According to the Independent Schools Council (ISC), the number of children in private education has fallen by 10,000 in the past year as parents anticipate the introduction of VAT on school fees in January.
The organization estimates that this move could cost the government an additional £93 million to educate these pupils in state schools.
A survey of almost 1,200 fee-paying schools conducted by the ISC showed a 1.7% decline in enrollments, with the steepest decline (4.6%) occurring in year seven, the first year of secondary education. This data compares the student numbers of September 2022 with September 2023.
The government’s decision to add 20% VAT to private school fees will come into effect in January 2025. A move Labor claims will generate £1.5 billion in extra funding for state education and teachers. Although ministers have suggested that schools do not have to pass on the full VAT costs to parents, few schools have committed to covering the costs.
Wales has been hardest hit, with a 5.2% drop in private school enrollments, followed by Yorkshire with 2.6% and South West England with 2.4%. The ISC noted that the decline mainly affects smaller schools and schools with lower tuition fees.
Smaller schools with fewer than 300 students have seen student numbers fall by 3.2%, three times as much as larger institutions. Additionally, schools with rates more than 10% below average have experienced an average drop of 7.5 students per school, compared to 5 students in institutions with higher rates.
The ISC has raised concerns about the impact of the VAT policy on small schools, faith schools and pupils with special educational needs and disabilities (SEND). Julie Robinson, general secretary of the ISC, said: “Parents are already pulling their children out of independent schools as a result of the government’s plans to charge VAT. This is just the tip of the iceberg; many small schools are already at risk of closure.”
The ISC is considering a High Court challenge to delay the introduction of VAT on school fees. Law firm Sinclairs is also pursuing a separate legal challenge on behalf of a mother of a child with special needs.
The government has promised that students with an Education Health and Care Plan (EHCP) do not have to pay VAT on their school fees. However, many children with special needs who do not have an EHCP are subject to an additional charge. This year’s ISC census found that 20% of children in private schools have a special need or disability.
With population growth in the number of middle-aged children expected to peak in 2029, the VAT policy could put further pressure on both private and public schools. A government spokesperson said: “Ending tax breaks for private schools will help increase the revenues needed to fund our education priorities.”
The Government’s full analysis of the VAT policy and its expected impact, based on cost calculations from the Office for Budget Responsibility (OBR), is expected to be published in the upcoming Budget.