– in Westminster Hall at 4:30 pm on 21 February 2024.
I beg to move,
That this House
has considered independent school fees and VAT.
It is a great pleasure to serve under your chairmanship, Mr Henderson—I think for the first time. I put on the record my thanks to the Independent Schools Council and its superb chief executive Julie Robinson, not only for the tireless campaigning that it does for the independent education sector but for its work as the secretariat for the all-party parliamentary group on independent education. I have been the chair of that group since founding it in 2017, after moving from being an MEP to an MP. A number of independent schools serve my constituents, including Quinton House, Bosworth School, Northampton High School for Girls and OneSchool Global.
More than 600,000 children are educated in the independent schools sector in the UK, saving UK taxpayers more than £4 billion each year because those pupils are not educated in the state sector. In addition, the independent sector has a total economic footprint that amounts to £16.5 billion, supporting 328,000 jobs and £5.1 billion in tax revenue. Why is it that the sector often gets bad press, despite its contribution to society both economically and educationally? For many people, when they hear the terms “independent school” or “private school”, they immediately associate them with elitism, isolation and privilege. Nothing could be further from the truth. Independent schools today are modern, diverse and inclusive places that often provide education and specialist provision where the state sector does not go. Furthermore, independent schools are more connected to society now than ever before, working with the state sector in partnerships and widening access through bursaries.
I congratulate my hon. Friend on securing this really important debate. Our independent schools do vital outreach work with access bursaries and access to sports facilities. Many hard-working families up and down the land make huge sacrifices saving to send their children to independent schools. Does my hon. Friend agree that the short-sighted Labour policy on VAT on independent schools will compromise these schools, force some parents to take their children out of them, and ultimately put more pressure on our local state schools?
I thank my hon. Friend for that question, which is indeed the major thrust of what I have to say. As chair of the all-party group, I am delighted every year to sponsor the Independent Schools Council’s annual “Celebrating Partnerships” report, which gives parliamentarians and stakeholders from across the sector the opportunity to come together to celebrate the fantastic work that the independent sector does in partnership. Three quarters of independent schools are now in partnerships with state schools. That is not the old swimming pool every other Tuesday afternoon for an hour or two; they are embedded, mutually beneficial partnerships.
Given how influential and impactful the sector is for wider society, it is in disappointment that I stand in opposition to the Labour party’s policy position on independent education—the introduction of a 20% VAT fee on independent school fees. I urge the current Government and my Conservative party colleagues to be robust in their stance of not imposing VAT on school fees. I look forward to the Minister’s analysis of that, but given that the Opposition are currently well ahead in the polls, and it is at least possible that they could form a Government in the next Parliament, it is important that this debate has been granted. It is important that we take the time to scrutinise what I believe is an ill-thought-out policy. Although I welcome the fact that Labour’s plans for independent education under Keir Starmer are not as draconian, undemocratic and questionable in law as they were when he served in the shadow Cabinet of Jeremy Corbyn—when it looked like the party was trying to abolish the sector entirely—they are still very worrying indeed.
The principle of parental choice is supported by article 2 of the first protocol of the European convention on human rights, which was incorporated into domestic law by the Human Rights Act 1998. It says that
“the State shall respect the right of parents to ensure such education and teaching in conformity with their own religious and philosophical convictions.”
However, is that right to choose being assisted, if said choice is made increasingly difficult by a huge tax rise? I do not think it is. It is also a fundamental principle that we do not tax the supply of education, and the Value Added Tax Act 1994 exempts education, including nurseries and universities, alongside independent schools. That principle is international in scope and the UK would be an outlier if Labour abandoned that policy. For example, EU nations, Australia and the USA do not apply sales taxes to education.
Beyond the core principles, there are many reasons why the policy could be harmful and doomed to fail. First, parents residing in the UK who make the decision to send their children to independent schools already contribute to the state education sector by paying their fair share of taxes. I have made that very clear in the Main Chamber when debating this subject, and the repeated use of terms such as “tax breaks” and “tax reliefs” should be avoided. Independent schools are taxed in the same way as other education providers and charities, and they provide more than £5 billion in tax annually, which is more than three times what Labour thinks it will raise from VAT. UK parents who pay school fees do so from already taxed income.
Now that the Labour party has put this policy forward, I am sure we will hear today that it has done so because it believes in educational excellence for everyone and not a reserved few. However, by introducing the policy a Labour Government would simply make independent schools even more elite than Labour already perceives them to be by pricing out hard-working parents who can just about afford to pay the fees to invest in their children’s futures. Those who can easily absorb the 20% will do so, and perhaps that is what the Labour party wants: to make private schools more elite so that it is more difficult for politicians like me to make the case for them.
I will use the jacuzzi and private jet analogy to demonstrate my point. Many of us will never have a jacuzzi in our gardens, but could probably afford to install one if we chose to do so. On the other hand, a private jet is, for virtually everyone, an unobtainable fantasy for a distant elite with no connection to our lives. That is what Labour wants independent education to be—the private jet, not the jacuzzi. Of course, that is purely figurative as a parallel and not related to the crucial importance of educational choice.
