(1 month ago)
Lords ChamberRead Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Lexden
To ask His Majesty’s Government what assessment they have made of the implications of levying VAT on independent schools with effect from 1 January 2025.
Lord Lexden (Con)
My Lords, I declare my interest as a former general secretary of the Independent Schools Council and the current president of the Independent Schools Association, one of the council’s constituent bodies. Its 670 members—which are generally small in size, with great strengths in special needs, bilingual teaching and the performing arts—are particularly at risk as a result of the Government’s VAT plans. The council acts on behalf of some 1,400 schools, which are educating around 80% of the 600,000 children in the independent education sector.
Surely, it ought to be the duty of each and every Government, regardless of political complexion, to value and to safeguard all children in our country’s schools. The education of the many thousands in independent schools ought never to be harmed by the actions of government. Can it be right to inflict on some—perhaps many—of these children the problems that the imposition of VAT, our country’s first ever education tax, will inevitably cause?
Nevertheless, this very short debate is not about whether VAT should be slapped on school fees. The die is cast: Labour’s election manifesto said explicitly that VAT would be extended to school fees, and the Government are proceeding at breakneck speed to get it introduced. This debate is about the great haste with which the Government are acting. Out of the blue, schools were told at the end of July that they would start paying VAT five months later, on 1 January next year—five months to alter plans and budgets that had been fixed for the academic year starting in September. Notice of those five months was received during the school summer holidays, during which the Treasury held a consultation exercise covering a whole host of technical details.
The Government say, blithely, that five months is quite sufficient to prepare for this unprecedented change. I ask the Minister: would the Government ever contemplate asking state schools to redo their plans for a new academic year at such short notice? Taxation apparently trumps the education and welfare of children in our country’s independent schools. The Treasury wants to start getting in cash as fast as it can. Last week in the Commons, a Treasury Minister said that
“we want to raise the money as soon as possible”,
adding, breezily yet again:
“There will have been five months for parents and schools to prepare”.—[Official Report, Commons, 8/10/24; col. 174.]
Glorious things are promised from the VAT receipts: 6,500 extra teachers, 3,000 new nurseries and breakfast clubs in all primary schools. All these benefits will come from money which, if the Government should manage to raise their levy target of £1.5 billion, will represent just over 1% of the total education budget. A degree of scepticism about these promises might be in order.
Will the £1.5 billion target be reached? The crucial issue is the extent to which the education tax will force parents to move their children to state schools. The Government say the numbers will be small. They have not bothered to make any assessment of their own; they are placing their faith entirely in one single report produced by the Institute for Fiscal Studies. This suggests that between 4% and 7% of children will “migrate”—a singularly inapposite term for the displacement and disruption of pupils during their school careers. That would mean up to 40,000 children would be unable to continue their education in the schools their parents had chosen for them. That in all conscience would be bad enough, but a number of other independent studies have calculated that the number will be much higher. The Government ignore them.
But even the author of the Government’s favoured report now has his doubts about its predictions. This is hardly surprising. The report itself declares that it is based on “relatively thin” evidence and “relatively old” data, garnished by details furnished by Catholic schools in America, whose relevance is unclear. Last weekend, the author of the IFS report said that the Government’s education tax could destroy the continuity of education for far more children: 15% could be forced to move. That means 90,000 children would be added to the number in state schools, virtually wiping out the £1.5 billion for which the Government introduced their education tax in the first place.
But such gloom is misplaced, say the Government, because, as the Treasury Minister, the noble Lord, Lord Livermore, told your Lordships a week ago,
“very many private schools will take steps to absorb a proportion, or all, of the new VAT liability, so there may be no increases in fees”.—[Official Report, 10/10/24; col. 2103.]
The noble Lord should get out and talk to those dealing with the financial affairs of independent schools. He would quickly discover that absorbing the education tax would mean cuts—above all to staff, who account for some 70% of school costs. No wonder the NASUWT has called for the new tax to be delayed until next September to try to find a way of reducing the prospect of job losses.
“What about the large sums that schools derive from their substantial capital assets?” some say. “They can be used to pay the education tax.” But no more than a small minority have any income from such sources. It cannot be said too often that most independent schools are small in size, serving their local communities in which they are embedded and by which they are cherished. Some 40% of independent schools have under 100 pupils. They have no handy reserves into which they can dip. They will be forced to jack up their fees by a massive 20% in the middle of an academic year—after a period of 20 years in which fees have risen broadly in line with inflation.
