Middle-class parents have welcomed the government’s decision to introduce a 20 percent VAT levy on private school fees, according to education secretary Bridget Phillipson.
Previewing the launch of the policy next Wednesday, Phillipson says many families have been “priced out” of independent education due to rising costs, and now want a stronger state system instead.
With some boarding schools charging more than £50,000 a year, and the average private school fee now standing at £18,000, Phillipson argues that “pushy middle-class parents” can no longer cover the costs. She said this supports Labor’s position that ending tax breaks for private schools will generate an estimated £460 million in 2024-2025 – rising to £1.7 billion in 2029-2030 – creating 6,500 new state teachers and additional mental health services for students will be funded.
Despite concerns from private schools, whose tuition costs have risen by 75 percent in real terms since 2000, Department for Education (DfE) officials predict the VAT increase will reduce private school enrollments by just 6 percent, with most of these students transfer to state education. Phillipson dismisses warnings of widespread closures as “scaremongering,” noting that state schools have recently housed significant numbers of students from Ukraine and Hong Kong “with no negative impact.”
Private institutions respond in different ways. Some, including Eton and Westminster School, are passing on the full 20 per cent surcharge to parents, while others, such as Queen Ethelburga’s near York, are limiting rate increases to 3 per cent. Schools are technically able to reclaim VAT on items such as capital projects and educational supplies, keeping their net VAT liability at around 15 percent. Phillipson says many have “no good reason” to impose the full increase on parents.
The Independent Schools Council says the levy, together with increased employer contributions and the loss of tax relief for charities, leaves schools in an “extremely challenging position”. For example, Carrdus School in Oxfordshire will close in July due to mounting financial pressures. Yet Phillipson insists the new funding stream is crucial to strengthening Britain’s state schools – and she says it represents a “badge of honour” as it raises standards for children across the country.