It has been said that these are not issues we should worry about, and that independent schools can simply absorb the VAT increase so that they do not pass it on to parents. That is a naive view, with many independent schools up and down the country being very small, operating on tight margins and unable to do that. A quarter of all schools in the Independent Schools Council have fewer than 155 pupils. They are not wealthy institutions that are able to absorb VAT.
I congratulate my hon. Friend on securing this important debate. Several headteachers of independent schools in my constituency of Woking have come to me and said that they are worried that many parents will not able to afford to keep their children at their schools with the VAT increase, and one or two are worried about the future of their schools. My hon. Friend has had conversations with the independent sector and the groups representing it; has Labour taken into account that there might be a massive increase in students having to go to the state sector due to schools closing, which would completely kibosh any potential financial gains it is claiming?
It would. My hon. Friend’s point leads me nicely into my belief that the naivety of Labour’s position is underlined by a hidden agenda to have smaller schools in the midlands and the north closed and absorbed by the state. Underlining that is perhaps the fact that the shadow Education Secretary, since taking up her post in 2021, has not visited an independent school with at least the aim or willingness to discuss the impact of her policy. My hon. Friend has spoken to people in the sector, as have I and many other people here.
The unwillingness to engage speaks volumes. Who would propose massive changes to the chemical industry or the high street retail industry without taking the trouble to speak to people involved in that sector to assess the impact? It is quite unthinkable. I also question why the policy is aimed only at taxing the supply of children’s education, which is arguably the most pivotal, and not at education for adults via universities, for example, or other forms of education such as private tutoring, which is the alternative private education leg-up provision of extra advantage that many on the left as well as not on the left utilise. There are no plans for VAT there; I wonder why.
Perhaps most important of all is the effect that the policy would have on independent schools’ ability to operate. If independent schools cannot absorb the VAT increase or parents cannot afford the fees, many of them would have to close. That would be disastrous for two important reasons. First, we would see the children go into the state sector, increasing the burden on other children and teachers. The Opposition believe that that can be offset by funds raised by the policy, but we are yet to see any consensus on the true impact.
The Institute for Fiscal Studies states that the policy will raise half a billion pounds less than Labour has committed in spending pledges. The education specialist think-tank EDSK puts the likely revenue even lower, leaving Labour more than £1 billion overdrawn on its spending plans. Most worrying is the IFS finding that the evidence of impact on children and families is “quite thin”—alongside 30-year-old data, it relied on the experience of Catholic schools in America—so it is tax first and repent later.
I am sure we will hear that this is a bogus claim and that there might not be a mass exodus, and that might be evidenced by the fact that as inflation has risen and independent school fees have gone up, we have not seen many children leave the sector. However, the ISC has found that 20% of parents who currently send their children to independent schools say they will be priced out and have to educate their children in the state sector. Those are the parents who will be making a difficult choice and might be forced into pulling their children out of the schools they have been educated in, and when they are at a key stage in their education. Perhaps most strikingly, the Baines Cutler report has calculated, using real data from schools and parents, that the predicted income-related drop-off if the policy is enacted would be nearly 100,000 children—one sixth of all the children educated in the sector who need somewhere to be educated.
Even more crucial is the impact on independent schools that provide specialist provision where the state sector does not go—independent specialist schools with small budgets that educate children with particular needs. Department for Education data shows that there are more than 100,000 pupils receiving special educational needs support in independent schools, some with education, health and care plans and some without. Moreover, many independent schools provide specialist faith schooling or provision for military families—something I saw the benefit of in my own education.
When it comes specifically to special educational needs and disabilities provision, what we will see is that parents who can no longer afford to pay the fees will seek out an EHCP if they do not have one, which will lead to more pressure on families, on local authorities at tribunal and on local authority budgets. I am interested to know whether there has been any realistic impact assessment of that.
If schools were to close as a result of the policy, the children would not have the provision they need. It will very much be the case that the schools will have to stop the excellent partnership work they do in order to cover their costs, or reduce their offer of bursaries to disadvantaged pupils, thereby reducing social mobility and making these institutions even more elite. That is the point. Such a regressive tax will seek to harm independent schools on the tightest of margins.
Even if the policy’s impacts are not seen immediately, I fear that the long-term negative consequences will be dire. It is the schools that Labour are not thinking about that will be hardest hit—small faith schools and special needs schools. That capacity sees some special needs support for 96,000 children who are not on an EHCP. Labour has exempted the EHCP pupils from VAT on fees, but not other students with special educational needs. That is 96,000 children facing disrupted education, with state provision further stretched and worse for all those who need it. Families are therefore incentivised to apply for EHCPs. Labour should exempt all pupils with special educational needs from VAT on fees. If it does not, the pressures will be laid at its door.
