Military families told to find cheaper schools after VAT raid on fees

Army sign - Military families told: find cheaper school after VAT raid on fees
Army sign - Military families told: find cheaper school after VAT raid on fees

The Government has advised military families on how to find cheaper private schools if they are priced out by its VAT raid.

In leaked internal communications circulated to serving members of the Armed Forces, parents were given guidance on how to switch schools if they were hit by fee increases as a result of the policy.

The memo, posted on the Ministry of Defence’s (MoD) internal DefNet earlier this week, said: “If you need to change your child’s school due to affordability, contact the pay and allowances casework and complaints cell.”

It offered another point of contact for anyone who required “specific educational advice” because of the VAT changes.

It comes after the Treasury refused to grant an exemption for military families and diplomats who send their children to boarding schools as part of Labour’s policy to reverse a long-standing exception that means private schools do not have to pay 20 per cent VAT.

Budget documents said the Continuity of Education Allowance (CEA), a form of taxpayer-funded support to pay up to 90 per cent of service families’ private school fees, will instead receive extra funding.

The Government, however, has not yet spelt out how much this will be and critics have warned the measure will not shield military families from higher fees.

‘This isn’t a lifestyle choice’

The Telegraph understands both the MoD and the Foreign, Commonwealth and Development Office (FCDO) have not yet worked out how much to increase the CEA, which usually receives an annual uplift to reflect fee hikes.

A senior defence source told The Telegraph the VAT raid was a “nasty policy” at a time when the military cannot afford to keep losing personnel.

“This isn’t a lifestyle choice, it’s essential for people who are forced to move because of their service,” he said.

“This will hit ordinary soldiers hardest, far more of them use it than officers do. It will undermine retention because, with the added cost of VAT, children will end up changing schools multiple times when we need mum or dad to move to a new posting.”

The support measure, which is designed to provide stability for children whose parents frequently travel for work, is currently capped at £27,240 for senior school pupils. It means parents often still have to pay thousands of pounds to send their children to boarding school while they are away on service.

The departments have informed military parents they will receive more information about the CEA uplift ahead of the tax raid coming into force on Jan 1 2025.

The internal memo to military families earlier this week admitted the Government will only be able to offer military families “some protection” from fee increases.

“Whilst the CEA cap uprating will provide some protection from fee changes as a result of the VAT exemption being lifted, the parental contribution may also increase [if] schools choose to pass this on,” the memo said. “Some claimants may need to consider this before the policy takes effect.”

‘Exemption for military families’

The internal document also said the Government would consider “potential adjustments” to the scheme at Ms Reeves’s next spending review in the spring, amid warnings that service personnel could be driven out without further support.

James Cartlidge, the shadow defence secretary, called on the MoD to explain to military families exactly what impact the VAT hike will have on them.

“The Government really need to let service families know where they stand, and sharpish,” he said.

“Labour are rushing this terrible tax through, so they have a duty to protect military personnel fully from its consequences. But this memo implies that they won’t be fully protected.

“I obviously oppose the tax wholesale, but this uncertainty shows that if it’s going to happen, the simplest step would be an exemption for military families from VAT on school fees, ending the uncertainty’.

The issue comes amid a major retention and recruitment crisis engulfing the military.

All three services have have suffered a staffing crisis, with the Royal Navy suffering the most.

A new Strategic Defence Review, which is being conducted by the MoD and is due to be published early next year, will address recruitment problems as well as pointing to how it plans to focus the military on the changing nature of conflict.

Lord West, the former head of the Navy, benefited from CEA whilst serving because he knew the discomfort of having a disrupted childhood.

He said: “When I was a child, my father was a civil servant for the Royal Navy, so we moved all over the place but I was not eligible for this scheme and I kept changing schools. I didn’t enjoy it one dot as a child, I found it really quite hard and I didn’t want my children to suffer that.

“The assistance enabled me to afford a boarding school but only just, it wasn’t easy, it was expensive. By the time you do it and pay all the extra money that comes with those schools it is hard graft.”

He called on the Government to reassess whether the VAT policy was worth it.

“How much money are we actually saving considering how much upset it will cause?” he said. “We need to look after our people in the military more than ever and need to look carefully to make sure things are fair and equitable.”

Fears more will leave Armed Forces

Lord Dannatt, the former Army head, warned that the way the MoD was rolling out the policy would have a negative impact on retention, an issue which has engulfed the military.

“It is unfair especially to children who may have to change boarding schools,” he said.

“A kinder policy – and bear in mind all services people are working people – would be to allow children to stay at their current schools even if future children should be directed to less expensive schools. But that will still see an exit by a number of parents who want the best for their children.”

Another army official called for military families to be granted a similar exemption to children with acute special educational needs. The Government announced last year that councils who pay private school fees for pupils with special education plans will be able to reclaim VAT once the policy comes into force.

The Army figure told The Telegraph that failure to offer further support would drive soldiers and even senior officers out of the Armed Forces.

The Army Families Federation wrote to the Treasury in September warning that many “will now consider leaving” unless the Government rolls out concessions.

The charity, which supports soldiers and their families, said a poll showed that 70 per cent of those with privately educated children would quit the forces without further support.

An MoD spokesman said: “We greatly value the contribution of our serving personnel and we provide the Continuity of Education Allowance to ensure that the need for the mobility of service personnel does not interfere with the education of their children.

“In line with how the allowance normally operates, the MoD will continue to pay up to 90 per cent of private school fees following the VAT changes on 1 January by uprating the current cap rates to take into account any increases in private school fees.”