‘Everyone worse off’ under Labour private schools plan

Stripping private schools of charitable status would increase burden on state school teachers, warn leaders

27th September 2021, 5:22pm

Independent Schools' Charity Status: Labour Private Schools Plan 'would Cost The Taxpayer'

A Labour plan to scrap private schools’ charitable status would result in “displaced pupils” moving to state schools and bigger class sizes, school leaders are warning.

Citing the gap between the children of wealthy families and poor families being further exposed by the coronavirus pandemic, Labour leader Sir Keir Starmer yesterday set out a plan to increase the tax burden of private schools.

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Labour has said it would end the charitable status of England’s private schools, raising an estimated £1.6 billion from VAT and £100 million from business rates.

Sir Keir told BBC One’s The Andrew Marr Show: “This is a political choice to take that money and switch it to our state schools so that children and young people in our state schools have the best chance they can have to come out of schools ready for life, ready for work.”

Removing charitable status for private schools ‘would end up costing the taxpayer’

But Geoff Barton, general secretary of the Association of School and College Leaders, warned that the idea could lead to “displaced pupils moving into the state system”.

He said: “We are happy to explore this proposal in more detail, but our concern is that it would result in many small independent schools having to close.

“This would be disruptive to the pupils and staff involved, and would most likely end up with many displaced pupils moving into the state system with a consequent increased cost on public funds that would erode the extra income that the policy is aimed at raising.”

Meanwhile, private schools are warning the policy would end up “costing the taxpayer significant sums of money”.

Simon Hyde, general secretary of the Headmasters’ and Headmistresses’ Conference, which represents leading private schools in the UK, said: “Research by Baines Cutler has shown that removing the charitable status of independent schools would not yield the amounts suggested, but would instead end up costing the taxpayer significant sums of money, as schools would be eligible for VAT recovery.

“Schools currently pay PAYE, business rates and VAT and pay significant sums in tax every year,” he added.

And Barnaby Lenon, chair of the Independent Schools’ Council, said: “Keir’s sums don’t add up. If VAT was imposed, the least well-endowed, smallest private schools would certainly be forced to close.

“This would result in a sudden increase in costs to the taxpayer as pupils transferred to the state sector, as well as an increase in state school class sizes. After four or five years these additional costs would exceed the VAT income. Everyone would be worse off.

“There are only 1,300 charitable status fee-charging schools so charging VAT and scrapping business rates relief for these schools would generate at best only £200 per state school pupil. As more private schools closed, this would gradually fall.”

Dr Hyde added: “HMC looks forward to working with all political parties to improve the education of all young people in the UK, especially as we emerge from the pandemic and the immense disruption so many learners have experienced over the last 18 months.”

“Independent schools contribute nearly £14 billion to the UK economy every year, support more than 300,000 jobs and save the taxpayer another £3.5 billion annually through the education of 600,000 children and young people, at no additional cost.”

“100 per cent of HMC schools are involved in partnerships with local state sector schools, bringing a huge range of cultural, sporting, academic and pastoral benefits for all involved.”