Currently, all schools are exempt from VAT as they are considered eligible bodies under the Education Act. According to the VAT Act 1994, the provision of education or vocational training by an eligible body, along with closely related goods and services, is VAT-exempt. This includes fees for independent schools. Furthermore, about 50% of private and independent schools qualify for charitable status, making them eligible for certain reliefs from business rates.
The new Labour Government's proposal to introduce a school tax, with 20 per cent VAT being added to private school fees, and remove reliefs for schools deemed charitable organisation is an ill-thought-out policy. Hard-working parents may not be able to fund the higher fees and over 35,000 children could potentially need a space at their local state school. Class sizes look likely to increase, and the policy could affect a large proportion of children with special education needs. The generous bursary system offered by many independent schools to so many disadvantaged children may also decline.
Richard is opposed to the measures and will work with local schools – public and state – and with the local Council to mitigate the worst consequences. Hard-working families should have the choice of where to send their children to school.
Since the election, Richard has been meeting with the headteachers of local private schools and the Head of the Harpur Trust to discuss the impact of the policy. He has also met with the Chief Officer for Education at Bedford Borough Council to better understand the knock-on effects of the policy on local state school provision.
In addition to being a mean, anti-aspiration measure, Labour’s policy has a potential serious practical impact on local state schools. In Bedford Borough alone we cannot take any additional students in secondary schools as the schools we already have are currently oversubscribed. Put simply, there are no secondary school places available.
To try and clarify the position with regard to fees in the next academic year, Richard tabled a Written Parliamentary Question with the Government: Written questions and answers - Written questions, answers and statements - UK Parliament. The Government has since confirmed in a statement to Parliament on 29 July 2024 that VAT will apply from January 2025.
In early August, Richard and neighbouring MP in Mid Bedfordshire, Blake Stephenson, wrote to the Education Secretary asking her to re-think this policy. The letter can be read here and in October Richard again wrote to the Education Secretary to raise Bedford Borough Council's concerns about the proposed removal of independent schools from current VAT exemptions for educational organisations. The reply can be read here.
In the Budget in October 2014, the Government confimed that it would be applying VAT on private school fees from January 2025 and that business rate relief would be removed in April 2025. Richard comments can be read here.
