Labour’s VAT raid will force private schools to close, education chief warns

Sir Keir Starmer, the Labour leader, talks to children in a classroom
Sir Keir Starmer said the policy would be implemented from day one of a Labour government - Jacob King/PA

Labour’s planned VAT raid will force private schools to close, an education chief has warned, as Sir Keir Starmer said he would roll out the policy “straight away”.

Rudolf Eliott Lockhart, the chief executive of the Independent Schools Association (ISA), said many smaller institutions were already on a financial “knife edge” and would be put out of business by the 20 per cent tax on fees.

Smaller, less well-known schools, including those for children with special educational needs and leaders in specialist subjects, were particularly vulnerable, he warned.

It came as head teachers told The Telegraph that parents were already cancelling places for September, following news of the July election. Others are scrambling to pay fees in advance to avoid the tax.

Asked on Friday if the policy would be implemented on “day one” of a Labour government, Sir Keir told Today on BBC Radio 4: “As soon as it can be done. It is a question of the timetable in Parliament. But these steps are intended to be done straight away.”

The party has claimed the policy – originally set under Jeremy Corbyn’s leadership – will raise £1.7bn, with £1.6bn coming from VAT and £100m from scrapping business rate relief.

However, Labour has given scant detail as to the timing of its implementation, nor the extent of any exemptions, leaving private schools unable to plan their budgets.

Mr Eliott Lockhart, whose association represents 660 mainly smaller schools, said: “In a sector our size there are always some schools, sadly, who close each year.

“This policy will inevitably increase the number of schools that are in that category.

“What’s not clear is how much it will increase by.

“Labour hasn’t fleshed out the policy, so we’re looking at tea leaves and trying to work out from different speeches that labour figures have made about what the policy is likely to be.”

Silas Edmonds, the principal at Ewell Castle School in Surrey, said parents of pupils with offers to join in September have already begun to pull out because they are “too worried” about the cost and uncertainty. Others, the headteacher said, are rushing to pay upfront.

Mr Edmonds said: “Several year seven families and families of pupils who would have been taking places in sixth form have withdrawn because they are just too worried about this additional cost.”

The principal of the £20,193-a-year school wrote to parents this week after Rishi Sunak’s announcement to warn them that while they are “hoping for the best” they are “preparing for the worst” if Labour wins the election.

“We are looking at our finances to see if there is any kind of buffer we can build in to meet parents halfway but it is going to be tough. I’m really hoping they [Labour] will see sense and realise it’s actually going to cost the Government long term.”

Last week the Telegraph revealed that Labour’s proposed VAT raid was likely to have cost the taxpayer approximately £22m already, after the Independent Schools Council revealed that nearly 3,000 fewer pupils started at private schools this academic year compared to 12 months earlier.

The Independent Schools Council, the umbrella body for the sector, has previously forecast that 10 per cent of pupils could be forced out of private schools within a year of the tax being imposed.

Loveena Tandon, who has two sons in private school and helps run a grassroots parents’ campaign called Education not Taxation, said the group’s petition calling on Labour to scrap the VAT hike had garnered an extra 2,000 signatures in the 24 hours since Mr Sunak called the election.

Ms Tandon, whose children attend private schools in London and Surrey, has calculated a 20 per cent rise in fees will leave her having to find £14,000 per term.

“A lot of parents are already inquiring about state schools. Everyone is doing whatever they can but the bottom line is a big chunk of parents cannot afford this,” she said.

Mr Eliott Lockhart said there was particular uncertainty among schools providing significant special educational needs provision.

Labour had suggested that such schools might be exempt from the tax, but a more recent speech suggested that it would be only pupils formally diagnosed as SEN that would be exempt.

However, pupils with an Education, Health and Care plan (EHCP) are thought to represent as little as 30 per cent of those in receipt of SEN provision.

“If these schools are put out of business because the pupils who aren’t on EHCPs have parents who can no longer afford the fees, it doesn’t exactly do any good for the pupils who are on EHCPs,” he said.

Meanwhile British private schools are increasingly looking overseas to boost their income, with many of the most famous opening international campuses.

Uppingham is set to unveil a ten-acre campus in Cairo this September, and Dulwich College, Harrow and Shrewsbury are among the schools with branches in the Middle East and South East Asia.

Last week a delegation from Saudi Arabia, led by the Kingdom’s education minister, came to London to talk about Britain’s schools and universities and the possibility of new partnerships.

David Woodgate, the chief executive of the Independent Schools Bursars Association, which represented 1,100 private schools, criticised Labour’s costing of the policy. He argued the party has not taken into consideration the cost to the state if tens of thousands of private school pupils are moved to the state sector.

“The figure could be well under £1bn in reality which is not very much money to fund the policies which Labour wants to fund from it,” he said.

Labour was approached for comment.