Similarly, small faith schools up and down the country could not be further from the stereotype that has been presented. They often charge low fees—often lower to the taxpayer than the cost of local state schools, because they are supported by local congregations and voluntary efforts. They are frequently very small, they cannot absorb VAT, and their families and supporters cannot find 20% more at a moment’s notice. They will face deficit and closure, and will be harder hit than the better-known schools that I am sure many have in their heads when proposing this.
There is a slow-burn issue as well, whereby parents perhaps persist for an extra year or two for a child who is in the middle, but then decide not to go ahead for a child who has not entered the system yet. There is also a danger of smaller schools becoming insolvent—having to assess that the increased risks of becoming technically insolvent prevent them from struggling on and pushing through. This needs to be considered in the round and not just as a standalone. Given that we have heard hardly anything else about supporting education from the Labour party, I am not sure voters are being presented with very much.
To conclude, independent schools play a vital role in educating our children. They provide specialist provision and excellent partnership work. The Labour party wants to pull all that up and put it at risk, for the sake of raising a questionable £1.5 billion, which is not enough to offset the damage it will inflict. I hope those listening who are in positions to influence this will take these points away. I look forward to the Treasury Minister’s further thoughts about the VAT details. We need to ensure that this ill-thought-out policy does not put unnecessary strain on hard-working families who want a better future for their children.
Order. I remind hon. Members that they should bob if they wish to speak. I will have to impose a time limit of three minutes, as I will have to call the Opposition spokesman at 5.15 pm.
It is a pleasure to serve under your chairmanship, Mr Henderson. I congratulate my hon. Friend Andrew Lewer on securing this important debate.
Labour’s plans to charge VAT and end business rate relief for independent schools is based on the politics of envy, from a party that wants to crush aspiration and ambition. Labour says its primary motivation is to generate revenue to invest in the state education system and that the policy might raise £1.7 billion for that purpose. Well, Labour had better get building more schools, because it intends to implement the policy as soon as Keir Starmer enters Downing Street, with no consultation or risk analysis. What a nonsense. The policy will harm both the state and the independent sector, and there will be an exodus of pupils into an increasingly stretched state system, with some independent schools closing altogether.
We must not trust Labour with our schools. About 12 years ago, the OECD “Education at a Glance” report found that expenditure on schools as a percentage of GDP increased from 3.6% in 1995 to 4.5% in 2009. The OECD average was 4%. Billions of pounds of spending went into schools under the last Labour Government, but that huge increase in spending led to no improvement in student learning outcomes. UK teenagers slipped down the league tables in crucial subjects, while our schools became the most segregated in the world, with Britain’s immigrant children clustered in the most disadvantaged schools. Primary school class sizes were bigger only in places such as Turkey and Chile, and there was an alarming rise in children not in education, employment or training. Taxpayers failed to get value for money and Labour’s policies had little impact.
Labour will never understand that it is not just about money; it is about leadership and structure. We have some amazing headteachers in Hastings and Rye. I will not name them, but they know who they are, and they work best with the support of positive and effective Government policy, and with the support of their academy trusts. In Hastings and Rye, 32% of schools were rated as being good or outstanding in 2010, compared with 82% in 2022. There is more work to do, but it can be done, as we have seen from the Conservative Government’s record, without destroying our valuable independent sector.
I have two independent schools in my beautiful constituency of Hastings and Rye: Claremont and Buckswood. Buckswood boards about 50 pupils from 48 different countries and has 200 local day-school pupils. Both schools have lower fees for local children, and they have a diverse mix of children, which contributes to a rich cultural environment—one that would not normally be expected in a coastal community. Thos schools enrich our communities, to the benefit of all our residents.
I apologise to Munira Wilson and Jim Shannon for not calling them earlier.
Thank you very much, Mr Henderson; it is a pleasure to serve under your chairmanship. I congratulate Andrew Lewer on securing this debate.
My Liberal Democrat colleagues and I aspire to a scenario in which the offering in all our state schools is so high—so superior—that parents do not feel compelled to send their children to the independent sector. It would be an education system that enables every individual, no matter their background or their needs, to flourish, succeed and fulfil their potential, wherever they are educated. But as liberals, we are also a party that has always championed choice, and it is important that parents are able to choose where their children are educated, and independent schools should always be one of those choices.
Let me be clear: we do not support ending the VAT exemption for independent schools, for the very simple reason that we do not support taxing education. As we have already heard, all education provided by an eligible body, including university education, music lessons and tutoring sessions, are exempt from VAT, and we would not want VAT or any other tax to be charged on any of these things. However, there needs to be a quid pro quo. Independent schools should give back to their local community, in order to retain that right; and, as we have heard, many already do. There are many excellent examples of collaborative work around the country. In my own constituency, Hampton School and Lady Eleanor Holles School have an exemplary partnership with Reach Academy in Feltham, sharing staff time, and mentoring and coaching of pupils for medical school and other university places. The relationship is about partnership and sharing not just swimming pools and theatre spaces but, as I have said, specialist teachers and specialist facilities.
