue has not been raised by any of the
Labour members of the Education Committee during my time as
Chairman. In the circumstances, I find that very surprising.
I am concerned about this issue primarily because of its impact
on our publicly funded schools. I seriously worry that Labour has
not done its sums properly and has not brought the impact of the
£6,000 a year required for the revenue funding, let alone the
capital expense of expanding those schools, into its
calculations. My county council is in the process of
commissioning a £40 million secondary school to meet the demand
for places that we already have. No calculation appears to have
been conducted of what the cost would be of the extra places
required by this policy.
When it comes to SEND, I expect the Labour Front-Bench spokesman
to say that Labour will exempt specialist settings from its VAT
proposals. I certainly hope that that is the case, and that is
what was indicated in our previous debate. However, I do not
think that the revenue calculations carried out by the Treasury
some years ago on the basis of imposing 20% VAT on all charges
for independent schools have taken that into account. I would
love it if the Labour spokesman could update us today on what
reduction in income Labour expects if it does exempt specialist
settings from this policy and on whether that will apply to all
of them, including the alternative provision settings that my
hon. Friend the Member for Ruislip, Northwood and Pinner () referred to. I recently
visited one at the Gloverspiece Mini Farm in the constituency of
my hon. Friend the Member for Mid Worcestershire (), which would like the
assurance that it will not be clobbered by a 20% increase in VAT
and in fees.
When it comes to SEND pupils, we are talking not just about those
in specialist settings. Many of my mainstream independent schools
in Worcester provide support to pupils who have identified
special educational needs but not an EHCP. If those people are
driven out of the independent sector by higher fees, they are
likely to seek EHCPs, putting pressure on our health system and
our local authorities, which are already overloaded—I will
campaign, along with colleagues, to try to increase the resources
for them.
As Chairman of the Education Committee, I want our state
education system to be one of the best in the world—it already
is, but we can make it even better. We should focus on doing
that, rather than on creating the misleading impression that
clobbering the independent sector by imposing VAT, which no
Labour Government in the last century have ever proposed to
introduce, and which none of our European or English-speaking
peers apply to independent education, is somehow the
solution.5.12pm
(Dulwich and West Norwood)
(Lab)
It is a great pleasure to serve under your chairmanship today, Mr
Henderson. I congratulate the hon. Member for Northampton South
() for bringing forward this
debate on independent schools and VAT. Many Members have made
contributions about the role that independent schools play in
their communities. In my own constituency, thousands of children
receive a high-quality education at independent schools including
Dulwich College, James Allen’s Girls’ School, Herne Hill School,
Alleyn’s School and others besides.
I will address some of the comments made by hon. and right hon.
Members this afternoon. On the analogy made by the hon. Member
for Northampton South about private schools and the difference
between private jets and jacuzzis, we would want every school to
represent and fulfil the aspirations that parents have for their
children. That is at the nub of this debate, which is about the
quality of education received by the 93% of children who attend
state schools in relation to the quality of education received by
a privileged 7% of children. [Interruption.] I am going to make
some progress, I am afraid—I will not take interventions right
away.
We all want the best education for our children; every single
parent wants the best education for their child. That is why the
next Labour Government will do what previous Labour Governments
have done: drive up standards in our schools and put education
back at the centre of our national life so that we can break down
the barriers to opportunity across our country. This debate is
focused specifically—[Interruption.] I do not know who was
chuntering from a sedentary position about what happened last
time, but as a London MP I can tell them exactly what happened
last time: it was called the London Challenge and it transformed
education in the state sector in my constituency and across
London. We went from a situation where our schools were failing
under the Conservatives to a situation where they are now
delivering brilliantly for all our children.
As many hon. Members have mentioned, the Labour party is
committed to levying VAT on independent schools and ending their
business rates exemptions. We have committed to doing that
because we believe in driving high and rising standards in all
our schools. Across this country, more than nine in 10 children
attend state schools. The independent Institute for Fiscal
Studies reported last year on policies in relation to VAT and tax
exemptions for private schools. In brief, it found that our
proposals would have little effect on the number of children
being educated in private schools, but would lead to a net gain
to the public purse of at least £1.3 billion per year. I
appreciate some of the concerns raised in the debate today, but I
urge right hon. and hon. Members to look in more detail at the
IFS report’s findings.
Neil O'Brien (Harborough) (Con)
I just want to press the Opposition Front Bencher on a specific
point. There are some brilliant special schools in my
constituency. The Opposition are saying that they will exempt
children with an EHCP from their tax, but they are not saying
that they will exempt all children at special schools from the
tax. Why not?
There is a very simple reason for that. It is the way we avoid a
loophole whereby any school can claim that it is a special
school. Without there being an independent test of the places
that are provided, any school could claim that it was a special
school, and that would provide a loophole that we do not—
Neil O’Brien
rose—
I will not give way again. It would provide a loophole that
schools could use to evade the policy.
