Ministers are pressing ahead with imposing VAT on private school fees despite a warning that it will be “destructive, disruptive and divisive”.
MPs clashed in the Commons as the Tories piled pressure on the Government to rethink the controversial policy.
It will hit major private schools, but also smaller ones including bilingual schools which are centred on London, as well as faith schools and those offering special needs expertise.
Shadow education secretary Damian Hinds suggested the January 2025 start date for the policy should be delayed, with many of the smaller schools finding it particularly difficult in adapting to the new financial regime.
“Time is needed to adjust, and that is why our motion further calls for the Government to postpone imposition of the VAT charge for schools in areas where state schools ... are on average almost full,” he told Parliament, with London and the South East set to be hardest hit by the VAT move given that there are more private schools in these than other regions.
Mr Hinds added: “This is a Government which barely has its feet under the table, and already it is a Government in chaos.
“A chaos exemplified by this destructive, disruptive and divisive education tax which will interrupt learning, create place demand where it cannot be accommodated, put further strain on the Send (Special Educational Needs and Disabilities) system ... likely generate much lower revenue than anticipated, and quite possibly actually even end up at a net cost to the public purse in its headlong rush to make a political statement.”
The Government insisted that most private schools will be able to keep fee increases affordable for parents by absorbing a “significant proportion” of new VAT charges.
Treasury minister James Murray was heckled by opposition MPs as he defended the proposal to remove the VAT exemption and business rates relief for private schools from January to enable funding for 6,500 new teachers in state schools.
He stressed that some schools have committed to absorbing the VAT liability entirely, while others are capping fee increases at five per cent or 10 per cent.
“Whilst private schools will now be required to charge VAT on the education services and vocational training they provide, we expect most private schools will be able to absorb a significant proportion of this new VAT charge and keep fee increases affordable for most parents,” he argued.
“They will be able to make efficiencies and recover the VAT they incur on the things they buy.”
Mr Murray also told MPs: “The Government recognises some pupils may subsequently move into the state education sector as a result of these policies.
“However, as set out in the technical note ... the number of pupils who may switch schools as a result of these changes represent a very small proportion of the overall numbers in the state sector.”
The minister said introducing the policy from January 1 was because the Government wants to “raise the funding we need as soon as possible to deliver our education priorities for state schools across the country”.
He insisted that the Government has “carefully considered” the impact of the changes on pupils and their families in both the state and private sectors.
The Chancellor will confirm more details in the Budget on October 30, he added, when the Government will “set out our assessment of the expected impact of this change in the normal way”.
But Mr Hinds urged the minister to publish an impact assessment on the controversial policy.
He added: “The principle of no tax on learning is a fast one. And once you loosen it, you don’t know where you’ll go.
“Where might the Treasury look next? Private nurseries perhaps. Music lessons. Private tutoring. What actually is the philosophical difference between independent school education and private tutoring?”
