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Private schools would call themselves special schools to exploit VAT loophole, says Labour

A group of schoolgirls walking
A group of schoolgirls walking

Labour is refusing to exempt all special needs pupils from its VAT raid because private schools would exploit a “loophole” to dodge the levy, a shadow minister has said

Sir Keir Starmer is planning to levy 20 per cent VAT on private school fees if Labour wins the next election, including on independent special schools, which cater for children with special learning needs and disabilities.

Shadow ministers have promised to exempt fees for children with an education, health and care plan (EHCP), which are issued by local authorities and detail the support they require.

However, more than 1,600 children in independent special schools do not have an EHCP, which can take years to obtain.

Helen Hayes, a shadow education minister, told MPs that special schools would not be exempt from VAT on fees because Labour believes private schools would exploit a “loophole” by claiming to be special schools.

Defending the policy during a Westminster Hall debate, she said: “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 schools could use to evade the policy.”

Parents with children at special schools who are already struggling to pay fees have told The Telegraph they could be forced out of the private sector if 20 per cent is added to fees.

Meanwhile, some special school heads said they feared they could be forced to close if the VAT rule was imposed because many parents could then not afford to pay fees.

‘So wrong’

Neil O’Brien, Conservative MP for Harborough, who questioned Labour over its policy, told The Telegraph: “It would be perfectly possible to exempt special schools from these new taxes, but Labour know there is a massive black hole in their spending plans and are desperate for cash.

“To try and paint the parents of children with special needs as dodgy characters trying to exploit a ‘loophole’ is so wrong. Parents of children with special needs work so hard and often have no practical choice except small independent schools to get the care their vulnerable children need.”

He added: “Instead of the help they deserve, Labour plan to whack them with massive new taxes. Schools will shut and vulnerable children will end up moving school and having to travel long distances.

“Whatever you think of this policy, all special schools should be exempt – it is just so wrong to be whamming them with massive new taxes when they do such good work for needy children.”

Under Labour’s plans, all private schools will also lose business rates relief.

Sir Keir Starmer has claimed that the VAT and business rates policy will raise around £1.7 billion to fund more mental health staff and expert teachers in state schools.

However, analysts have warned that tens of thousands of private school pupils will be forced to move to the state sector because of higher fees.

The Independent Schools Council (ISC) said nearly 100,000 pupils in private schools receive special educational needs support but do not have an EHCP.

Julie Robinson, chief executive of the ISC, said: “We are calling for an exemption for over 96,000 of our students who are receiving SEND support but who do not have an EHCP.

“Whether or not their independent school is designated as a special school should be irrelevant to this. We are keen to work with Labour to make sure this exemption would be targeted at the families and children who need it.”