What have the Government to say to the thousands of worried parents up and down our country? I will give just one example. A father in Worcester will have to move his son from an independent school at the end of this term. He writes that,
“we need a local school that will teach my son for his A-levels starting in January. You can’t possibly expect a young man to drop two years and restart A-level courses in different subjects. He is studying Greek, Latin and German. There is no local school that can provide what he needs”.
How would the Minister reply to that distressed parent?
Independent schools are surely entitled to expect clear, comprehensive guidance on what they must do when the education tax takes effect in two and a half months’ time. They have not got it. What was issued to them a week ago by HMRC was woefully inadequate. In a letter to the Treasury last Monday, the Independent Schools Council described it as “disheartening” and “disappointing” and said that it did not provide the
“clear and comprehensive overview schools need”.
The guidance, it stated, was
“confusing, partial and lacking in relevant examples for schools”.
They may have just a single bookkeeper who will be a novice on VAT matters. The ISC said:
“Clear and understandable guidance is needed if mistakes are not to be made”.
Will the Minister give a firm commitment that this crucial guidance will be revised and reissued? Nothing could illustrate more clearly the folly of rushing to bring in the education tax on 1 January. Will the Minister tell the House whether anyone—anyone at all—outside the Labour Party itself has said that they support the introduction of the tax on 1 January?
Finally, in the debate that I introduced six weeks ago, much disquiet was expressed about the ways in which VAT will affect service and diplomatic families defending and representing our nation overseas; the families of the some 90,000 children with special needs who are thriving in independent schools without education and health care plans, which are so difficult and often so costly to get; and the Muslim, Jewish and other families who depend on small, low-cost faith schools in the independent sector. Will the Government now find the time to consider with great care the needs of these many desperately worried families? To do that, they should halt the dash to impose VAT in January.
Lord Watson of Invergowrie (Lab)
My Lords, I commend the noble Lord, Lord Lexden, whom I much respect, for giving us this debate on a subject that is, I know, close to his heart.
The question of VAT on independent school fees was widely circulated before the election, so nobody should be surprised by it. I accept that the January date will have come as a surprise to some but, having said that, if a school has decided that the imposition of VAT will mean it has to close, I cannot believe that the tax starting in January rather than September will be the deciding factor. Surely no school that values its students would close half way through an academic year.
The noble Lord, Lord Lexden, mentioned job losses and the National Education Union. It seems inconsequential to me because, given the issues around the retention and recruitment of teachers, any teacher unable to gain employment in the independent sector will have no difficulty in getting a job in the state sector.
My final point is that there seems to be a hypocrisy here. The Tories have characterised the proposed national insurance contribution rise as ignoring a Labour manifesto commitment. Here is a Labour manifesto commitment being delivered, yet there is more criticism. You cannot have it both ways—much as some would like to.
Baroness Garden of Frognal (LD)
My Lords, I have four quick questions.
First, how many of the highly experienced educationalists on the Government Benches are in favour of making such a demanding change half way through the academic year? Will the Government consider deferring this damaging decision to September, which will give time for an impact assessment and cause far less disruption—although disruptive it will still be?
Secondly, on VAT, what action are the Government taking on the discrepancy that means that FE colleges are not liable for the VAT refund scheme in the way that schools and multi-academy trusts are? This takes well over £210 million out of FE funding every year. They do an amazing job on very limited resources and they really deserve parity.
Thirdly, how will the needs of children with special needs or special skills that cannot be met by the state sector be covered if the specialist schools cannot afford to continue? What provision is being made for this?
Fourthly, I come to my regular question on the children of military personnel. Will the education allowance be increased to cover the additional cost? Military children already suffer upheaval aplenty and military personnel may well not be able to afford the increase if the Government do not pay. I am happy for the Minister to write if she does not have time to reply.
We have 19 spare minutes in this debate; I apologise for taking up 17 seconds of it.
Lord Alton of Liverpool (CB)
My Lords, during our previous debate, I referred to advice from my noble friend Lord Pannick on issues of compatibility with conventions that are relevant to the rights of children and their education. In the light of this proposal’s impact on schools catering for children with special needs, faith schools and specialist schools—as well as the disruptive consequences for children caused by the implementation date—several submissions have now been made by Members of this House to the Joint Committee on Human Rights, on which I serve, urging it to consider these issues of compatibility. There is also to be a legal challenge in the courts. It would be prudent and respectful of proper parliamentary scrutiny and consideration for the Government to wait for the outcome of such consideration and I urge them to do so. It is true that, when you legislate in haste, you repent at leisure.
