Independent Schools: VAT and Business Rates Relief

Monday 3rd March 2025 Westminster Hall

16:30

[Martin Vickers (in the Chair)]

Before we begin, I will make a short statement on the House’s sub judice resolution. There are legal proceedings active in relation to the policy of applying VAT to private schools. However, Mr Speaker issued a waiver on 5 February to allow reference to those cases, now and in future proceedings, on the grounds of national importance. For the record, I point out that my daughter is a teacher in a school affected by the VAT on fees.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

I beg to move,

That this House has considered e-petition 701268 relating to VAT on independent school fees and business rates relief for independent schools.

It is a pleasure to serve with you in the Chair, Mr Vickers. The petition is on an important subject and has gained over 114,000 signatures in two months. The lead petitioner, Hugh Beckinsale, is in the Public Gallery today with his daughter Amelia—someone who will be directly impacted by this policy decision. The petition has a straightforward ask of the Government: do not apply VAT to independent school fees or remove business rates relief.

The petition states that

“the Government needs to understand that not all independent school parents are wealthy, appreciate the benefits of independent schools and do better due diligence… We think this policy will split children from established friend networks, familiar environments and place the burden and cost on public schools.”

I will build on those points throughout the debate, but those succinct statements go straight to the heart of the issue. I commend the petition organisers on being so direct and clear.

I will turn to my own view on this issue. The topic is divisive; usually, that would cause a Government to approach it with caution, respect and careful deliberation, but this Labour Government have taken the opposite approach. They have been deliberately divisive, because their goal is not to improve education for all or even some young people. The decision was taken for purely political and ideological reasons. It is a direct result of the politics of envy and bitterness that extreme elements of the Labour party subscribe to and champion. It will do damage to young people, directly and indirectly, but the Government are not listening or even pretending to listen.

In truth, Labour Ministers do not care about the negative impact of the policy, and they have not considered what may happen as a result of it. As the Independent Schools Council has made clear, independent schools were shocked at the rushed nature of the introduction of the policy. In my discussions with representatives of independent schools, they have said that it has not been well thought through.

Before I turn to the negative impact that the policy will have, I will briefly mention my constituency in the Scottish Borders. We are lucky to have excellent schools in the state and independent sectors across the Scottish Borders. St Mary’s in Melrose is the only independent located in my constituency. However, many of my constituents send their children to independent schools in Edinburgh, East Lothian and across the border to Longridge Towers school near Berwick-upon-Tweed. St Mary’s school was founded in 1895, and has been providing an extraordinary educational experience for boys and girls between two and 13-years-old. All those young people will be directly affected by the policy, so I have received many letters and emails from concerned parents and teachers.

As a result of the lack of care when this policy was brought in, Labour has created serious issues that will impact pupils, parents and the public purse. First, the policy will burden parents with huge costs when bills are already high; they have already been taxed on the money that they earn, but they will now be forced to pay tax on it again. As the Independent Schools Council has stated, this policy is

“a blanket tax that assumes independent schools are a stereotype”.

It assumes, wrongly, that all parents who send their children to independent schools are immensely wealthy and can afford to pay more and more.

That was also noted by Matthew Dent, who is the public affairs and policy officer at the Independent Schools Council. He highlighted that the policy treats everyone who sends children to independent schools as wealthy, as well as the fact that it is simply not realistic to raise taxes by 20% with no warning. That is a good point: there are few other instances in which the Government would even consider introducing a 20 percentage-point tax rise in a single year.

The second issue that Labour has created is the impact on vulnerable pupils, who seem to have been neglected entirely. There seems to be no recognition from the Government that independent schools do not cater exclusively for wealthy children, but for young people who may need extra support. As the Independent Schools Council’s chief executive, Julie Robinson, has said, the policy will,

“cause huge disruption for thousands of families and children, especially those in low-fee faith schools, specialist arts education, single-sex schools, or those who need special needs support.”

The Scottish Council of Independent Schools has also endorsed that point, saying:

“Pupils with additional support needs will be affected the most by disruption to their education.”

The policy will also have an impact on people on the margin of being able to afford independent schooling for their children. The ISC claims that around a third of independent schoolchildren are not paying full fees; they are there because of special needs or academic excellence, not because of how rich their parents are. In fact, in most cases, money cannot buy a place at a top independent school—only merit can. As the SCIS highlighted, children in receipt of fee assistance will be the most at risk of being forced out of independent schools. It stated that the finances of those families have

“already been rigorously means tested and assessed as at the limit of what they can afford therefore we know they cannot pay any more. Being forced to move school will be particularly detrimental to children with additional support needs.”

