Parents are already deciding against sending their children to private schools in the wake of Labour coming to power as they face fee rises from Sir Keir Starmer’s controversial VAT policy, school leaders and education experts have warned.
The government will remove independent schools’ VAT exemption from January and business rates relief from April in a move Labour says will fund 6,500 new teachers for state schools.
Headteachers of smaller, specialist private schools say they have little room in already-squeezed budgets to make cuts, leaving few alternatives but to hike fees by 20 per cent – and parents are turning down places as a result.
Research shared withThe Independent by education consultants Anglo Schools International Services (ASIS) revealed that smaller independent schools already struggling financially had seen 27 per cent of parents offered places for the upcoming academic years for their children choose not to accept them by the end of July – compared with a usual figure of 10-15 per cent – with most blaming “VAT shock”.
Chair of ASIS David Boddy said: “Parents are realising the VAT shock is not a problem to come, this is a problem now – and unless they make a move now, they could well miss out on a state school place. This is not a problem coming down the pipe for private schools, this is a problem hitting them now. The fear and concern of this are leading parents to make decisions as protection for their children and finances.”
Christine Cuniffe, the principal of LVS Ascot in Berkshire, said independent schools like her own are already seeing a “significant” drop in pupil numbers from September. However, she warned, “The true impact will be felt within 18 months and [by] then the damage is done,” adding: “The social divide will increase as this will not affect the rich.”
As many as 20,000 to 40,000 pupils are set to drop out of private schools as a result of a 15 per cent effective VAT rate, which would be between a 3 to 7 per cent fall in attendance, according to estimates from the Institute for Fiscal Studies (IFS) in a report issued last year. The 15 per cent figure has been calculated after allowing for input deductions, likely VAT on boarding fees and exemptions for specialist provision, with schools pledging to only increase fees in line with the final rate.
The CEO of the Independent Schools Council (ISC), Julie Robinson, warned that “thousands of children face having their education disrupted”, with special educational needs schools among those facing increased pressure.
Currently, the average private day school charges between £3,000 and £5,500 per term, according to the ISC’s 2023 Census, with over a third of pupils receiving fee assistance. The IFS has estimated that removing tax exemptions could have a net gain to the public finances of around £1.3–£1.5 billion per year, allowing for about a 2 per cent increase in spending on state schools – but it concluded the policy is likely to have little impact when it comes to reducing inequalities by school attended.
Diarmid Mackenzie, the chair of governors at Sands School in Devon, who has been working with many other independent schools on this issue, said: “If children withdraw, then schools would have to further increase fees or reduce staffing levels, as they still need to pay VAT – so there’s a risk of schools going into a negative spiral, where the overall proposition of the school ceases to be viable.”
Jamie Harle, the bursar of St Piran's School in Berkshire, warned this would put further strain on the state sector: “The threat that has not been engaged with is that as schools start to lose pupils or even close, as they are now, the state sector will have to offer places but has not been prepared or resourced to do so.” Referring to the proportion of pupils who attend state schools in the UK, he warned: “Ironically, it is the 93 per cent that we should be concerned about.”
Andy Harris, the headteacher at Emmanuel Christian School in Leicester, described his “shock” at the “blanket policy”, which is set to have a huge impact, with fees likely forced to rise from £4,080 to £4,896, and around 10 of the 54 pupils estimated to leave.
And Michelle Catteron, the headteacher of the Moon Hall School in Reigate, said the move has put parents at her school, which caters to children with special educational needs, in the “most difficult and awful of situations”, as they face paying £25,000 in fees plus £5,000 in VAT.
She said: “What I worry about is not necessarily the families taking them out of school, it’s the impact on those parents. What other sacrifices are they going to have to make to send their child to Moon Hall?”
The Independent has contacted the UK government for comment.
