From New Year’s Day 2025 onward, all education, boarding, and vocational training provided by fee-paying private, or independent, schools in the UK will be subjected to VAT at the standard rate of 20 per cent. Furthermore, all schools with charitable status in England will cease to benefit from business rates relief from April 2025, “subject to parliamentary passage of suitable legislation.” Private schools that are registered as charities are already expected to provide some form of “public benefit” under the Charity Act 2006, such as means-tested bursaries, partnerships with local schools, or involving their pupils in charitable works.
These measures were first announced by the newly elected Labour government on 29 July 2024, and are expected to provide £1.9 billion in investment in state schools by 2029-2030, thereby funding the recruitment of 6,500 new teachers. As many as 37,000 children are projected to move over to state institutions, costing the state an additional £8,000 per child in a year. According to the government, charging VAT at 20 per cent does not necessarily require schools to increase their fees by the same proportion, as they will be able to reclaim VAT on capital expenditure and on purchases of educational supplies.
Britain’s private schools come in various shapes and sizes. Included under this label are day/boarding schools, single sex/coeducational schools, single faith/all faith schools, specialist schools for the arts and music, and schools that cater for pupils with special educational needs (SEND). Some senior schools in the private sector are misleadingly identified as ‘public schools’, while their junior counterparts are known as preparatory or prep schools. When it comes to paying taxes, these education providers will henceforth all be subject to the same treatment, with some exceptions for those providing for SEND pupils.
There are over 2,500 private schools in the UK, the majority of which come under the umbrella of the Independent Schools Council, while a smaller select group of public schools subscribe to the Headmasters and Headmistresses’ Conference. These schools are subject to inspection by either the Office for Standards in Education, Children’s Services and Skills (Ofsted) or the Independent Schools Inspectorate, which require different standards to be met. There is also a hierarchy among private schools, at the top of which are the nine elite Clarendon Group schools, which include Eton, Harrow, Rugby, and Winchester. According to government figures, an average of 74 private schools have closed and 83 new ones opened each year from 2000 onwards, suggesting that market forces may play a part in the constant flux in numbers.
Yearly average fees for day pupils are currently around £18,000, rising to £40,000 for boarders. Averages are not necessarily the best measure of expenditure on private education as they can mask the wide range of school fees and are particularly distorted by a small number of outliers. These fees also do not account for such hidden extras as uniforms, sports kits, school buses, catering, school trips, and assorted extra activities.
The Labour government’s actions have provoked accusation of “class envy” in right-wing circles, being seen as an assault on the desire of “aspirational parents” who scrimp and save, forgoing luxuries including holidays and even remortgaging their homes to secure an advantage for their children, and have re-energised the debate over the rights and wrongs of public versus private education.
According to a review by Professor Francis Green on “Private Schools and Inequality” for the Institute of Fiscal Studies in 2022, “there is a stark socioeconomic segmentation of pupils between private and state sectors.” There is no level playing field in British secondary education, and the attainment gap in educational and socioeconomic outcomes between private and state schools continues to widen, perpetuating differences in incomes and social status in later life. Many private schools are well provided for in terms of land and buildings and have enviable financial assets in the form of investments and securities. Their ample resources allow them to cater for smaller classes with lower pupil-teacher ratios, while providing far superior access to extracurricular facilities (arts, drama, music, debate, sports, etc). A wider range of subjects can be taught, as these schools are not restricted by the National Curriculum. Pastoral care for pupils is readily available, promoting emotional wellbeing and developing self-confidence, assertiveness, and leadership skills. Private school alumni consequently perform better at school-leaving exams, are more likely to progress along a proverbial ‘conveyor belt’ to Oxbridge or Russell Group universities, to secure well-paid prestigious jobs, to play an important role in public life, and to even excel in professional sport.
These new taxes, which may or may not be ringfenced, are meant to enable increased government spending on state schools, and can also be seen as part of a wider drive towards educational equality in British society. Access to private school education is mostly the prerogative of wealthier households, with a smaller number of children from lower-income families benefiting from bursaries, scholarships, employer support, sibling discounts, or inherited windfalls from their grandparents. Given that 94 per cent of schoolchildren are provided for in the state sector, there is a dearth of public sympathy for those parents who are likely to be disadvantaged by these new taxes, especially when many private schools are expected to pass on this new tax burden directly onto parents. It is noteworthy that private school fees have risen by as much as 75 per cent in real terms since 2000, without any added taxation, and are much higher than the fees payable for state-funded private education in France and Germany.
Most parents of children in public schools and many other prestigious private schools should be able to absorb the added costs of VAT. Some of these schools are business ventures, owned by corporations, trusts, and well-heeled private individuals, including venture capitalists-all better equipped to deal with raised taxes. Those smaller educational institutions at the bottom of the pile may either be forced to close, to relocate, or to rethink their strategies and business models and then restructure to cope with the new realities. Some parents may opt for “proactive financial planning” to ensure that their children continue to benefit from private schooling. While there will always be a place for private schools, it seems just that all pupils, irrespective of family circumstances, should benefit from better standards of education, and not just the chosen few, if the nation is to become truly “great again.”
Ashis Banerjee