None of that seems to have been properly, or even slightly, considered by this Labour Government, who charged ahead with this policy at breakneck speed. They did not sit down to have discussions about the impact that the policy would have on vulnerable children; they charged ahead, because this is an ideological and political move. It is not meant to help the country; it is intended to appease the left-wing fringe of the Labour party.

The third problem is the dreadful consequences on some young people who will be forced to move school. The policy could be devastating for those who will have to start again somewhere new. Students forced to move schools may be ripped out of a friend network or taken out of the stable set-up that they are used to. They may be forced, through absolutely no fault of their own, into a very different learning environment. Have the Government not made any assessment of the emotional and mental health damage that will cause to our young children, or do they just not care?

To make matters worse, that could happen to those young people at a critical moment in their education—for instance, in an exam year or when they are about to choose subjects that will influence their later career. How can it be fair to inflict that on young people? What have they done to deserve such upheaval? Why could this policy, if it had to be brought in, not have come through with a delayed introduction period so that parents could, at least, plan with a bit of warning?

It is clear that this policy is not an attack on wealthy parents but an attack on vulnerable children. As I have also already noted, many of those young people will have additional support needs and may not be well suited to a sudden change of environment. It is estimated that, in Scotland alone, 6,000 pupils will have their learning disrupted by being forced out of the sector. That is 6,000 young people in Scotland who will suffer for no good reason. What the Government are inflicting on young people is wrong, but they seem to neither listen nor care.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

The hon. Gentleman is talking with great passion about a subject that is of interest to him and to us all. He talked of many thousands of children facing displacement, but, in Edinburgh, I think the number of children being moved from the private sector to the state sector is somewhere between 50 and 60. Edinburgh has one of the largest private sectors in the UK, so where are the other thousands coming from?

[John Lamont]

The hon. Gentleman represents a part of Scotland where the proportion of young people going to independent schools is among the highest, if not the highest, in the country. I have had conversations with constituents and the teaching staff at a number of schools in his constituency, so I know how concerned they are. A number of parents are now considering taking their children out of the sector because they can no longer afford to pay the fees.

The hon. Gentleman knows from his discussions with those parents that they are not necessarily wealthy. During the last election, I spoke to parents who had made really tough choices about how they lead their lives to ensure that they can pay school fees—very often in schools in his constituency. They have made that choice about how they want their children to be brought up, and I think it is wrong that the Government are potentially taking that choice away or making it much more difficult for families to send children to the very good schools that he supposedly represents.

[Christine Jardine (Edinburgh West) (LD)]

I represent a different part of Edinburgh, where one in four or five pupils goes to independent school. I have already received representations from parents who have had to take their children out of their schools and are concerned about where they can be placed in the city, given that the Labour council has already said that at least 15, and possibly 16, schools will be at capacity by the end of the decade even if there are no extra pupils.

[John Lamont]

The hon. Lady makes an excellent point. Many young people, particularly in the city that she represents, go to schools in the independent sector, so the effect of this policy will be disproportionately higher in her city and the constituency of the hon. Member for Edinburgh South West (Dr Arthur), than in other parts of Scotland and the United Kingdom. It is disappointing how dismissive Labour Members are of the concerns raised by the schools that the hon. Gentleman supposedly represents.

My fourth point, which really undermines Labour’s stated reasons for going ahead with this policy, is that there are huge potential costs to state schools arising from pupils moving out of independent schools. Every pupil who moves from an independent school to a state school will incur more cost to taxpayers. Those students did not cost the Government any money, but now their entire education will be met at a cost to the taxpayer.

The Government think that they have been clever by raising a tax to support public services, but they have not come to the obvious realisation that they are also raising the cost of providing public services. Just look at the number of students: there are 30,000 pupils in independent schools in Scotland alone. Survey data from the Independent Schools Council shows that, across the UK, 8,500 children have already left independent schools or did not start last September, and another 3,000 are expected to have left in January. The Independent Schools Council has stated that that is nearly four times the Government’s estimate for this year alone. The kicker is that the real test will come in September 2025, once this policy really hits parents hard. All those pupils will now have their education delivered by the state, and taxpayers will have to pay for it.