Lord Campbell-Savours (Lab) [V]
My Lords, I strongly support VAT on tuition fees. If parents want to avoid it, there is a perfectly acceptable alternative: send children to boarding schools in the state sector, where VAT is likely to apply to boarding alone and not to tuition. For example, Keswick School, formerly a grammar school and now a comprehensive with a wide curriculum, in my former constituency, which three generations of my family have attended, provides day-pupil and boarding facilities in a beautiful environment in the heart of the Lake District, and attracts pupils worldwide.
Whereas public school fees average over £40,000 per year, state boarding schools such as Keswick School average at around £14,000. It is their wide social mix, in an atmosphere of local intake, parental aspiration and teacher commitment, that enable such schools to top state and private sector academic listings. Such schools are few and far between. I would like a huge expansion. Too many parents commit to public schools in the belief that a narrower social mix uniquely provides for the standards that they seek. They are mistaken. There are far too many casualties in the system that so often go unreported.
Baroness Morris of Bolton (Con)
My Lords, independent schools add greatly to their wider communities. They take the strain from the state sector through the willingness of parents to fund their children’s education, often at great personal cost. In many cases they offer a haven for children who struggle in large classes.
However laudable the Government’s aim to provide more resources in the state sector is, the means of funding this is questionable. This is not a theoretical debate. This affects real children and real choices. The changes to the system are bound to be complex, but enacting those changes in just five months and in the middle of the school year will have profound consequences for children in both the independent and the state sector. Philip Britton, the head of Bolton School, where I was educated and am a governor, has said that these changes need
“time and care and it really is a moment to press pause and think harder”.
Lord Davies of Gower (Con)
My Lords, the limited warning and the unworkable timings of a school holiday deadline mean that smaller schools without large accounts teams and in-house expertise will struggle to make the required changes in time, and it is unfair to give schools and parents such little time to digest this.
What about the child who has to leave a school where they were happy and thriving, and where that child has a supportive network of friends? The mental health crisis for young people resulting from the pandemic should be a reminder that young people are vulnerable to change. Each of the children leaving a school that they love is an individual, not a statistic, whose day-to-day life has been upended with virtually no warning. These children are the voiceless victims of the policy.
What plans do the Government have to support children going through this change? I would be very interested to know what the Minister has to say. The focus should be on bringing the whole education sector together. One suggestion put to me by a leading independent school was that, rather than VAT, why do the Government say that they expect independent schools to show that 20% of revenue goes into supporting means-tested bursaries and partnerships? If schools do not meet their target, tax them on the rest. As it stands, levying VAT is a pernicious move which will be disastrous on the whole of education.
Lord Davies of Brixton (Lab)
My Lords, I have two points for my noble friend the Minister by way of background to this debate. Does she agree that it is not just those parents who pay for their children’s schooling who care about their children’s education? Also, we all must pay our fair share of taxation—some taxes on our incomes, some on our expenditure through VAT. We pay our taxes not as a fee for service but as part of our commitment to society as a whole.
Baroness Fraser of Craigmaddie (Con)
Have the Government assessed the impact for Scotland? We have a different curriculum, exam structure, term dates, and pay and conditions for teachers. We also have different school starting ages, meaning that this policy could include nursery provision. Special needs are governed by the ASL Scotland Act. A diagnosis is not required to get help. We do not have EHCPs. A co-ordinated support plan is not a direct equivalent, as it is not required to attend a special school or receive additional support.
As education is devolved, the Government cannot reassure us that any income passed to the Scottish Government would be ring-fenced for education. At this moment, the Scottish Government are withholding £145 million from local authorities which is earmarked for education. Councils are making cuts. North Lanarkshire is reducing school bus services. Falkirk Council is considering cutting school hours. Inverclyde Council has said that if it does not receive the funding it will be forced to cut teacher numbers. Question 5 of the Treasury’s consultation asked:
“Does this approach achieve the intended policy aims across all four UK nations?”
Can the Minister tell us what responses to this question have revealed?
Lord Hacking (Lab)
My Lords, as a number of your Lordships know, I prepared an assessment on the school fees issue. I believe that this assessment was fair, honest and accurate. I sent a copy to the Prime Minister on 15 August and have supplied a number of Peers with copies, including my noble friend the Minister.
On the essential issue of the likely forced pupil migration, it is clear that the Government’s assessment is patently wrong. The consequences are grave: no profits whatever for the much-needed benefit to state education; and 80,000 pupils being forcibly migrated from the independent sector. This must not happen. I ask my noble friend the Minister to prevent it.
