Labour’s 20% VAT on private school fees, which starts in January, is already driving a shift from the independent to the state sector, with more than 3,000 privately educated students applying to state schools between June and September.
The policy, announced by Chancellor Rachel Reeves in the Budget, will add an estimated £2,000 per pupil to annual school fees. Critics have called it a “tax on aspiration” and warn it could overwhelm the state sector.
New figures show that 124 councils in England, Scotland and Wales have received 3,011 applications from private school pupils to switch to state schools, with a further 2,500 expected to have left by January, according to the Independent Schools Council (ISC).
ISC chief executive Julie Robinson accused Labor of underestimating the impact, pointing out that the Treasury had initially forecast around 3,000 private-to-state transfers over the entire 2024-2025 academic year. Robinson expressed concern about the pressure on the state sector, stating: “The government has underestimated how many families will be affected.”
The impact of the policy has already led some private schools to consider closure. Carrdus School in Oxfordshire, owned by Tudor Hall, announced it would close in the spring if a buyer is not found. In a letter to parents, chairman Alison Darling identified VAT on tuition fees and higher employer national insurance contributions as factors making the school financially unsustainable.
The ISC, which represents more than 550,000 independent school pupils in Britain, has taken legal action against the government, claiming the policy is discriminatory. The organisation, represented by prominent barrister Lord Pannick KC, says the policy breaches the European Convention on Human Rights, particularly affecting students with special educational needs and disabilities.
Robinson emphasized that the ISC’s legal challenge is intended to defend families who may not be able to find suitable alternatives to public schools. “We continue to ask the Government to work with us to reduce the risks of this policy on specialist arts education, low-cost faith schools, small girls’ schools and children with SEND,” she said.
The Office for Budget Responsibility estimates that the policy could push 35,000 students from private to state education, raising concerns that the already overburdened state sector will struggle to accommodate them. The ISC’s legal claim will focus on the “right to education” and argue that the policy unfairly targets independent school families, potentially forcing them out of their educational choices.
With the start date fast approaching, pressure is mounting on the government to reconsider or delay the implementation of the policy to assess its full impact on both private and public schools.