Now that I have outlined the great damage that the policy could do, let me turn to what the Labour Government have said in response and rebut some of their ridiculous claims. The Government stated in response to the petition that the policy

“will raise £1.8bn a year, helping to deliver the Government’s commitments for children in state schools.”

Except that may not be the case. It may not raise anywhere near that amount, because that is an estimate, not a hard fact. That claim also does not fully take into account the cost to the public finances of so many young people joining the state school system all at once. It is a big claim, and it does not really stack up.

[Dr Arthur]

It is important to remember that, although there is uncertainty with the number, and the revenue could be slightly lower or slightly higher—we do not know—the policy will none the less generate revenue. I spoke to the principal of an independent school in my constituency last week, and she outlined some of the challenges that she faces because of the policy, but the challenge that we face is that if we cancel the policy today—I know we cannot—the revenue that it generates will have to be found somewhere else. I ask the hon. Gentleman: where should we find that revenue? Perhaps we can find that money from public services in his constituency.

[Martin Vickers (in the Chair)]

Order. I remind hon. Members that interventions should be short.

[John Lamont]

The last Government increased revenue expenditure in our schools during our time in office. If fewer pupils go into the independent sector, the Labour Government will have fewer opportunities to charge VAT, so the policy will not raise the anticipated revenue. I am intrigued to know whether, in the discussions that the hon. Gentleman has had with the multiple independent schools in his constituency, a single one indicated any support for the policy. I am more than happy for him to intervene again if he can name one school in Edinburgh that supports the policy.

[Dr Arthur]

I thank the hon. Gentleman for inviting my intervention. What I will say is that more than half of voters in Edinburgh voted for the policy. Does he think that they were wrong?

[John Lamont]

I would be amazed if the voters of Edinburgh endorse the policy in the way that the hon. Gentleman suggests. He should put that suggestion to some of the Facebook groups that support the directly affected Edinburgh parents—some of his constituents are directly affected by the policy—and see how many of their members say they support the policy. I suspect that very few will. If he paid any attention to those groups, he would know how much animosity there is towards the policy among parents in Edinburgh.

[Richard Tice (Boston and Skegness) (Reform)]

Does the hon. Member agree that it is quite possible that this ludicrous policy raises the square root of net zero once we knock off possibly 100,000 children not going to independent schools, the recovery of input costs from schools, the closure of schools and the reduction in bursaries because the schools cannot afford to give them?

[John Lamont]

The hon. Member is absolutely right, and that leads me neatly to my next point. Let us look at what else the Labour Government have claimed. They said:

“Ending tax breaks for private schools was a tough but necessary decision that will secure additional funding to help deliver the Government’s commitments relating to education and young people.”

That supposed extra funding is far from guaranteed. The policy is unlikely to raise what has been stated, and it may well incur far greater costs to taxpayers than anticipated.

Let me state it plainly: nothing about this decision was necessary. This did not need to happen now or in this manner. At the very least, it could have been considered in detail, with all the repercussions weighed up. The Government estimate that in the long term, 37,000 pupils will leave or never enter the UK private school sector as a result of the VAT charge. That number may also prove to be nonsense; if it is, the Government’s entire basis for doing this will fall apart. If the number is higher, the cost to the public finances will be higher and less revenue will be raised. That is a potentially vicious double whammy for the Treasury, inflicted entirely by Labour’s own design.

[Alison Taylor (Paisley and Renfrewshire North) (Lab)]

Does the hon. Gentleman agree that the policy was well documented in the 2017, 2019 and 2024 Labour manifestos? People voting in the 2024 election were well aware of Labour’s policy.

[John Lamont]

If the hon. Lady engages with the parents and schools affected, as I am sure she has, she will know that one of their criticisms is the haste with which the policy was introduced, and the inability of schools and parents to make plans to adjust to this severe tax. I cannot think of another example of a Government trying to increase a tax by 20% in one go. One of the main reasons schools and parents are so concerned is the failure to engage, discuss and properly understand the impact, as well as the suggestion that only wealthy parents will be affected. The hon. Lady will know from her constituency that people are making tough choices about whether they send their young people to one of the local independent schools; they are making choices about how they lead their lives, and budgeting accordingly. It is very sad that the lives of young people will be disrupted as a consequence of the policy.

The Government also stated:

“Many of the resulting moves into state schools are expected to take place at natural transition points, such as when a child moves from primary to secondary school, or at the beginning of exam courses.”

