Labour's private school tax raid 'threatens UK’s global reputation for education'

Heads of independent schools hit back over imposition of 20 per cent sales tax on fees from January

Prime Minister Keir Starmer and Education Secretary Bridget Phillipson with children at Perry Hall Primary school in Orpington. Getty Images

Labour’s VAT raid on private schools threatens to harm the UK’s global reputation for education, according to a group representing independent school head teachers, as the government acknowledges that some international students will inevitably leave.

The UK will add the 20 per cent sales tax to fees from January, while removing business rates relief from April under plans to funnel more money to the state sector.

The measure was confirmed in Wednesday’s big-spending budget, which raised taxes by £40 billion, despite being unlikely to lift economic growth over the next five years, according to the independent Office for Budget Responsibility. Chancellor Rachel Reeves admitted on Thursday that her decision to raise national insurance contributions (NIC) for employers is likely to reduce wages and lead to job losses.

A government policy document released on budget day revealed it expects a 37,000 pupil reduction in the private education sector – hundreds of whom could be pupils from overseas.

“Of the 37,000 pupil reduction in the private sector, the government estimates an increase of 35,000 pupils in the state sector in the steady state following the VAT policy taking effect, with the other 2,000 consisting of international pupils who do not move into the UK state system, and domestic pupils moving into homeschooling,” it said. “This state sector increase represents less than 0.5 per cent of total UK state school pupils, of which there are over 9 million.”

The chief executive of the Independent Schools Association told The National it was deeply disappointed by the “misguided policy” which looks to be a “serious error” by the government.

“The policy threatens to undermine the UK's position as a global education hub and will undoubtedly hurt many of our schools and the pupils who use them,” said Rudolf Eliott Lockhart. “Despite this challenge, I'm confident that independent schools within our membership will do everything they can to continue to attract students from across the UK and around the world. Our schools have always been adaptable, and they'll keep working hard to maintain the remarkable quality and appeal of UK independent education on the global stage.”

Earlier this week, European ambassadors warned that imposing VAT on international schools in the UK could lead to hundreds of pupils leaving. German ambassador Miguel Berger and French ambassador Helene Duchene told The Times they wanted international schools excluded from plans.

The only groups the government has pledged to support so far, however, are special needs children with an Education, Health and Care Plan and military and diplomatic families who move frequently for work and whose children attend boarding school to ensure their education is not disrupted.

The government will increase the funding allocated to the continuity of education allowance (CEA) – which supports these staff with the fees for their children. The CEA can cover up to 90 per cent of boarding school fees.

The new policy, which will make the UK the only western country aside from New Zealand to tax education, is expected to lead to a drop of up to 20 per cent in the number of private school pupils. The sector currently educates around 6 per cent of children in the UK.

Independent schools across the country reported a fall of more than 10,000 pupils this year, with the starkest decline at the start of secondary school. Boarding schools saw the biggest drop overall, at 2.4 per cent on average, according to new figures from the Independent Schools Council (ISC).