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Independent Schools: VAT and Business Rates Exemptions
08 October 2024
Lead MP
Bradley Thomas
Bromsgrove
Con
Responding Minister
James Murray
Tags
EducationEconomyTaxation
Word Count: 14523
Other Contributors: 34
At a Glance
Bradley Thomas raised concerns about independent schools: vat and business rates exemptions in Westminster Hall. A government minister responded.
Key Requests to Government:
Thomas requests that the Government abandon or delay implementation of the policy until September, perform a full consultation and impact assessment, protect very small schools from VAT changes, exempt service families on continuity of education allowance from VAT, and provide support for students transitioning between independent and state sectors without disruption to their education. The Minister should confirm whether low-income families and staff members in receipt of bursaries or discounts would be liable for VAT on school fees. He should also consider exemptions for arts schools, mitigate financial planning issues for international pupils, ensure legal exemptions for SEND provision, address impacts on council budgets, and provide funding for transport and private placements.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
Mr. Bradley Thomas is concerned about Labour's plan to remove VAT and business rate exemptions for independent schools, stating that the policy will not achieve its aims and could displace children mid-education. He cites statistics such as 71% of parents feeling influenced by rising school fees and 26% considering withdrawal from independent schooling due to potential VAT introduction. Thomas also highlights economic benefits like supporting 328,000 jobs and saving £4.5 billion for the state through choice-based education funding. The policy will remove the ability of people to send their children to local primary schools as places get filled by those who currently can just about afford private schools. The continuity of education allowance for military families may no longer house all 4,200 users, and arts schools being exempt could withdraw opportunities from the arts sector. The financial planning of international pupils will be impacted, and there is an issue with council budgets if children are taken out of the private sector.
Adnan Hussain
Ind
Blackburn
Asked if the Minister would give way to speak further.
Al Pinkerton
Lib Dem
Surrey Heath
In Surrey Heath, there are six small independent schools serving 820 students with special educational needs being a significant issue. Adding VAT would exacerbate financial pressures on families and force children into an already strained state sector.
Alec Shelbrooke
Con
Wetherby and Easingwold
This policy is open to legal challenge and if held up, could cause mass disruption by being introduced mid-academic year.
Alison Griffiths
Con
Bognor Regis and Littlehampton
The policy will cause stress on state schools already dealing with limited resources, and it will exacerbate financial challenges for independent schools that provide significant support to special educational needs students.
Aphra Brandreth
Con
Chester South and Eddisbury
Independent schools are facing difficult choices about how to continue their charitable work due to rising costs caused by the policy, which will impact children with special educational needs and add pressure on the state system.
Ayoub Khan
Ind
Birmingham Perry Barr
In Birmingham Perry Barr, parents earning just above minimum wage secure places in an all-girls faith school, while there is already a problem with waiting lists. The policy does not stack up financially and we lack the infrastructure to manage it.
Ben Coleman
Lab
Chelsea and Fulham
The Labour MP criticized the Conservative Government for failing to support special educational needs, noting that councils are sending children to private schools due to insufficient state provision. He highlighted a situation where parents have no other choice but to send their children to independent schools despite financial strain. Asked the Liberal Democrat member to apologise for the state of the SEND system, which he believes is a legacy issue from previous governments.
Ben Obese-Jecty
Con
Huntingdon
The absence of secondary school places in Huntingdon has caused concern for parents. Kimbolton school, one of three independent schools in the constituency, faces a 20% VAT increase on fees that could alter its family feel and reduce opportunities for future students. The Government's current course is unlikely to change.
Ben Spencer
Con
Runnymede and Weybridge
Asked Al Pinkerton if he would vote against the policy, considering that around 15% of independent school students have special educational needs but only about 5% have EHCPs. The imposition of a tax on education will affect about 5% to 10% of the approximately 7,500 to 8,000 children attending independent schools in Runnymede and Weybridge. This could lead to increased pressure on local state school systems and disruption for pupils nearing GCSE, A-level and baccalaureate exams. Asked if the Minister would give way on a specific point.