The share of pupils being educated in private schools has
consistently remained around 6% to 7%, despite fees increasing
above inflation year on year for many years. Indeed, independent
school fees are 55% higher in real terms now than 20 years ago.
Although we do not believe the scaremongering that there will be
an exodus of pupils into the state sector, our state schools
would be able to cope with an increase in their numbers. Across
England, overall pupil numbers are due to decline by at least
100,000 per year until 2030; the total drop is higher than the
number of children currently attending private schools.
Will the hon. Member give way on that point?
I give way to the Chair of the Select Committee.
Mr Walker
That is very kind; I am grateful to the hon. Member for giving
way. I just want to make the point that, yes, the overall numbers
are declining, but that is primarily in primary. The demographic
bulge, as she well knows, is coming through into secondary
schools, and secondary schools in many areas of the country are
full. How does the Labour party plan to deal with that?
As the hon. Member rightly points out, what happens in primary
flows into secondary, so secondary schools across the country,
including secondary schools in my constituency, are absolutely
aware of the drop in numbers that is coming down the track, and
we are seeing secondary schools in London closing—two of them
this year—because that flow is starting to affect them.
The Labour party believes in parental choice, but the
conversation today has to take place with fairness in mind. In
2022-23, average independent school fees were £15,200, but
average state school spending per pupil was £8,000. The gap in
funding between independent and state school spending has more
than doubled since 2010. With the £1.3 billion of funding that
would be raised each year from our measure, we could
significantly increase school spending, allowing the Government
to drive high standards across our state schools too. The
Government are consistently missing their targets for teacher
recruitment and face teachers leaving the profession in droves.
We would use that money to recruit and retain more than 6,500
additional teachers.
There is considerable evidence of the need to improve and the
benefit from improving teacher training, so Labour will work with
schools to deliver a teacher training entitlement, throughout
every stage of a teacher’s career, to deliver evidence-based,
high-quality professional development.
We need to look again at school inspection and improvement—
(in the Chair)
Order. I need to stop you there, Ms Hayes, and call the
Minister.
5.19pm
The Financial Secretary to the Treasury ()
It is a pleasure to serve under your chairmanship, Mr Henderson.
Please allow me to start by congratulating my hon. Friend the
Member for Northampton South () on securing the debate. What
a pity we have only 60 minutes, because there was so much more to
say here. We heard some fascinating and thoughtful contributions
on the matter of independent school fees and VAT.
It will not surprise anyone present to hear that I agree
wholeheartedly with Government Members, and I am very pleased to
hear from our Lib Dem and DUP colleagues, who support the
Government’s policy to allow independent school fees to be exempt
from VAT for the many valid and obvious reasons expressed by hon.
Members and right hon. Members today. Those include the
incredible impact that they have on communities, the partnering,
their impact on so many people’s lives, and the fundamental
principle of choice.
I am afraid that what we have heard from the Opposition is what
we hear consistently. Perhaps we might all be sighing with relief
soon when we get the inevitable flip-flopping on this policy—I do
not believe for one minute that it is wholeheartedly supported by
Opposition Members. It is just virtue signalling of the highest
order. It is complete left-wing populist virtue signalling by the
Opposition, but the British public see straight through it. This
Government understand the vital role that education plays in all
our lives. Just this year, school funding will total about £57.7
billion, and next year it will be £59.6 billion. I am very proud
to say that that will be the highest ever real-terms spending per
pupil under the Conservatives.
(South Holland and The Deepings)
(Con)
I am grateful to the Minister for giving way; I learned as a
shadow Minister and a Minister that it is better to be gracious.
The Minister will understand that one of the best arguments for
independent schools is that they often innovate. My right hon.
and learned Friend the Member for Fareham () was involved in
establishing a school that innovates and breaks new ground. From
Steiner schools to Bedales to Summerhill, those schools could
only exist in the independent sector. How does the Minister think
that the Labour party perceives that, or does it not perceive it
at all?
My right hon. Friend, as always, talks very sensibly about this.
The independent sector is a major contributor to our ecosystem.
Of course, many teachers flip flop between the different sectors;
the innovation in the private sector can also help the state
sector, which is one of the many benefits that we have heard
about today. In terms of the broader performance in the education
system, not only do the Opposition consistently talk down the
economy, our constituencies and our businesses but they also talk
down our teaching profession. Actually, it is incredibly
successful and we should be proud of what teachers have
achieved.
Our commitment to quality education has seen 89% of all schools
achieve “good” or “outstanding” at their most recent inspection,
an increase from 68% back in 2010 under Labour. In the programme
for international student assessment, our rankings for reading
and maths improved by 10 places from 2015 to 2022 to ninth and
10th across the Organisation for Economic Co-operation and
Development countries. Within that mix, as we all know, England
performed better than Labour-run Wales or SNP-run Scotland,
despite their higher funding. If we want to see what would happen
in education under Labour, all we need to do is look to Wales—it
is not an impressive performance. In the latest paediatric
adverse childhood experiences and related life-events screener
assessment of reading for 10-year-old students across 57
education systems, England ranked fourth internationally. I think
we can all accept that those are good things.
