The government’s policy of putting VAT on private school fees is “destructive, disruptive and divisive”, the shadow education secretary has warned in Parliament today.

Damian Hinds pressed the government to publish a full impact assessment to show the effects of the reform on independent schools and the state sector as MPs debated the issue.

However, the government has said that private schools will be able to keep fee increases affordable for parents by absorbing a “significant proportion” of the new VAT charges.

Treasury minister James Murray was heckled by opposition MPs as he defended the proposal to remove the VAT exemption and business rates relief for private schools from January, to enable funding for 6,500 new teachers in state schools.

He said some schools have committed to absorbing the VAT liability entirely, while others are capping fee increases at 5 per cent or 10 per cent.

Calls for government to postpone VAT charge

Mr Hinds suggested the January 2025 start date for the policy should be delayed and he also questioned if it might lead to the Treasury also targeting private nurseries, music lessons and private tutoring.

Speaking during a Conservative-led opposition day debate, Mr Hinds said: “Time is needed to adjust, and that is why our motion further calls for the government to postpone imposition of the VAT charge for schools in areas where state schools…are on average almost full.

“This is a government which barely has its feet under the table, and already it is a government in chaos.”

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“A chaos exemplified by this destructive, disruptive and divisive education tax which will interrupt learning, create place demand where it cannot be accommodated, put further strain on the special educational needs and disabilities (SEND) system…likely generate much lower revenue than anticipated, and quite possibly actually even end up at a net cost to the public purse in its headlong rush to make a political statement.”

Mr Hinds later said: “The principle of no tax on learning is a fast one. And once you loosen it, you don’t know where you’ll go.

“Where might the treasury look next? Private nurseries perhaps? Music lessons? Private tutoring? What actually is the philosophical difference between independent school education and private tutoring?”

Government ‘has carefully considered’ impact of changes

Replying for the government, Mr Murray said: “Whilst private schools will now be required to charge VAT on the education services and vocational training they provide, we expect most private schools will be able to absorb a significant proportion of this new VAT charge and keep fee increases affordable for most parents.

“They will be able to make efficiencies and recover the VAT they incur on the things they buy. These recovered costs can be used to offset increases to fee-payers. We are already seeing that some schools have committed to absorbing the VAT liability entirely whilst others are choosing to cap fee increases at 5 per cent or 10 per cent to keep fees as low as possible for parents.”

Mr Murray also told MPs: “The government recognises some pupils may subsequently move into the state education sector as a result of these policies.”

However, he said it would be a very small proportion of the overall numbers in the state sector and added that the government was “therefore confident that the state sector will be able to accommodate any additional pupils” coming into the system as a result of this policy.

Mr Murray said introducing the policy from 1 January was because the government wants to “raise the funding we need as soon as possible to deliver our education priorities for state schools across the country”.

He said the government has “carefully considered” the impact of the changes on pupils and their families in both the state and private sectors, adding: “The government’s costing of these policies is currently being scrutinised by the independent office for budget responsibility.”

MPs voted 363 to 190, a majority of 173, to reject the Conservatives’ motion calling for an impact assessment on the policy of introducing VAT on school fees to be published ahead of the budget on 30 October.