That sort of ingrained partnership work benefits both the state sector and the independent sector, and it needs to become the norm for all. Removing the VAT exemption from independent schools would reduce partnership work and also hit parents who have felt that, for whatever reason, the state sector cannot meet their children’s needs, especially if they have additional needs but do not have an EHCP. I know of many examples of parents who have scrimped and saved, or used a little bit of inheritance that they may have had from their own parents, to send their child, who is not thriving in a state school, to the independent sector, where they are able to thrive. As we have heard, many independent schools are not the Etons, the Winchesters or the Harrows; many are small schools with fewer than 400 pupils.
We should all aspire to make the best investment we can in education and to make every school as good as possible. Taxing education is not the way to achieve that goal.
It is a pleasure to serve under your chairmanship, Mr Henderson. I congratulate my hon. Friend Andrew Lewer on securing this debate.
I draw the attention of the House to my entry in the Register of Members’ Financial Interests. I will declare an interest of three types: my partner is the headteacher at a prep school; she also owns a house that backs on to one of the best-performing state schools in Surrey, so inevitably her house price will go up when selection for that school becomes selection by house price rather than by academic achievement or fees; and I myself went to an independent school—my father paid a fortune for this accent.
I would say two things about this. Economically it is not sensible, and educationally it is not sensible either. Prep schools in particular are already a fragile ecosystem, and most have around 150 to 250 pupils. My hon. Friend the Member for Northampton South talked about an impact assessment of what happens if a few pupils drift away. I will tell hon. Members what happens if 10 or 15 pupils leave a fragile prep school. That school is perhaps not paying market price for its teachers’ salaries, and it has already opted out of the teachers’ pension scheme, which accounts for around 28% of salaries.
Independent schools are the only ones paying in—it is a Ponzi scheme—and some actuaries predict that that figure will go to 40% because there will be more failures. If 10 or 15 pupils leave that sort of school, it collapses. There will then be 150 pupils who have to get educated under the state system in that area, which may be a rural area with a small state school. There may be 1.1 million vacancies in state schools around the country, but they are not equally distributed: something like 20% of secondary schools are over capacity. Those are the best ones—the ones that people want to get into.
Prep schools are already fragile. Those that go up to 13 are already having to change their business models. This policy would be another nail in the coffin of pupils’ aspiration, as we have already heard. It would not lift life chances; it would just set one group of children over another. The small amount of money that that broad change will raise will not be as meaningful as the Labour party thinks. It is better to look for other, more collaborative ways, but let us not destroy the partnership working that we have heard about. Let us not destroy the work around using different sites, sporting facilities, expertise and skills.
The IFS report states that private schooling tends to be concentrated among those with the most income and wealth, but “tends to” is doing a lot of heavy lifting there. A lot of people struggle to ensure that their children get a better education, and we should reflect on that. The shadow Secretary of State for Education, Bridget Phillipson, should go out and meet some headteachers.
Congratulations, Mr Henderson; it is a pleasure to serve under your chairship. I also congratulate Andrew Lewer on raising the issue.
In Northern Ireland, schooling is slightly different, in that we still have a transfer test that allows entrants into grammar schools. For that reason, there is not as great a preference for private schools as there would be were grammar schools to be removed. However, I am thankful that the DUP, with a now-working Assembly, has a Minister in place to protect the education system and retain grammar education for people of all classes and backgrounds.
To declare an interest, back in the ’60s—I probably go back further than nearly anybody in the Chamber—my mum and dad sent me to a boarding school in Coleraine, which gave me five years of good education. I am incredibly indebted to my mum and dad. In the ’60s especially, we had no holidays, and our car was an old banger that was kept forever—just so that their sons could have an education. I thank them for that. It gave me a great chance in this world, and I appreciate it.
Taxing private schools out of existence is not the route to take. The education of children is charitable in the extreme, and the only profits that are made are found in well-rounded children and well-paid teaching staff, which should be the goal of every school. That is what we should be looking at—nothing else. We should not achieve that goal by raising fees to such an extent that only the most elite can afford schooling, as in schools in Switzerland, for example.
The boarding school on the periphery of my constituency of Strangford is Rockport School, in North Down constituency. It draws a number of international students to its doors. That can only be good for the local area. It also generates money, cultural exchange and social engagement. I would hate to see that great school—its headteacher, Mr George Vance, cut his teeth at our local grammar school, Regent House, in my constituency —left in a position in which fees rise at an exorbitant rate and the benefits of the school are lost. That would be a tragedy.
There are 16 private schools registered in Northern Ireland, and there is a role for the sector. The work that they do deserves support; we should not set out to tear the sector down by stealth taxation. I am a believer in the public school system. My boys all went to Glastry high school, my granddaughters go to the local integrated school and my grandsons are in the local primary school. I have faith in the schooling system, but that does not mean that I want to abolish the smaller subsidised schools. The VAT proposal is not only aimed against the ultra-wealthy. It will go much further than that, which concerns me. With great respect to what Labour is putting forward, I am concerned that it will have a detrimental effect on the education and economy of this great nation of the United Kingdom of Great Britain and Northern Ireland.
