Sir Keir Starmer has insisted that Labour’s decision to remove tax exemptions from private schools if elected is not an “attack” on the sector.
The Labour leader said he is “very comfortable” with the institutions as he faced criticism from private school leaders for policy plans that would also see their business rates exemption ended.
He was also facing allegations of a “U-turn” after Labour backtracked on plans to end the charitable status of private schools in England.
The party said the move was no longer needed to fulfil its commitment to charge 20 per cent VAT on fees and make private schools start paying full business rates.
Sir Keir said that he does not believe the institutions are an obstacle to opportunity, but he wants to ensure that state schools are “just as good”.
“We have to do something about the appalling state of our schools,” he told the BBC’s Political Thinking with Nick Robinson podcast.
“It is not an attack on private schools. It’s just saying, ‘an exemption you have had is going to go’.”
Private schools in England currently benefit from an 80 per cent discount on business rates, and they also do not have to pay VAT on school fees.
Sector backlash
Julie Robinson, chief executive of the Independent Schools Council, said: “If Labour takes away the tax relief associated with charitable status for independent schools, the policy would create a two-tier system within the charity sector.”
She said she fears that this could set a “worrying precedent” that any charity that is viewed as “not reflecting the political ideology of the day” could then be forced to pay additional taxes if Labour continues with its plans.
“We would love to work with Labour to build more effective ways to achieve our shared goal of improving education for all young people.”
Christine Cunniffe, principal at the independent day and boarding school LVS Ascot, said: “This whole thing is an error. When you look at the real figures of what the impact is going to be, they’re not going to make any money. It’s going to cost them. Why would you mess with something that’s not broken?”
Sir Keir has told private schools that they “[don’t] have to pass [the additional costs] on to the parents in fees”.
“Each of the schools is going to have to ask themselves whether that’s what they want to do,” he added.
Labour accused of U-turn
The Labour leader is facing allegations of a “U-turn” after his party backtracked on plans to end the charitable status of private schools in England.
The party, as first reported by the i newspaper, says it no longer needs to strip the schools of their charitable status to impose VAT on them.
Party sources pointed out that they only ever intended to remove the VAT and business rates “perks” for private schools and claim the issue of charitable status was used “more as shorthand for the policy”.
Being able to claim gift aid on donations and not paying tax on annual profits, which must be reinvested in education, are among the benefits that their charitable status allows.
Tax hike ‘just doesn’t work’
A Labour spokesperson said: “Our policy remains. We will remove the unfair tax breaks that private schools benefit from, to fund desperately needed teachers and mental health counselling in every secondary school.
“This doesn’t require removing charitable status, however driving high and rising standards for every child against the backdrop of a broken economy requires political choices. Labour isn’t afraid to make them.”
The party said its policy costings only ever took into account charging VAT on school fees and ending the business rates exemption, rather than the other tax breaks.
Chief secretary to the Treasury John Glen said: “Labour has been forced to U-turn on one of their major policies - this time admitting that their schools tax hike just doesn’t work.”
Earlier this year, the Institute for Fiscal Studies carried out analysis that found that removing tax exemptions from private schools is likely to have a limited effect on the number of pupils attending them.