That is pure assertion. It is made up. It is fantasy. The Government have no guarantees that that will be the case. There is no evidence to suggest that pupils will move only “at natural transition points”. Many parents will be unable to afford the extra bills and will have to move their children immediately, and not at a “natural” time. As I stated earlier, that could easily be at a critical moment in the child’s development.

The Government have said:

“These policies will not impact pupils with the most acute additional needs.”

That is plainly false. It is not even close to the truth. The Independent Schools Council, the Scottish Council of Independent Schools and individual headteachers all say the opposite. The Government’s policy will have an impact on vulnerable pupils with additional needs. It is simply shameful to claim otherwise, and does a huge disservice to the many parents out there doing their best for young people who just need a bit more help.

I conclude by thanking the petitioner again and all those who have signed this important petition. I look forward to hearing from other right hon. and hon. Members about their views of the petition. I believe that this reckless policy is being pursued for political and ideological reasons. It is not about what is best for the country; it is a move to placate the left wing of the Labour party. It will cost pupils, parents and taxpayers. It will leave both independent and state schools worse off. Labour promised change—well, here it is: change for the worse.

[Several hon. Members rose—]

[Martin Vickers (in the Chair)]

Order. I remind Members that they should, bob if they wish to take part in the debate.

16:52

[Alison Taylor (Paisley and Renfrewshire North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Vickers. I thank the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for his introduction to the petition today.

I have considerable sympathy with the petitioners. I know that families make the choice to send their children to a private school for many reasons. I have been contacted by constituents who felt that their children’s needs were not being met in local state schools, and that they had no choice but to go private. I know, too, that families make sacrifices to be able to afford fees. I have been contacted by families who send their children to St Columba’s junior and senior schools in Kilmacolm in the neighbouring constituency to mine. I know that the new VAT measures, combined with other costs, have led to a 20% increase in school fees from the beginning of 2025, and that is difficult for the families and for the school. I also appreciate that for some families, and not just the 50 or so signatories to the petition in my constituency, the speed with which this measure was introduced has been difficult.

I am encouraged by the extent to which schools have been able to offset VAT on capital charges against input VAT, to make the effective increase lower than the 20%, but it is clear that other pressures have made the increase in school fees necessary. I am aware that school fees have been increasing year on year in any event, so not all of the increase is down to VAT.

Ultimately, government is about making choices. This Government were elected on a clear manifesto commitment to introduce VAT on private school fees. The express intention was to use the revenue raised to improve funding for schools in the state sector. In England, the Government have been setting out plans for school rebuilding, introducing breakfast clubs, supporting school attendance and recruiting new teachers, all of which will help to build up the state sector and give pupils in England the best chance of a foundational education that has the capacity fundamentally to change the trajectory of children’s lives.

[Aphra Brandreth (Chester South and Eddisbury) (Con)]

The UK is now the only country in Europe to tax education. Does the hon. Member recognise that this policy is about Labour’s ideology and not about improving education for all children across our country, irrespective of whether they are in the state sector or the independent sector?

[Alison Taylor]

I simply do not agree. I refer to my earlier point that this policy was in Labour’s manifesto in 2017, 2019 and 2024. It is a long-standing policy of the Labour party.

[Gregory Stafford (Farnham and Bordon) (Con)]

If I understand the hon. Lady’s point, it is that because the Labour Government now have a stonking majority, this policy is therefore approved by the British people. Is she therefore saying that in 2017 they rejected this policy, in 2019 they rejected this policy, and then suddenly in 2024 the majority of the population converted to supporting this policy? Or is she really saying what we all know, namely that the British people did not vote for Labour based on this policy and they did not understand the effect that it will have, not just on the independent sector but on the state sector?

[Alison Taylor]

I think my point refers to the timing point that the hon. Gentleman has been making. I will carry on.

In Scotland, it is up to the national Scottish Government to decide how to use the significant additional funds that they receive through the block grant. As expenditure on education in England increases, so do the resources available to the Scottish Government, but despite Scottish families being taxed more than families in any other part of the UK and despite Scotland receiving the largest increase in the block grant since the Scottish Parliament was formed, there is little to show for those things in state schools in Scotland. In spite of the incredible hard work of teachers and support staff in schools in Scotland, the attainment gap continues to increase, and standards and results continue to fall.

[Christine Jardine]

I agree with the hon. Lady that the state of the education system in Scotland is appalling, and the blame lies squarely with the SNP, but how does she think the state sector will be helped to recover by putting extra pressure on it through forcing parents to move their children to places that do not exist?