Blake Stephenson
Con
Mid Bedfordshire
The Conservative MP emphasized the importance of parental choice in education and discussed local statistics showing that many families in his constituency do not receive offers for their first-choice secondary schools. He argued against Labour's VAT policy, stating it would damage the economy by reducing job opportunities.
Caroline Voaden
Lib Dem
South Devon
My constituency houses several small independent schools catering to pupils who struggle in mainstream education, often due to autism or other mental health challenges. Parents have made significant sacrifices to afford the fees at these private settings but are now facing financial strain from proposed VAT on school fees. The policy may lead to the closure of small schools and force children into homeschooling or dropping out of school entirely.
Christine Jardine
Lib Dem
Edinburgh West
The debate is important for Edinburgh where 20% to 30% of children are independently educated, with local authority concerns about over-capacity and the state sector's inability to cope if more children move from independent schools.
Damian Hinds
Con
East Hampshire
Asked if the Minister would give way to speak further.
David Simmonds
Con
Ruislip, Northwood and Pinner
Representing a constituency with six mainstream independent schools and numerous small SEND providers, David Simmonds raised concerns about the financial impact of the policy. He highlighted that the proposed changes would lead to less than half the cost of a single classroom teacher per state school across England and mentioned that state schools have an average surplus balance of more than £162,000.
Gideon Amos
Lib Dem
Taunton and Wellington
Stated that independent schools in his constituency cater for many SEND children, and the local authority should receive resources to cope with an increase in applications for support from these children. Questioned Ben Spencer on how children without EHCPs would get support if they cannot receive one, highlighting the existing challenges in securing necessary educational provisions.
Harriett Baldwin
Con
West Worcestershire
The independent school sector is key to economic growth through export earnings, unlike other western economies that do not tax education.
Helen Maguire
Lib Dem
Epsom and Ewell
Asked whether the Government must ensure that vulnerable children with special educational needs are not disadvantaged by this policy. As a Liberal Democrat defence spokesperson, Helen Maguire supports a stable environment for military families but did not address VAT directly, instead focusing on the broader context of educational support.
Iqbal Mohamed
Ind
Dewsbury and Batley
In Dewsbury and Batley, state schools are under strain with many children outside of education. Six private schools educate over 1,000 children at fees starting from £1,800 to £3,300. Imposing VAT would worsen the financial situation for low-income families.
Jerome Mayhew
Con
Broadland and Fakenham
The policy's rationale is unclear, with no impact assessment provided on its revenue generation potential or costs. The speaker raises concerns about the displacement of students from private to state schools, particularly those with special educational needs and boarding facilities for children in care. He also questions the fairness of targeting military families and highlights the risks to bursaries and local businesses dependent on these institutions.
Jim Shannon
DUP
Strangford
The speaker discusses the impact of the policy on independent schools in Northern Ireland, particularly grammar school preps and Christian schools. He emphasizes that parents make sacrifices to send their children to these schools based on religious beliefs or specific educational formats needed by international families. Shannon argues against a broad brush approach and asks for careful consideration.
Lewis Cocking
Con
Broxbourne
The Turnford school in Broxbourne was relaunched as Haileybury Turnford School in partnership with an independent school, resulting in a £200,000 annual improvement grant and significant improvements. The partnership has benefited working-class communities, but the policy could hinder such collaborations.
Mims Davies
Con
East Grinstead and Uckfield
The policy stokes division and harms aspiration by stopping sharing of facilities and opportunities, despite the Education Secretary's statements on social media.
Neil Hudson
Con
Epping Forest
The Conservative MP intervened to argue that the proposed removal of VAT and business rates exemption from independent schools will negatively impact pupils across the country and strain local state schools' capacity.
Solihull West and Shirley
Neil Shastri-Hurst argued against the imposition of VAT on private education, citing its negative impact on military and diplomatic service families who rely on boarding schools for continuity of education allowance. He stressed the importance of upholding the societal contract between the state and armed forces and requested reassurances from the Government.
