Labour tells private schools to ‘make cuts’ as VAT raid looms

Schools like Harrow will see their fees jump in Labour's possible VAT raid
Schools like Harrow will see their fees jump in Labour's possible VAT raid - Peter Dench/Getty

Private schools must make cuts to cope with Labour’s planned VAT raid as the state sector was forced to by the Conservatives, Rachel Reeves has said.

Labour plans to impose 20 per cent VAT on private school fees if it wins the general election, with Sir Keir Starmer pledging to roll out the policy “straight away”.

It has prompted a backlash from private school headteachers and parents, who are warning that it could lead to an exodus of pupils to the state sector and force the closure of some private institutions.

Asked about concerns over the VAT raid by The Telegraph on Sunday, Ms Reeves dismissed them, saying: “I’m sure that private schools can make efficiencies in the same way that state schools have been making efficiencies this last decade or so.”

Her comments were criticised by independent schools and Tory MPs, with Gillian Keegan, the Education Secretary, describing Labour’s policy as the “politics of envy”.

She said: “Keir Starmer has admitted that Labour’s flagship education ‘pledge’ is entirely unfunded and Rachel Reeves still needs to ‘find the money’ to pay for the thousands of additional state school places that the policy will need.

“Ultimately, this is more proof that Keir Starmer hasn’t changed Labour as much as he likes to claim he has. This is the same old Labour Party, they have taken pupils backwards in Wales and are now exercising the politics of envy, with unfunded policies that will punish hard-working parents who can no longer send their children to their school of choice.

Private schools must make cuts to cope with Labour's planned VAT raid, Rachel Reeves said
Private schools must make cuts to cope with Labour's planned VAT raid, Rachel Reeves said - Temilade Adelaja/Reuters

“The choice is clear: stick with the plan that is working for a safer, more secure future with Rishi Sunak. Or, go back to square one with Keir Starmer and the politics of envy.”

Alton School in Hampshire last week announced it would shut this summer. The school said in a statement on its website that “adverse political and economic factors” had drained pupil numbers, making it “unviable”.

Other private schools also warned that parents are cancelling places for September amid fears Labour will be in power before the start of the new school year.

It has also emerged that the parents of more than 100,000 children with special educational needs face being unfairly taxed under Labour’s policy.

One in five private school pupils receive specialist support, with the vast majority not having the written certification that would make their families exempt from paying the planned VAT on school fees.

Brendan Clarke-Smith, a former teacher and education minister, said: “Rachel Reeves needs to realise that the efficiencies schools will have to make will be through scrapping bursaries and scholarships for those less well off.

“Many hardworking parents, who already make efficiencies and work hard to pay for their child’s place, will now be unable to afford the fees full stop and have to move their children to another school.

“We’ve already witnessed the closure of one school this week due to concerns over Labour’s plans.

“Financially it just doesn’t stack up and will simply add unbearable pressure to the state system, meaning state pupils also lose out. You can’t trust Labour with our children’s education.”

Gillian Keegan described Labour's plans as the 'politics of envy'
Gillian Keegan described Labour's plans as the 'politics of envy' - ANDY RAIN/EPA-EFE/Shutterstock/Shutterstock

Julie Robinson, chief executive of the Independent Schools Council, said on Sunday: “We remain concerned that Labour’s tax policy will not raise the money it has promised our state colleagues. It risks leaving them underfunded and oversubscribed.

“Independent schools have been working hard to keep fees affordable to parents – as evidenced by the below-inflation fees rise seen last year.

“While they will look to make efficiencies, between two-thirds and three-quarters of any school’s budget goes on staff, who are the most valuable resource in any school.

“Rather than taxing education, we want to work with Labour on our shared goal of a great education for every child, building on the more than 9,000 partnerships already in place across schools in the UK.”

Speaking to The Telegraph at Ossett rugby club in West Yorkshire on Sunday, Ms Reeves said the private school VAT plan would benefit state schools by funding more teachers.

She said: “We know that our state schools are in a terrible state after 14 years of Conservative government and the cuts to education funding.

“So this is about paying for 6,500 additional teachers in our state schools to ensure that all children get the very best start in life.”

Ms Reeves said last year that the new policy, which she hopes will generate £1.7 billion to spend on state education, would be introduced in her first budget.

Asked about the closure of Alton School, Liz Kendall, the shadow work and pensions secretary, said: “I don’t know the details of that case and the finances of the school and what’s really happened, but I do know that children in all schools deserve to have the teachers that they need, and the curriculum and subjects they need to get the best possible education.

“And that we are saying, you know, we will end the tax breaks. The private schools have to put the money into our state schools to recruit those 6,500 new teachers in key subjects, to give children a better start in life.”

Asked about a prediction by the Institute for Fiscal Studies that 40,000 pupils could leave the private system and join state schools, she said: “We’ve had other people make predictions that actually this money can be raised and it wouldn’t necessarily have that impact.”