Labour’s 20% VAT on private school fees, which is due to start in January, is already driving the shift from the independent sector to the state sector, with more than 3,000 private school students applying to schools. government between June and September.
The policy, announced by Chancellor Rachel Reeves in the Budget, will add an estimated £2,000 per pupil to annual school fees. Critics described it as a “tax on ambition” and warned that it could overwhelm the state sector.
New figures reveal that 124 councils across England, Scotland and Wales have received 3,011 applications from private school pupils to move to state schools, with a further 2,500 expected to leave by January, according to the Independent Schools Council (ISC).
ISC chief executive Julie Robinson accused Labor of underestimating the impact, noting that the Treasury had initially expected around 3,000 transfers from the private sector to the state during the entire 2024-25 academic year. Robinson expressed concerns about the pressure on the state sector, saying: “The government has underestimated the number of families that will be affected.”
The impact of this policy has already led some private schools to consider closing. Cardus School in Oxfordshire, owned by Tudor Hall, has announced it will close in the spring if a buyer is not found. In a letter to parents, chair of governors Alison Darling pointed to VAT on fees and increased employer National Insurance contributions as factors making the school financially unsustainable.
The International Study Centre, which represents more than 550,000 independent school students in the UK, has launched legal action against the government, claiming the policy is discriminatory. The organisation, represented by senior barrister Lord Pannick KC, says the policy breaches the European Convention on Human Rights, and particularly affects students with special educational needs and disabilities.
Robinson stressed that the legal challenge faced by the International Study Center aims to defend families who may not be able to find suitable alternatives to public schools. She said: “We continue to call on the government to work with us to mitigate the risks this policy poses to specialist arts education, low-fee religious schools, young girls’ schools and children with special educational needs.”
The Office for Budget Responsibility estimates that the policy could push 35,000 students from private education into state education, raising concerns that the already overstretched state sector may struggle to absorb them. The IEC’s legal claim will focus on the “right to education” and argue that the policy unfairly targets independent school families, potentially forcing them to give up their educational choices.
With the start date fast approaching, pressure is mounting on the government to reconsider or delay implementation of the policy to assess its full impact on private and state schools.
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