It is pleasure to serve under your chairship, Mr Henderson. I thank my hon. Friend Andrew Lewer for bringing forward this debate.
I will focus on the consequences of removing the current VAT exemption for independent schools. It is clear that this change would lead to a rise in school fees, as schools are forced to pass on the cost to parents in order to keep running. That would immediately mean that many parents, who may only just be able to afford the fees as they stand, would no longer be able to continue sending their children to private school. In fact, I calculated that one of my local Nottinghamshire high schools would lose around 20% of its children. Smaller schools would struggle to survive at that rate and may close. That would mean job losses and loss of choice for local parents regarding their child’s education.
I was recently contacted by my constituent, Dr Sharmini, a local school governor who is incredibly concerned about the potential change. She emphasised that it is not the most wealthy and their children who will be affected, but parents who work incredibly hard and make sacrifices to send their children to independent schools.
It is important to emphasise that this change would also have a knock-on effect on non-fee-paying schools, which would see an increase in pupils. That could mean larger class sizes and greater resources being required in non-fee-paying schools. It may also result in children having to move schools in very short time spans.
I am a veteran, and this is the sort of thing that would affect military families. They may have to move mid-school year, and they make good use of independent schools and boarding schools because of that. This change will have a large effect on the lives of children who will have to move. We are removing children from their teachers and friends, and for many that will be very distressing.
My team spoke with the head of a local private school in Nottinghamshire today. He had huge concerns about the use of the school’s facilities. As it stands, sports facilities and facilities such as halls are given over to a huge variety of local clubs at no cost. He stated that if VAT came in, the school would be forced to look at more economical ways of renting out those spaces and would not be financially able to continue lending them out for free.
That head also emphasised the difference between the big private boarding schools and smaller independent day schools. It is the small independent schools that will be hurt most by this change, and many may not survive the loss of students. The focus of all Members in this House must be on ensuring that every child has the best possible education; that is what I will be focusing on in Broxtowe.
On a point of order, Mr Henderson. I neglected to say earlier that I might have an interest to declare, as my husband is a governor of an independent school.
Noted. Thank you.
It is a pleasure to serve under your chairmanship this afternoon, Mr Henderson. I, too, congratulate my hon. Friend Andrew Lewer on securing the debate.
I represent a constituency with five thriving independent schools of the traditional private school variety; state schools that, as academies, are independent schools; a significant number of private special educational needs and disabilities schools; and private nursery provision. My children have benefited from state, private and privately funded state provision over the years, so I have a direct interest in the subject the debate.
I want to focus particularly on the impact that the VAT change would have on the very large sector of small independent schools, on which so many parents rely. Ofsted has a rule that any setting with two or more children present for the purposes of their education must be registered as a school. In my constituency, I have a stables—an equine centre—that provides equine therapy for mute, autistic children. Those children are reliant on it, because it is an environment in which they can gain educational benefit. They have been placed there and funded by the local authority, and that is simply not to be found in any other form of schooling.
Across the country, there is a huge number of such schools, which are legally registered, with an Ofsted number, and privately funded. Many are not charitable trusts; in some cases, they are businesses providing a particular type of apprenticeship or educational experience for a specific set of special educational needs. The impact of introducing VAT on the fees paid by local authorities and parents for that huge variety of provision would be absolutely enormous. A number of my constituents who have children with quite profound special educational needs are deeply concerned about the impact that this change would have on not just their household budget but the availability of the specific specialist provision on which they depend.
I have some sympathy with the argument that the element of education that is hotel costs in boarding schools is not strictly an educational purpose, and I have heard it advanced across the sector. However, it is clear that the availability of highly specialised private provision would be jeopardised profoundly by imposing a policy of putting VAT on all fees. The cost would directly hit the taxpayer and mean that so many of our constituents who feel that they have at last found the right setting for a child with profound needs, often after many years of searching for it, would see that put at risk by a policy of introducing VAT. I commend the Government on strongly resisting such a policy, and I hope the Minister will restate that resistance this afternoon.
I thank my hon. Friend Andrew Lewer for leading the debate. Frankly, this Labour party policy is a viciously cynical ploy to allow Labour to masquerade as class warriors and as the working-class heroes taking on the elite. However, the reality is that they are champagne socialists pretending to be social justice champions. This policy is not about education, outcomes, the welfare of children or supporting the British people: it is about division and removing choice. It will harm educational outcomes and cause hardship. Far from being the class warriors of our age, Labour will become the party that kills off social mobility through this tax on aspiration, personal choice and responsibility, and social mobility.
There are three reasons why the policy is misguided. First, independent schools are positive for the economy. They contribute £16 billion to the economy, support 300,000 jobs contributing £5 billion in tax revenue, and save the taxpayer £4 billion by educating pupils outside the state sector. All of that would be put at risk by this ill- thought-out policy. Secondly, special education schools will be hard hit by this punitive policy. There are 96,000 pupils at SEND schools who are not on an EHCP and, simply put, they will be put at risk by the policy. Where will those children go when these special schools are put out of business? Many specialist schools in the state sector are already over-subscribed. Lastly, this tax on aspiration will simply push many poorer pupils out of good-quality schools, and parental choice will be destroyed.