Lord Bilimoria (CB)
My Lords, this is intended to raise £1.3 billion to get 6,500 more teachers, yet we have 7% of children in private schools. I am a governor of Wellington College and a president of BAISIS. An estimated loss of 135,000 pupils would mean that we lost £1.58 billion not raise £1.3 billion, even if 15% to 25% of pupils moved to state schools. What about the 80% business rate discount being removed? That is so unfair. Will special needs children be exempt from this and continue to get help? Will Armed Forces children continue to get help?
We have a state school budget of £60 billion. Trying to save £1.3 billion when we actually end up losing £1.6 billion is not just a false economy; it is foolish. It is penny-wise and pound-foolish. Who thought of this? This is the politics of envy. We should be rising all the boats.
Viscount Bridgeman (Con)
My Lords, I will speak briefly on a particular aspect of education: cathedral choir schools. They are the inheritors of a priceless tradition that goes back centuries. The number of visitors to the cathedral services at which pupils sing is an acknowledgement of the hard work that choristers have put in, in their pursuit of excellence.
Musical education is hard work at these schools. They have a normal curriculum and rehearsals, and it is a condition of practically all choir schools that pupils study and learn a second instrument. If a cathedral school is forced by this new proposal to close, or at least to discontinue its choral traditions and facilities, the public sector will not be geared to take up the slack. I urge the Minister to do all in her power to safeguard the continuance of these very British institutions.
Baroness Keeley (Lab)
My Lords, the Government’s plan, linked to the policy to recruit 6,500 more teachers, is a vital step to solving the crisis in music education in state schools. Since 2010, there has been a catastrophic reduction in the number of children in state schools receiving sustained music tuition. We lost over 1,000 music teachers from state schools in a decade. Last year, the previous Government reached only 27% of their target for trainee music teachers. The number of GCSE music students has fallen by over a quarter since 2010 and the number taking A-level music has fallen by over two-fifths. Middlesbrough was among the areas that did not have a single school offering A-level music in 2021-22. Some 50% of children in independent schools receive sustained music tuition, but the figure for state schools is only 15%. The Government are right to take action to invest so that sustained music education and music qualifications become available to more pupils in state schools.
Lord Black of Brentwood (Con)
I declare my interests, as in the register. I have three questions. First, in opposition, noble Lords made much of commitments to the performing arts. Why do they now attack schools providing specialist training in these disciplines? They rely on recruiting young people with talent regardless of the means to pay. Ability to pay will now trump talent, endangering the pipeline of young people empowering the creative economy, including the tradition of English choral music.
Secondly, what is the Minister’s advice to a pupil studying A-level music who is forced out of their school in an exam year with no local school offering that subject, which is highly likely as 50% of state schools no longer do? Is it home schooling or “give up on your dreams”?
Thirdly, £1.5 billion is a wild overestimate of VAT revenues because of pupil migration. Even if, in the Government’s economic la-la land, all the money goes on teachers, which it will not, because this magic money tree is also funding nurseries and breakfast clubs, it will add just one-third of one teacher to each school. Is this con trick not just raising unattainable expectations of increasing standards for vulnerable children?
Lord Mountevans (CB)
My Lords, we have heard of the disruption to be caused by the extremely tight timing and of the groups who will be impacted particularly hard by the Bill. I have travelled professionally around the globe, and Britain’s independent schools are admired the world over. They are soft power, which is terribly important in this country. I am all in favour of social mobility: I was something akin to a governor of that great school, Christ’s Hospital, a unique school with a special position in social mobility. Please, can we not seek to level up?
Lord Shinkwin (Con) [V]
My Lords, when I asked the Government in a Written Question what assessment they had made of the mental health implications of this policy on children with autism and neurodiverse conditions, the noble Lord, Lord Livermore, said that it was a “tough” decision. I agree—tough if you have autism, SEN or a disability. Can the Minister confirm that she will place in the Library a copy of her department’s rigorous assessment of the mental health implications for these children, which her noble friend seems unaware of?
Lord Parekh (Lab)
My Lords, we need to look at this thing from a wider perspective. I suggest that we look at it in terms of what it is trying to achieve. Basically, it is concerned with achieving a certain measure of equality. We all recognise that our society is, rightly or wrongly, characterised by a deep sense of inequality, and that has educational and economic roots: a few schools, for example, produce students who control positions of power. Therefore, if our society is going to make progress and be stable and cohesive, it should be equal. An equal society would mean that those who have should share with those who do not. Therefore, in principle, I support this principle. The only question is whether it will achieve anything by itself. No, it is only a small step. Are other measures being contemplated? I do not see that. Therefore, my answer is: yes, this is a step in the right direction, provided it is complemented by other steps.
