10,000 fewer children in private schools ahead of Labour’s VAT policy, industry warns
The number of children attending independent schools fell by 10,000 last year as parents await the introduction of VAT on school fees in January, according to the Independent Schools Council (ISC).
The organization estimates that the move could cost the government an extra £93 million to educate these students in state schools.
The ISC’s survey of nearly 1,200 fee-paying schools revealed a 1.7% drop in enrollment, with the largest drop—4.6%—occurring in the seventh year, the first year of secondary education. This data compares student numbers from September 2022 to September 2023.
The government’s decision to add 20% VAT to private school fees is expected to come into effect in January 2025, a move that Labor claims will bring in £1.5 billion in extra funding for education and teachers. Although ministers have suggested that schools should not pass on the full cost of VAT to parents, few schools have committed to containing the cost.
Wales was hit hardest, with a 5.2% drop in private school enrollments, followed by Yorkshire by 2.6%, and the south-west of England by 2.4%. The ISC noted that the decline particularly affects small and low-income schools.
Small schools with fewer than 300 students saw enrollment decline by 3.2%, three times the rate of larger institutions. Additionally, schools with fees more than 10% below average dropped an average of 7.5 students per school, compared to 5 students at the highest-paying institutions.
The ISC raised concerns about the impact of the VAT policy on small schools, religious schools, and students with special educational needs and disabilities (SEND). Julie Robinson, General Secretary of the ISC, said: “Parents are already pulling their children out of private schools because of the government’s plans to charge VAT. This is just the tip of the iceberg, with many small schools already at risk of closure.”
The ISC is considering a High Court challenge to delay the implementation of VAT on school fees. A separate legal challenge is also being pursued by law firm Sinclairs on behalf of the mother of a child with special needs.
The government has committed that students with an Education Health and Care Plan (EHCP) will not pay VAT on school fees. However, many children with special needs who do not have an EHCP will be charged extra. This year’s ISC census revealed that 20% of children attending private schools have special needs or disabilities.
As the population of children attending high school is expected to increase by 2029, the VAT policy may put pressure on both private and public schools. A government spokesman said: “Ending the tax break for private schools will help raise the money needed to fund our education priorities.”
The government’s full analysis of VAT policy and its expected impact, based on estimates from the Office for Budget Responsibility (OBR), is expected to be published in the next budget.
