Labour may be gaining a reputation for policy shyness, but one of its ideas is already having an impact. The party’s plan to introduce a 20% VAT tax on private schools to better fund state education seems to have spooked the sector, which has increased fees by 8% this year. Meanwhile, the Independent Schools Council has reportedthat admissions this past year have fallen 2.7%, and earlier this year the FT reported that private schools are aggressively recruiting wealthy international students in anticipation of Labour’s proposals.
Why is that important? Because taxing private schools is not like taxing private tennis clubs. With schooling, every domestic child who opts out of the private system to avoid about £3,000 of VAT will then need about £8,000 in taxpayer money annually to fund their state education. The potential result? A substantial threat to the Treasury’s ability to fund improved state education outcomes.