Lord Naseby (Con)
My Lords, nowhere else in the world is education taxed in this manner. Thousands of our children are to be basically left behind in the middle of the year, just at the time they need to prepare for exams and just after they have been through Covid. Boarding is vital to the military, our diplomats, and those who work abroad. I went boarding at Bedford School because my father was working in Pakistan. No, we cannot have envy being the determinant of the education, and indeed the future, of our country.
Lord Addington (LD)
My Lords, when it comes to this subject, here is the tack I would take: what is the practicality? What are you achieving? The fact of the matter is that the independent sector has had a tradition of covering gaps that the state has, particularly in special educational needs. There is music education, which it has quite clearly taken over, and the issues raised about services families. I gave some warning of this question, the answer to which should arrive in the Minister’s reply: will the Government take an assessment of what has happened in those three areas at least, and will they publish it during this Parliament so we can see what effect this has had? It is a fundamental change that they are making here, and they are on very shaky ground, so I would suggest that that happens.
Baroness Barran (Con)
I too thank my noble friend Lord Lexden for securing this debate. We have heard an overwhelming set of arguments this afternoon, as we did in our earlier debate, against this misguided move on the part of the Government.
Those arguments fall into different groups of children: those with special educational needs and disabilities, children from military families, children who take part in the music and dance scheme, and those attending cathedral choir schools. We have also heard serious concerns about implementation; the timing of introducing the new tax, particularly in Scotland; the disruption to teachers and children; the lack of readiness of HMRC; and, importantly, the impact on mainstream schools.
Organisations from the education unions to the Chartered Institute of Taxation are calling for delay, so I ask the Minister two questions. First, will she commit to talk to her colleagues in the Treasury to review the timing of the introduction of VAT? Secondly, if this really is not an ideological move, will she commit that the OBR will do future annual impact assessments, and reverse this if there is not a net contribution to the economy?
The Minister of State, Department for Education (Baroness Smith of Malvern) (Lab)
I thank the noble Lord, Lord Lexden, for securing this debate and providing another opportunity for noble Lords to discuss the implications of tax changes affecting private schools. I welcome the speed with which those contributing to the debate have rattled through their questions and I will do my best to respond to the points that have been raised. Where I am not able to do that, I will write to noble Lords with those responses, although given that we had three and a half hours on this topic relatively recently I am not sure that any new issues were raised in this debate. That does not mean that I do not recognise the strong feelings that have been expressed.
For the Government, the key implications are to secure the funding necessary to improve the state-funded schools that educate 93% of our children. Our state-funded school system includes more than 20,000 schools in England educating almost 8.5 million pupils. It is to this system that most parents and children must turn to meet their high aspirations—they do not have a choice. It is to this system that any parent can turn if they need a school place for their child—this includes parents of children who have previously attended a private school or may do so in the future. It is this system which already supports the vast majority of children with special educational needs. Most children with education, health and care plans are already educated in mainstream state-funded schools. It is these schools that provide a safe, supportive and nurturing environment, and high-quality education, for most children. It is for all the parents who have no choice that we must focus our efforts on these state-funded schools—this is where our priorities lie.
Ending the tax breaks on VAT and business rates for private schools is a tough but necessary decision. It will generate additional funding—I am afraid I disagree with the noble Lord, Lord Bilimoria—to help improve services, including the Government’s commitments to improve state-funded schools, which includes expanding early years childcare for all, opening 3,000 new nurseries, rolling out breakfast clubs to all primary schools, recruiting 6,500 new teachers, and improving teacher and head teacher training as part of restoring teaching to the career of choice for our best graduates.
It is strange to argue that “£1.5 billion is not that much money and therefore we should not pursue this particular route”. It perhaps explains how we ended up in the fiscal mess that we have done that so many noble Lords opposite are so flip about £1.5 billion.
Many noble Lords expressed concern about the timing of this provision. It was, of course, included in the plans of this Government when in opposition, and was for some time. It was in our manifesto. We have had a consultation on the issue. I and my colleagues in the DfE and the Treasury have held many meetings with concerned groups to listen to concerns and respond to them.
VAT will apply to tuition and boarding fees charged by private schools. I should say to my noble friend Lord Campbell-Savours that VAT will not apply to boarding fees in a state boarding school for terms starting on or after 1 January 2025. It is right that we end tax breaks as soon as possible to raise the funding needed to deliver our education priorities.
