Imposing VAT on independent school fees could cause a “loss of talented teachers” for both state and private schools, headteachers’ and teachers’ leaders have warned. They say the policy should be delayed to next September to avoid “negative consequences”.
In its response to the Treasury’s consultation Applying VAT to Independent School Fees, the Association of School and College Leaders warned that introducing the charge in the middle of the school year, in January, could lead schools to make unbudgeted staffing changes, and result in teacher redundancies.
The concerns come after the government announced over the summer holidays that the 20 per cent tax on private school fees would be coming into force on 1 January 2025.
The policy was a key pledge in the Labour election manifesto, with the party promising that removing the VAT exemption and business rates relief for independent schools would generate funding for 6,500 new teachers in state schools, pay for breakfast clubs in all primary schools and allow for the reform of Ofsted.
Teacher union the NASUWT expressed fears about potential redundancies in its consultation response, warning that some teachers may be unable to secure a new post mid-year and could be “lost permanently” from teaching.
“We do not wish to see the loss of talented teachers from the profession,” the union wrote in its consultation response, which closed last week.
NASUWT and ASCL have 15,000 and 1,600 independent school members respectively.
NASUWT specifically warned the government about the policy’s impact on the “retention of experienced teachers”, and said that female teachers, who according to the ISC make up the majority of the independent sector workforce, would be particularly impacted.
Private schools in England currently benefit from an 80 per cent discount on business rates, and parents do not have to pay VAT on school fees.
Longer time frame needed for changes
ASCL, NASUWT and the Independent Schools Association (ISC), which represents more than 1,400 independent schools in the UK, have all called on the government to delay the January 2025 starting date for the new tax to be charged on fees.
Both ASCL and ISC urged for the policy to be pushed back to September 2025, with ISC adding that it would be “more practical” for schools that have already set their budgets for the current academic year.
“There has never been an opportunity to have a meaningful discussion on the principle of the policy, the detail or the timing of implementation,” the ISC wrote in its submission.
It further added that the impact of the policy on schools across all parts of the sector “has not been fully considered”.
NASUWT also requested a “more reasonable time frame” from the government, warning that the current start date could cause “excessive disruption for teachers, pupils and parents”.
Independent staff under ‘immense pressure’
The policy’s short implementation time could also harm staff wellbeing, the unions and sector organisations warned.
ASCL said that announcing the new mid-year start date in July, when schools were on their summer break, “truncated helpful dialogue” and “increased anxiety among school leaders”.
ISC also highlighted the impact that the VAT policy has had on the “emotional wellbeing” of governors and senior leadership teams.
“They will be under immense pressure from parents anxious about fee rises and will be having to take very difficult decisions, which may include making staff redundant,” ISC warned.
VAT policy could create ‘unhelpful division’
Both NASUWT and ASCL, who represent teachers and school leaders across state and independent schools, expressed concerns about the potential negative impact the tax policy could have on state schools.
ASCL warned that VAT on independent school fees could create “unhelpful division across the education sector”, and questioned the government’s choice over how it will raise money for the state sector from “elsewhere in the education system”.
It also warned that potential pupil movement from independent to state schools because of these policies could both “reduce VAT revenue” and “increase costs to the state of educating more pupils”.
Research by the Institute for Fiscal Studies (IFS) think tank in 2023 found that the number of private school pupils has been stable in recent years, despite a 20 per cent real-terms increase in average private school fees since 2010, and a 55 per cent rise since 2003.
Calls for SEND impact assessment
Additional pressure on the state sector system could result from an increase in education, health and care plan (EHCP) applications, according to consultation submissions.
Both NASUWT and ISC called for the undertaking of an impact assessment to consider the effect on the special educational needs and disabilities (SEND) system, specifically on local authorities, “where more mainstream places may be needed”.
The government has said that independent school pupils with EHCPs will not have to pay additional fees under the new policy.
However, NASUWT warned that the policy may still result in local authorities being put under pressure to find additional school places or carry out more SEND assessments for students displaced from the independent sector.
The ISC is also concerned about those children with SEND who are still waiting to receive an EHCP.
The number of pupils and young people with EHCPs has increased by the largest amount since the pandemic, government data revealed earlier this year.
According to DfE data for England, there are 132,500 pupils in independent schools receiving SEND support (one-fifth of all pupils in the independent sector) - of these, 33,500 pupils have EHCPs and 99,000 pupils receive SEND support without an EHCP.
“Often, independent schools are providing SEND provision to plug gaps in capacity that is not otherwise available locally,” the ISC said, adding that the VAT policy will “undermine the government’s attempts to fix the SEND system”.
The Treasury has been contacted for comment.
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