Nigel Huddleston
Con
Droitwich and Evesham
The policy will have a detrimental impact on both the independent and state sectors, potentially increasing costs for families and reducing bursaries. More than 10,000 pupils have already been pulled from independent schools, which could cost taxpayers £1.6 billion. The timing of the proposals is concerning as they are being introduced mid-year without adequate preparation or clear legislation. Additionally, there are concerns about exemptions for military families and those with special educational needs.
Paul Kohler
Lib Dem
Wimbledon
The MP expressed concern over the removal of VAT exemption for independent schools, arguing it will lead to fewer enrolments and increased pressure on state schools. He cited private school enrolment declines due to tax hike fears and noted the rush to implement changes in just three months could be problematic for institutions lacking tax expertise. Paul Kohler also highlighted the role of independent schools in supporting children with special educational needs, noting 90,000 children receiving SEND support without an EHCP.
Peter Bedford
Con
Mid Leicestershire
The VAT policy will disproportionately affect families on lower and middle incomes who have made sacrifices for their children's education. Parents in my constituency are concerned that they may be penalised for making the right decisions.
Peter Fortune
Con
Bromley and Biggin Hill
Parents who opt for independent schools do so out of a desire to provide their children with the best possible education. Independent schools also offer bursaries and donate facilities to other local schools, contrary to the view that taxing these institutions will improve state school resources.
Priti Patel
Con
Witham
The measure will devastate families with special educational needs, and the minister should tell us what mitigations and support local authorities will receive to cover the cost and pressures they face.
Rachael Maskell
Lab Co-op
York Central
I agree with my hon. Friend that the proposed VAT change will disproportionately affect families who rely on independent schools for their special educational needs children, often due to necessity and not choice. I urge the Government to publish an impact assessment of this policy.
Richard Fuller
Con
North Bedfordshire
The policy will impact children's education, those with special educational needs and students during crucial examination years; the debate is about education.
Richard Tice
Reform
Boston and Skegness
The policy will damage education for both private school students and those in the state sector due to capacity issues, and it could force families with special educational needs children into the state system where there is no nearby capacity.
Robin Swann
UUP
South Antrim
Robin Swann brought up the specific Northern Ireland context, focusing on religious-based independent schools. He quoted from the administrator of Newtownabbey Independent Christian school, who expressed concern that adding VAT would deprive low-income parents of their religious-based choice for sending children to a Christian school and could be an infringement of parents' religious freedom.
Sarah Olney
Lib Dem
Richmond Park
The Liberal Democrats oppose imposing VAT on private school fees, arguing that it would disincentivise people from purchasing education and create administrative burdens. The proposal could affect nearly 100,000 children without EHCPs and strain local authority resources for special educational needs and disabilities (SEND). This change will cause a precipitous increase in costs for families, leading to forced changes in schools which can be traumatic for children with SEND.
Government Response
James Murray
Government Response
It is a pleasure to speak in this debate with Dame Caroline Dinenage in the Chair. I start by congratulating Bradley Thomas on securing this debate and thanking all Members for their contributions. The Government cares deeply about education, aiming to break down barriers to opportunity and ensuring every child has access to high-quality education through improving state schools. To fund these improvements, we will end tax breaks for private schools from January 2025 by introducing VAT at the standard rate of 20% on all education services provided by private schools in the UK. This policy will raise revenue but may lead to increased costs for some parents and carers whose children are in the private system. While private schools will charge VAT, most are expected to absorb a significant proportion to keep fee increases affordable for most parents. HMRC is ready to support schools with registration ahead of January 2025 and will publish bespoke guidance on gov.uk by October 30th. The policy's impact has been carefully considered, including the number of pupils who may switch to state education, which is expected to be minimal over several years. We are committed to transforming the system for supporting children and young people with special educational needs in all schools. This decision was necessary to help raise funding needed to deliver our priorities for state education in the country.
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About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.