HMRC will be providing support to schools. Schools will be able to register for VAT following the Budget on 30 October. The Government recognise that, for many private schools, this will be the first time they have needed to register for VAT, which is why there is already bespoke guidance for schools. There will be online support sessions over the coming months to support schools to ensure that the registration process is as smooth as possible for them. That will help schools to be ready to charge VAT correctly and to remit it to HMRC.
I was clear the last time we spoke that the Treasury is assessing the impact of these changes in advance of the Budget. It will publish a tax information and impact assessment, including an equality assessment. The noble Lord, Lord Shinkwin, wanted an assurance that that would include special educational needs, and it will. On the impact, it is worth pointing out this change does not necessarily mean that parents will automatically face 20% higher fees. The Government expect private schools, as all businesses have to when taxes change, to take steps to minimise fee increases, including through their ability to reclaim VAT that they incur in supplying education and boarding, and, like state schools—which have seen considerably smaller increases in the resources available to them than the increases in fees for private schools—to make savings where necessary.
I know noble Lords feel very passionately about special educational needs, and so do the Government. That is why my right honourable friend the Secretary of State has made improvements in special educational needs provision fundamental in our department. We are not willing to accept that the only way we can deal with special educational needs is by providing an opt-out for a small number of pupils. We have sought to ensure that these changes do not disadvantage pupils who genuinely need provision unavailable in the state sector. Pupils who need a local authority-funded place in a private school, including those with local authority-funded education, health and care plans, will not be impacted by the changes because local authorities are able to reclaim the VAT that will be charged.
Most children with special educational needs attend mainstream state-funded schools. Most parents do not have the option to secure support within a private school. It is right that, where parents have the resource to choose a private school place for their child, for any reason—I understand why parents might choose to do that, given the parlous state that special educational needs provision in our schools was left in by the previous Government—they should pay their fair share to support a good state-funded education for every child. Any child with SEN who needs a state-funded place can apply to their local authority. All state-funded schools are used to supporting the needs of children with SEN. With the actions of this Government, I hope they will be even better at doing that in years to come. Parents of children with needs that cannot be met by their current school can request an education, health and care assessment, which can lead to an education, health and care plan. As I have already pointed out, if it identifies that a place in a private school is necessary, that will not cost the parents.
Once again, noble Lords have rightly identified the considerable contribution made to our education and creative sectors by music and dance schools, and choral schools. The Government have been engaged in discussions with schools providing that service. It is because we recognise the enormous contribution made by the eight schools in the music and dance scheme that we already provide access to that provision for talented young people on a means-tested basis. This allows low-income families to access that specialist education, where they have the enormous talent needed to do that.
The right way to manage this is to consider the support that the department provides through our music and dance scheme, rather than through any tax exemption, given the simplification in this system that the Treasury has rightly set as a principle. I know that the department will consider these issues following the upcoming spending review, as will the Ministry of Defence and the Foreign, Commonwealth and Development Office when looking at the continuity of education allowances provided to eligible officials and service personnel.
Once again noble Lords raised the extent to which pupils will transfer out of private schools. There are always some pupils who move between the private and state-funded school sectors. Approximately 50 mainstream private schools close every year, for a range of reasons. Where schools close, pupils may transfer to another private school or move into the state sector. I am sorry, but I fundamentally disagree with the analysis of my noble friend Lord Hacking; all the evidence appears to suggest that the number of pupils who might switch schools following these changes represents a very small proportion of overall pupil numbers in the state sector, and any displacement is likely to take place over several years. The IFS, by the way, is sticking with its figure that there will be a small impact in pupils moving.
Given that private schools have increased their fees— I made this point in a previous debate—by 20% in real terms over recent years, yet we have seen few students moving, it is not unreasonable to suggest that there is an inelastic demand for private schools, and that we will not see the scare stories about pupils having to move which have been part of this debate. All children of compulsory school age are entitled to a state-funded school place if they need one. I know that moving schools can be challenging but, where that happens, local authorities and schools already have well-established processes in place to support pupils moving between them.
I can tell the noble Baroness, Lady Fraser, that Scotland will be covered by the impact assessment.
Private schools will remain a part of our education system. Most pupils who are currently privately educated will continue to be privately educated. For the small number of parents who choose to move their children from the private to the state sector, we will make sure that there is a place for them. However, most children are already educated in the state sector, and that is where we must target our support and focus our efforts and resources. That is what we will do.