[Alison Taylor]

As is well documented, this policy will raise £1.8 billion for the state sector. I will carry on.

This Government have made the hard decisions, including introducing VAT on private school fees, that are necessary to improve education for all children. That is already starting to make a difference in England. I sincerely hope that the Scottish Government will take a short break from stirring up grievance within the UK and instead will focus their attention on meeting the real needs of families in Scotland.

In the past, I and other members of my family have spent all or part of our education in the independent sector, but currently I have no family members in the independent sector. Given how much time has passed, I honestly do not know whether the increase in fees would have resulted in my family making different choices. My comments today are informed by what I have been told by parents in my constituency who have been impacted.

16:58

[Damian Hinds (East Hampshire) (Con)]

As always, it is a great pleasure to see you in the Chair, Mr Vickers.

I thank and commend Mr Beckinsale and the other 114,948 petitioners, including 611 in my constituency of East Hampshire, for bringing this very important subject to Westminster Hall today. After all that we have heard today, we might ask, “Why? Why would the Government do this?” The measure is a revenue-raiser, but in the grand scheme of things it is not the most enormous revenue-raiser. It is already causing all sorts of disruption in children’s education, and there is more disruption ahead. So why are the Government doing it?

I think the answer is fairly straightforward. The Government were genuinely in the market for tax rises, especially tax rises that did not break the rules they had set for themselves on income tax, on VAT and—I say this with a cough—national insurance contributions; and when they looked down the list, this one looked quite popular. It is certainly popular with Labour members and it is very popular with the left wing of the Labour party.

I think the Government thought the measure could be sold quite easily to the British public. They could link it to definable things—to the provision of breakfast clubs, mental health support or recruiting 6,500 teachers. None of those things is new, though. There are already breakfast clubs in thousands of schools supported by state funding. As far as I can tell, this Government’s programme for mental health support continues the previous Government’s programme for mental health support, and recruiting 6,500 teachers to the state sector is a material slowdown compared with the number of teachers recruited in the previous five years.

The Government will have calculated that many schools will absorb the increase; they think that some families might be priced out, but that the number will be relatively minor, and that it will be massively outweighed by the revenue anyway. They also think—we have heard this line so many times from a Government spokesperson—there are so many places that are free and empty in the state sector that pupils can be easily absorbed.

Many Opposition Members think that taxing education is just wrong in principle—we value diversity and believe in the sanctity of parental choice—but from a Labour point of view, given everything I have just listed, it is so far, so good. I think the Government have made five crucial errors. The first is the belief that schools might be able to absorb such a tax increase. Economists know—the one thing we know about the Chancellor is that she is an economist, very definitely; periodically she reminds us—that when we get an increase in an indirect ad valorem tax, that does not get absorbed fully by the producer. It gets shared between the seller and the buyer. With a tax increase of this degree—20% added to the price of a service—that is clearly going to be very difficult for any organisation, but organisations such as schools just do not have those kinds of margins to fall back on to be able to absorb such an increase. To the extent that they can absorb the increase, they can do so only by cutting their service to families, which therefore increases the displacement effect of children from the private sector to the state.

[Alison Taylor]

Does the right hon. Gentleman agree that schools can offset some of the VAT?

[Damian Hinds]

That is what I just said.

[Alison Taylor]

So it is not 20%, then—it is closer, probably, to 15%.

[Damian Hinds]

I am coming to that. I am grateful to the hon. Lady—she can keep teeing me up.

The Government’s second error was to fail to consider the cumulative effect of all the different cost pressures added on to schools; as well as VAT, there are also business rates, which are mentioned in the petition. There is also the increase in the employer contribution for the teachers’ pension scheme—before somebody says it, this was introduced by the previous Government to come in this year—which is material for schools in that scheme. Now, of course, we have employer national insurance contributions as well. The hon. Lady is right that the amount added through VAT would not be quite 20%; it might come down to 15%, but all those other things add cost as well.

The third error the Government made was to ignore the existence of geography. There may well be thousands of places available in the country, but they are utterly worthless from this perspective if they are not in the right places and the right age groups for the children who will be displaced. Overall—this is a great simplification —the effect of the measure in primary schools will be relatively small because there is a lot of capacity in primary schools in not quite all, but almost all, parts of the country. In secondary, though, there are lots of areas—in places like Bristol, Bury, Salford and Surrey—where there just are not enough places to accommodate significant numbers of children being displaced from the private sector.