I feel passionate about this policy. I stand against it because of my own personal educational journey. We will all have personal experiences and views informed by our own education, but mine is apposite. My parents were working-class people; they were migrants who came here with nothing. They themselves had poor educations in Mauritius and Kenya, so they valued the opportunity to give me a good chance at getting educated. I started in a local state school, where the teachers would go on strike every week, outcomes were poor and discipline was bad. However, my parents had a choice. Through scrimping, saving and sacrifice, they got me into a small independent private school. From that school, I got into Cambridge, I practised as a barrister and I made it to Parliament. I would not be here if it were not for their sacrifice and the great small private school that my parents had the choice to send me to.
I congratulate my hon. Friend Andrew Lewer on securing this important debate. I speak in my capacity as the Chair of the Education Committee.
This is slightly awkward, because we do not, of course, look at policy proposals that are not from the Government. However, we had a debate about a year ago in the Chamber of the House of Commons where the Labour party proposed to bypass my Committee and appoint their own to look at this policy proposal. What was interesting in that debate, as in this one, was how few Labour Back Benchers turned up to support what is supposed to be their flagship policy. This issue has not been raised by any of the Labour members of the Education Committee during my time as Chairman. In the circumstances, I find that very surprising.
I am concerned about this issue primarily because of its impact on our publicly funded schools. I seriously worry that Labour has not done its sums properly and has not brought the impact of the £6,000 a year required for the revenue funding, let alone the capital expense of expanding those schools, into its calculations. My county council is in the process of commissioning a £40 million secondary school to meet the demand for places that we already have. No calculation appears to have been conducted of what the cost would be of the extra places required by this policy.
When it comes to SEND, I expect the Labour Front-Bench spokesman to say that Labour will exempt specialist settings from its VAT proposals. I certainly hope that that is the case, and that is what was indicated in our previous debate. However, I do not think that the revenue calculations carried out by the Treasury some years ago on the basis of imposing 20% VAT on all charges for independent schools have taken that into account. I would love it if the Labour spokesman could update us today on what reduction in income Labour expects if it does exempt specialist settings from this policy and on whether that will apply to all of them, including the alternative provision settings that my hon. Friend David Simmonds referred to. I recently visited one at the Gloverspiece Mini Farm in the constituency of my hon. Friend Nigel Huddleston, which would like the assurance that it will not be clobbered by a 20% increase in VAT and in fees.
When it comes to SEND pupils, we are talking not just about those in specialist settings. Many of my mainstream independent schools in Worcester provide support to pupils who have identified special educational needs but not an EHCP. If those people are driven out of the independent sector by higher fees, they are likely to seek EHCPs, putting pressure on our health system and our local authorities, which are already overloaded—I will campaign, along with colleagues, to try to increase the resources for them.
As Chairman of the Education Committee, I want our state education system to be one of the best in the world—it already is, but we can make it even better. We should focus on doing that, rather than on creating the misleading impression that clobbering the independent sector by imposing VAT, which no Labour Government in the last century have ever proposed to introduce, and which none of our European or English-speaking peers apply to independent education, is somehow the solution.
It is a great pleasure to serve under your chairmanship today, Mr Henderson. I congratulate Andrew Lewer for bringing forward this debate on independent schools and VAT. Many Members have made contributions about the role that independent schools play in their communities. In my own constituency, thousands of children receive a high-quality education at independent schools including Dulwich College, James Allen’s Girls’ School, Herne Hill School, Alleyn’s School and others besides.
I will address some of the comments made by hon. and right hon. Members this afternoon. On the analogy made by the hon. Member for Northampton South about private schools and the difference between private jets and jacuzzis, we would want every school to represent and fulfil the aspirations that parents have for their children. That is at the nub of this debate, which is about the quality of education received by the 93% of children who attend state schools in relation to the quality of education received by a privileged 7% of children. [Interruption.] I am going to make some progress, I am afraid—I will not take interventions right away.
We all want the best education for our children; every single parent wants the best education for their child. That is why the next Labour Government will do what previous Labour Governments have done: drive up standards in our schools and put education back at the centre of our national life so that we can break down the barriers to opportunity across our country. This debate is focused specifically—[Interruption.] I do not know who was chuntering from a sedentary position about what happened last time, but as a London MP I can tell them exactly what happened last time: it was called the London Challenge and it transformed education in the state sector in my constituency and across London. We went from a situation where our schools were failing under the Conservatives to a situation where they are now delivering brilliantly for all our children.