This Conservative Government believe that there is a broad public
benefit in the provision of education. That is why many education
and training services are exempt from VAT, which includes an
exemption on independent school fees. Labour does not seem to
recognise the public good, as my right hon. Friend the Member for
South Holland and The Deepings just mentioned. It wants to charge
VAT on school fees and end business rates relief for private
schools, taxing aspiration and inevitably putting more pressure
on state schools.
(Bassetlaw) (Con)
I am very blessed to have two excellent independent schools in my
constituency, Worksop College and Ranby House, and I speak as a
former head of an independent school myself. We also have some
excellent state schools at the Outwood Grange Academies Trust
that give outstanding opportunities to local pupils. Does the
Minister agree that the knock-on effect of this is not spoken
about enough? Labour is actually adding to the capacity problems
and neglecting the state sector in what it is doing to the
independent sector.
My hon. Friend makes a really important point that has been
repeated by many colleagues today. An introduction of 20% VAT can
have two impacts: it will either push up prices or lead to
cutting costs somehow. It is intuitively obvious that, if we push
large numbers of pupils from the private sector into the state
sector, it will inevitably put pressure on the state sector and
therefore cost members of the public even more. The numbers
suggested by the Opposition simply do not stack up. It is an ill
thought out policy. The full knock-on impact has not been
properly considered. VAT is an incredibly complex area. It is not
simple to make blanket policy without considering the full
impact.
Not every private school is some kind of Eton—a point made by my
hon. Friend the Member for Worcester (Mr Walker) and several
other hon. Members. There are exceptionally vulnerable people in
very deprived areas of the country who rely on our private
schools to provide the type of education they cannot get in the
mainstream system.
It is well known that many of our major independent schools such
as Eton and Harrow give 100% bursaries to children from
disadvantaged areas to give them a chance to skill up and to
benefit for their own communities. That is amazing.
My hon. Friend is absolutely correct; the broader societal
benefit of many of our private schools is considerable. That is
one of the reasons why many, although not all, have charitable
status. They provide all sorts of benefits, including through
opening up for sports provision.
The Government are not alone in having concerns about Labour’s
current policy. Labour’s own shadow Chief Secretary to the
Treasury, the hon. Member for Bristol North West (), spoke out against its
planned tax rise before he joined the Front Bench, telling
students that he did not believe the policy would bring in the
money that his party was promising. Of course, that has not
stopped Labour from spending the money several times over
already, and it does not have a plan to pay for the potential
incremental costs.
I will bring my comments to a close, but I must express a slight
disappointment: much as it is always a pleasure to have the hon.
Member for Dulwich and West Norwood in this Chamber, I am
normally faced in these debates by my opposite number, the hon.
Member for Ealing North (). I must share an irony in
that situation: I stand here today as a proud product of a
comprehensive state school education nevertheless supporting the
role of private schools in the UK and the principles of freedom
of choice, aspiration, opportunity and social mobility.
My Labour counterpart is a product of the private school system
yet is advocating a policy that could potentially restrict access
to the very system from which he has himself benefited, as indeed
have many Members on the Opposition Benches. I find that quite
ironic and hypocritical, but I will never criticise somebody for
the choices made by their parents. We do not do that on this side
of the Chamber, but a little bit of humility in this debate might
be appreciated. A good education for all is a priority for this
Government, and I hope hon. Members from across the House will
work with us to deliver it.
(in the Chair)
, you have two minutes to wind
up.5.27pm
I want to express my sincere thanks to so many colleagues. I had
thought about having an Adjournment debate on this subject but I
am so pleased that, rather than standing in the Chamber talking
to myself, I have a large number of people in Westminster Hall to
take part in the debate and make such useful and constructive
contributions.
The proposed policy fails on the principle of freedom of choice
and the principle of education being free of VAT. The idea of
saying, “Well, we don’t want VAT on education apart from on the
bits that don’t we like—apart from on the bits that we can give a
bit of a class-warrior go at,” also fails in practice. For every
report in one direction, there are others: the EDSK report and
the Baines Cutler report are both independent and carefully
researched reports that prove that this money, which has been
spent dozens of times already, does not actually exist in the
first place.
To me, the issue feels like the current Leader of the
Opposition’s version of foxhunting. He needs to come up with
something red-meaty to throw at his left to say, “Look, we’re
still socialists and we’ll bash the rich and the elite.” did it with foxhunting, and now
it is independent education. The difficulty is that this issue is
so much more profound and more damaging than even that issue,
which did cause problems for rural communities. This is much
worse, much more broadly based and much more damaging.
I am delighted that so many colleagues have been able to pick up
so many key points. The point about special educational needs
that was made by several colleagues is particularly potent, and I
shall certainly try to take that up in my ongoing work as chair
of the all-party parliamentary group on independent
education.
Question put and agreed to.
Resolved,
That this House has considered independent school fees and VAT.
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