The Government’s fourth error was to fail to segment the market. By the way, the media do this as well: whenever there is a story about this topic, it is always accompanied by a picture of children in exotic headwear, as though wearing a boater or a top hat represented the only type of private school available. It is true that there is probably plenty of VAT to be had from the parents of boys at Eton, and the elasticity of demand is probably quite low—those famous old schools, by the way, will also benefit disproportionately from being able to reclaim VAT on capital; that is actually a benefit for them—but what the Government have ignored is the existence of another tranche of schools.

For a low-fee faith school, for example, the Exchequer makes somewhere between £500 and £1,000 VAT per child a year, but every one of those children displaced into the state sector will cost £7,000 or more. That figure is higher again when we are talking about children with special educational needs or disabilities, whose parents in many cases have just found a place that can accommodate their child, that can cater to their needs and where their child is happy. In many cases, parents are making huge sacrifices to fund the fees, but they are doing so willingly. For some of them—not all of them—this will push them over the edge; they will not be able to afford it any more. The cost per child for those children in the state sector is that much more.

In extreme cases, parents will be unable to afford to send their children to their school, which might be very expensive, so they will go to the local authority and get an education, health and care plan; and the local authority will deem that they have to go back to the same school, but now the state will be paying, including possibly for their transport.

The fifth error that the Government made was to ignore the effect on specific groups of children and families who we should be seeking to support and encourage, for example through the continuity of education allowance for our armed forces—there has been a partial mitigation on that. There has also been a partial mitigation for the music and dance scheme, which drives forward the talent of tomorrow and our creative industries, but only for families with a household income below £45,000.

As has already been said, this change makes our country an outlier—almost unique in the world in putting a tax on learning. It does not level the field between the state and the private; it makes private schools more exclusive than they were before, and therefore widens the divide. It risks losing teachers from the profession. The biggest effect of all is that it is going to make class sizes in state schools bigger, fill up more state schools and therefore, in the end, make it less likely that parents get their children into the school of their choice.

This has now happened—it happened in January. It is done, but it is not too late for the Minister to say that he will keep an open mind. The Government could review the effects on revenue, the displacement of children, the disruption of education, and the number of extra education, health and care plans after two years of the policy being in place. If it turned out that those effects have not all been as they expected, would they reverse this move?

17:09

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

It is a pleasure to serve under your chairship, Mr Vickers, and to see the newly minted Minister in his place—I think it is the first time I have been in a debate with him. It is also a pleasure to follow the right hon. Member for East Hampshire (Damian Hinds), who was the Secretary of State; I sometimes see him on the District line, because we head the same way.

I rise to speak on behalf of constituents who have contacted me about this issue—in my inbox, in person at the advice surgery I do every Friday, and on the doorsteps when meeting and greeting voters in the recent general election. This issue comes alongside an array of others raised by mums and dads. I am familiar with the arguments and have read the Government’s response; it contains very compelling figures—94% of schoolchildren in the UK, including my own, attend state schools. I also know that the policy polls very well. However, there is also that 6%, and 14 of those private schools are in the constituency of Ealing Central and Act; in 2023 there were 15, in fact, but one has closed its doors since then. I want to vocalise some of their concerns to my hon. Friend the Minister.

Fourteen is a higher than average number of private schools in a constituency, and the petition was signed by 821 people in the constituency—although that is not even in the top 10. The heat map shows that the top 10 seats all have more than 1,000 signatories. I think two of those constituencies are in Surrey, but the remaining eight tend to have a W, NW or SW postcode. What I am trying to say is that the distribution of the signatures and the schools is a fairly west London-type phenomenon. In fact, if we look at the 650 constituencies across the land, the first one on the list is single digits; it is a seat in Wales starting with A—Aberconwy, or somewhere like that. This is not a phenomenon everywhere, but in west London it is not that unusual.

The high school of the hon. Member for Farnham and Bordon (Gregory Stafford) was not very far from my high school in my constituency. I was a Notting Hill girl, and I know that he was a St Benedict’s pupil back in the day. The prep school of the Minister who is often sent to respond to this debate—my hon. Friend the Member for Ealing North (James Murray), who is my neighbouring MP—was Durston House, and it is in my seat of Ealing Central and Acton. We should not demonise these parents. In some senses, they are people who I have grown up with and live alongside, and they do have genuine concerns.