As many hon. Members have mentioned, the Labour party is committed to levying VAT on independent schools and ending their business rates exemptions. We have committed to doing that because we believe in driving high and rising standards in all our schools. Across this country, more than nine in 10 children attend state schools. The independent Institute for Fiscal Studies reported last year on policies in relation to VAT and tax exemptions for private schools. In brief, it found that our proposals would have little effect on the number of children being educated in private schools, but would lead to a net gain to the public purse of at least £1.3 billion per year. I appreciate some of the concerns raised in the debate today, but I urge right hon. and hon. Members to look in more detail at the IFS report’s findings.
I just want to press the Opposition Front Bencher on a specific point. There are some brilliant special schools in my constituency. The Opposition are saying that they will exempt children with an EHCP from their tax, but they are not saying that they will exempt all children at special schools from the tax. Why not?
There is a very simple reason for that. 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 we do not—
I will not give way again. It would provide a loophole that schools could use to evade the policy.
The share of pupils being educated in private schools has consistently remained around 6% to 7%, despite fees increasing above inflation year on year for many years. Indeed, independent school fees are 55% higher in real terms now than 20 years ago. Although we do not believe the scaremongering that there will be an exodus of pupils into the state sector, our state schools would be able to cope with an increase in their numbers. Across England, overall pupil numbers are due to decline by at least 100,000 per year until 2030; the total drop is higher than the number of children currently attending private schools.
Will the hon. Member give way on that point?
I give way to the Chair of the Select Committee.
That is very kind; I am grateful to the hon. Member for giving way. I just want to make the point that, yes, the overall numbers are declining, but that is primarily in primary. The demographic bulge, as she well knows, is coming through into secondary schools, and secondary schools in many areas of the country are full. How does the Labour party plan to deal with that?
As the hon. Member rightly points out, what happens in primary flows into secondary, so secondary schools across the country, including secondary schools in my constituency, are absolutely aware of the drop in numbers that is coming down the track, and we are seeing secondary schools in London closing—two of them this year—because that flow is starting to affect them.
The Labour party believes in parental choice, but the conversation today has to take place with fairness in mind. In 2022-23, average independent school fees were £15,200, but average state school spending per pupil was £8,000. The gap in funding between independent and state school spending has more than doubled since 2010. With the £1.3 billion of funding that would be raised each year from our measure, we could significantly increase school spending, allowing the Government to drive high standards across our state schools too. The Government are consistently missing their targets for teacher recruitment and face teachers leaving the profession in droves. We would use that money to recruit and retain more than 6,500 additional teachers.
There is considerable evidence of the need to improve and the benefit from improving teacher training, so Labour will work with schools to deliver a teacher training entitlement, throughout every stage of a teacher’s career, to deliver evidence-based, high-quality professional development.
We need to look again at school inspection and improvement—
Order. I need to stop you there, Ms Hayes, and call the Minister.
It is a pleasure to serve under your chairmanship, Mr Henderson. Please allow me to start by congratulating my hon. Friend Andrew Lewer on securing the debate. What a pity we have only 60 minutes, because there was so much more to say here. We heard some fascinating and thoughtful contributions on the matter of independent school fees and VAT.
It will not surprise anyone present to hear that I agree wholeheartedly with Government Members, and I am very pleased to hear from our Lib Dem and DUP colleagues, who support the Government’s policy to allow independent school fees to be exempt from VAT for the many valid and obvious reasons expressed by hon. Members and right hon. Members today. Those include the incredible impact that they have on communities, the partnering, their impact on so many people’s lives, and the fundamental principle of choice.
I am afraid that what we have heard from the Opposition is what we hear consistently. Perhaps we might all be sighing with relief soon when we get the inevitable flip-flopping on this policy—I do not believe for one minute that it is wholeheartedly supported by Opposition Members. It is just virtue signalling of the highest order. It is complete left-wing populist virtue signalling by the Opposition, but the British public see straight through it. This Government understand the vital role that education plays in all our lives. Just this year, school funding will total about £57.7 billion, and next year it will be £59.6 billion. I am very proud to say that that will be the highest ever real-terms spending per pupil under the Conservatives.
I am grateful to the Minister for giving way; I learned as a shadow Minister and a Minister that it is better to be gracious. The Minister will understand that one of the best arguments for independent schools is that they often innovate. My right hon. and learned Friend Suella Braverman was involved in establishing a school that innovates and breaks new ground. From Steiner schools to Bedales to Summerhill, those schools could only exist in the independent sector. How does the Minister think that the Labour party perceives that, or does it not perceive it at all?
My right hon. Friend, as always, talks very sensibly about this. The independent sector is a major contributor to our ecosystem. Of course, many teachers flip flop between the different sectors; the innovation in the private sector can also help the state sector, which is one of the many benefits that we have heard about today. In terms of the broader performance in the education system, not only do the Opposition consistently talk down the economy, our constituencies and our businesses but they also talk down our teaching profession. Actually, it is incredibly successful and we should be proud of what teachers have achieved.