As a parent, I would never dream of going private, but I can understand and accept that people do. I went to school in the 80s—the dark days of Thatcherism—before the Labour Government reforms that made excellent state schools in my constituency. My parents chose to put me in the state sector for primary school, at Montpelier primary, and as a parent myself, I have benefited from Gordon Brown’s reforms. The child trust fund came to maturity for my son recently; it did go up in the end—it was the one that could go up as well as down. I have not used the private sector as a parent—as a child I did, but it was not my own choice. I completely appreciate that people, like my own parents at the time, make enormous sacrifices to send their children to independent schools, as my hon. Friend the Member for Paisley and Renfrewshire North (Alison Taylor) said. I have heard people say on the doorstep, “We have the worst car. We never go on holiday.” That was me in the ’80s.

I want to point out some unintended consequences of the policy to the Minister aware. These are people who consider themselves to be working people. The strapline of the Labour manifesto was “No taxes on working people”. We should be careful with our rhetoric sometimes and not seek to—[Hon. Members: “Come over here!”] Hang on—let me carry on.

The first unintended consequence—or commonly misstated thing—is that pupils with an education, health and care plan still remain eligible. It is impossible to get one in west London. We have all taken on new wards in our boundaries, so now I do not only represent Ealing borough but a bit of Hammersmith and Fulham too. A head from one of primary schools was saying that they have a large percentage of special educational needs and disabilities pupils. The wards that I have inherited are from the north of the borough—Shepherd’s Bush way. Apparently, by the age that a child goes to school and those issues show up, it is kind of too late. A sharp-elbowed, middle-class parent from the south of the borough might have had their child assessed privately at a very young age, ensuring they have support all the way through, but by school age, there is a waiting list of many years to get the assessment and then it is potluck.

The problem is that the words “private school” imply a whole load of things—but they are not all Eton. Some of the comms around this policy have not been done very sensitively. I know that offence was taken at a comment about how they all have astroturf pitches, swimming pools and embossed stationery; that did not go down well with parents and heads in my constituency. They are not all like that. There are smaller SEND schools and smaller faith schools—what I am trying to say is that they are not all Eton, and some of the comms are based on a caricature. We should be careful about what we do in that regard.

One parent, Matthew, forwarded me a missive from the private school that his boys are at, which read:

“For music lessons with peripatetic teachers employed by the School…VAT will need to be applied at 20%.”

He continued:

“Traditionally the tax system has been a way of discouraging people from picking up bad habits like smoking and drinking. Not from picking up a trombone”.

It seems as though people are capitalising on the policy, and then other things are coming in through the back door.

I have been replying and trying to sound sympathetic to these parents. My constituent also said:

“you referred to a consultation…on the VAT proposals—yet like most government consultations, what was passed didn’t seem, in any significant way, different to what had been proposed.”

Maybe that is a lesson in life for all of us: if we put something out for consultation, we should make it look like we listened, because he is saying that it came back exactly the same.

The right hon Member for East Hampshire raised that elitist private schools such as Eton have actually done quite well out of this policy, because they can cash in on windfalls from the new VAT rules on independent schools—they can claim it back on capital projects, such as buildings and land acquisition, over the last 10 years. All the VAT on costs, which is now 20%, is recoverable when factoring in non-business use, so the policy will basically hand money back to schools such as Eton from Treasury coffers. Surely there is a loophole there—an unintended consequence—that needs to be addressed by my hon. Friend the Minister.

There are long lists of such things. The Times says:

“Eton spent more than £20 million on a sports centre in 2023 and Winchester College’s”—

where I think our former Prime Minister went—

“accounts from the same year said it spent £15 million on capital expenditure”.

It also says that Radley College, in Oxfordshire has a 20-acre solar farm and 40-acre woodland, and that Charterhouse in Surrey

“built two boarding houses in 2021 and is developing a theatre and lecture theatre”

Again, costs can come back for the big boys, but not for the little ones.

[Jack Rankin (Windsor) (Con)]

As the MP for Windsor, Eton is in my constituency. I appreciate, as the hon. Lady says, that not all private schools are Eton, but I point out in its defence that the sports centre she mentioned is used by local schools and community groups, and that Eton does an awful lot in my community. I accept her point that Eton is not among the schools that we necessarily want to focus on in this debate, but I suggest that some of those points are a bit unfair.

[Dr Huq]

It is interesting to learn that—

[Rachel Gilmour (Tiverton and Minehead) (LD)]

Will the hon. Member give way on Eton?