Our commitment to quality education has seen 89% of all schools achieve “good” or “outstanding” at their most recent inspection, an increase from 68% back in 2010 under Labour. In the programme for international student assessment, our rankings for reading and maths improved by 10 places from 2015 to 2022 to ninth and 10th across the Organisation for Economic Co-operation and Development countries. Within that mix, as we all know, England performed better than Labour-run Wales or SNP-run Scotland, despite their higher funding. If we want to see what would happen in education under Labour, all we need to do is look to Wales—it is not an impressive performance. In the latest paediatric adverse childhood experiences and related life-events screener assessment of reading for 10-year-old students across 57 education systems, England ranked fourth internationally. I think we can all accept that those are good things.
This Conservative Government believe that there is a broad public benefit in the provision of education. That is why many education and training services are exempt from VAT, which includes an exemption on independent school fees. Labour does not seem to recognise the public good, as my right hon. Friend the Member for South Holland and The Deepings just mentioned. It wants to charge VAT on school fees and end business rates relief for private schools, taxing aspiration and inevitably putting more pressure on state schools.
I am very blessed to have two excellent independent schools in my constituency, Worksop College and Ranby House, and I speak as a former head of an independent school myself. We also have some excellent state schools at the Outwood Grange Academies Trust that give outstanding opportunities to local pupils. Does the Minister agree that the knock-on effect of this is not spoken about enough? Labour is actually adding to the capacity problems and neglecting the state sector in what it is doing to the independent sector.
My hon. Friend makes a really important point that has been repeated by many colleagues today. An introduction of 20% VAT can have two impacts: it will either push up prices or lead to cutting costs somehow. It is intuitively obvious that, if we push large numbers of pupils from the private sector into the state sector, it will inevitably put pressure on the state sector and therefore cost members of the public even more. The numbers suggested by the Opposition simply do not stack up. It is an ill thought out policy. The full knock-on impact has not been properly considered. VAT is an incredibly complex area. It is not simple to make blanket policy without considering the full impact.
Not every private school is some kind of Eton—a point made by my hon. Friend Mr Walker and several other hon. Members. There are exceptionally vulnerable people in very deprived areas of the country who rely on our private schools to provide the type of education they cannot get in the mainstream system.
It is well known that many of our major independent schools such as Eton and Harrow give 100% bursaries to children from disadvantaged areas to give them a chance to skill up and to benefit for their own communities. That is amazing.
My hon. Friend is absolutely correct; the broader societal benefit of many of our private schools is considerable. That is one of the reasons why many, although not all, have charitable status. They provide all sorts of benefits, including through opening up for sports provision.
The Government are not alone in having concerns about Labour’s current policy. Labour’s own shadow Chief Secretary to the Treasury, Darren Jones, spoke out against its planned tax rise before he joined the Front Bench, telling students that he did not believe the policy would bring in the money that his party was promising. Of course, that has not stopped Labour from spending the money several times over already, and it does not have a plan to pay for the potential incremental costs.
I will bring my comments to a close, but I must express a slight disappointment: much as it is always a pleasure to have the hon. Member for Dulwich and West Norwood in this Chamber, I am normally faced in these debates by my opposite number, James Murray. I must share an irony in that situation: I stand here today as a proud product of a comprehensive state school education nevertheless supporting the role of private schools in the UK and the principles of freedom of choice, aspiration, opportunity and social mobility.
My Labour counterpart is a product of the private school system yet is advocating a policy that could potentially restrict access to the very system from which he has himself benefited, as indeed have many Members on the Opposition Benches. I find that quite ironic and hypocritical, but I will never criticise somebody for the choices made by their parents. We do not do that on this side of the Chamber, but a little bit of humility in this debate might be appreciated. A good education for all is a priority for this Government, and I hope hon. Members from across the House will work with us to deliver it.
Andrew Lewer, you have two minutes to wind up.
I want to express my sincere thanks to so many colleagues. I had thought about having an Adjournment debate on this subject but I am so pleased that, rather than standing in the Chamber talking to myself, I have a large number of people in Westminster Hall to take part in the debate and make such useful and constructive contributions.
The proposed policy fails on the principle of freedom of choice and the principle of education being free of VAT. The idea of saying, “Well, we don’t want VAT on education apart from on the bits that don’t we like—apart from on the bits that we can give a bit of a class-warrior go at,” also fails in practice. For every report in one direction, there are others: the EDSK report and the Baines Cutler report are both independent and carefully researched reports that prove that this money, which has been spent dozens of times already, does not actually exist in the first place.
To me, the issue feels like the current Leader of the Opposition’s version of foxhunting. He needs to come up with something red-meaty to throw at his left to say, “Look, we’re still socialists and we’ll bash the rich and the elite.” Tony Blair did it with foxhunting, and now it is independent education. The difficulty is that this issue is so much more profound and more damaging than even that issue, which did cause problems for rural communities. This is much worse, much more broadly based and much more damaging.
I am delighted that so many colleagues have been able to pick up so many key points. The point about special educational needs that was made by several colleagues is particularly potent, and I shall certainly try to take that up in my ongoing work as chair of the all-party parliamentary group on independent education.
Question put and agreed to.
Resolved,
That this House
has considered independent school fees and VAT.
Sitting adjourned.