[Dr Huq]

I am not finished addressing the first point. Can we do this sequentially? I will respond to the hon. Member for Windsor (Jack Rankin) first and then I will take the hon. Lady’s intervention.

It is interesting to learn that, but my point is that such schools are still going to be quids in after this.

[Rachel Gilmour]

Will the hon. Member give up on all this stuff about Eton? I speak as a mother of two Old Etonians. I was a single parent; I worked three jobs. The right hon. Member for East Hampshire (Damian Hinds) said there is more money from Old Etonian parents, but there certainly is not—not from this one. Eton hands out completely free fees to 100-plus boys a year; they do not even have to pay for their pencils. When it comes to things like Dorney Lake and the sports centre, it hands that back a thousand times to local communities across the country. Give it up!

[Dr Huq]

I do not know how parliamentary that language is. I am not going to join in the praise of Eton, particularly because I think the hon. Lady may have been an atypical parent. I imagine that some parents there would be able to bear a 20% increase, and for a school that is clever with its accounts, these things may just be a rounding error. I am talking about smaller schools for which that does not apply.

It is interesting to see the hon. Member for Boston and Skegness (Richard Tice) here. I have a massively remain constituency, with 72% of my electorate voting remain, but, perversely for Reform, it is leaving the EU that has made this policy possible—it is a Brexit benefit. If only we had never left the EU, this would not be happening.

Usually education is not a taxable luxury good, and there is a fear that if this increase happens, what could be next—nurseries or universities? I used to work in that sector. There is a slight worry that there is a loophole, because the policy contradicts the EU’s VAT directive that specifies there should be no VAT on any form of education. In Greece in 2015, the left-wing Syriza Government wanted to introduce VAT at 23%. They had to abandon that for a slew of different reasons, including because it was contrary to the EU’s VAT directive.

University tuition is zero rated, and there is a worry among my friends in the sector there, who say, “You’re lucky to have got out when you did, because they’re closing so many university departments in the UK.” What could be next? I hope that my hon. Friend the Minister can assure me that nurseries and universities are off limits.

We have heard all these things—that schools are going to close—and we have heard a lot of catastrophising, but it remains to be seen whether those things will come to pass. One of my schools went in 2023. My worry is that this policy will make an elitist system more elitist. The Government say in their response:

“Ending tax breaks for private schools was a tough but necessary decision”,

but when growth comes, is there a way of undoing it? It was a very clear policy in many manifestos, so I understand that it will not all be undone, but let us think a bit creatively.

[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

What does the hon. Lady expect her Government to do if they will not give way on this point?

[Dr Huq]

I would suggest implementing it in a slightly different way, based on turnover—so doing it for the enormous schools that can afford it, but not for smaller ones that have been caught in the trap.

There is also an argument for looking at grammar schools, which are a legacy from many years ago. We do not have them in my area, but when I was the Labour candidate in Chesham and Amersham in 2005, they came up as a hustings issue. The argument that the Labour party always gave me in those days was that we respect parental choice. At times, the Conservative party has flirted with bringing back more grammar schools, but they are even more elitist in a way because they take state funds for private school-type facilities. Dr Challoner’s grammar school in Amersham was way bigger than the school I went to; I felt very small when I went there. Perhaps something could be done about the grammar school system, because that is an inegalitarian one.

I wanted to vocalise some of the concerns from my electorate and remind hon. Members that one size does not always fits all. In this case, that is far from the truth.

17:21

[Christine Jardine (Edinburgh West) (LD)]

It is a pleasure to serve with you in the Chair, Mr Vickers, and to follow the hon. Member for Ealing Central and Acton (Dr Huq). I feel as if the speakers so far have been talking about me, because they have been talking about parents who are not rich but who send their children to independent schools. I no longer have a declarable interest, but my daughter did go to an independent school. We were not wealthy, and it was not easy, but it was our choice. We never regretted it, but we often struggled to finance it. I know that there are thousands of parents, many in my constituency, who face an even bigger challenge because of this change.

My daughter went to an independent school in the west of Scotland. It was originally the town school—anyone from Glasgow knows which one I mean—and it had a tradition of awarding a large number of bursaries every year. A lot of the children who were at her school and are now doing well would not have got that place otherwise. A lot of them faced challenges, and the school helped them. We need to remember that we are talking not about the Etons and the Harrows—the big schools—but about a lot of independent schools that often provide a service in communities. It is a choice made by parents who are not always rich.

My city of Edinburgh is one of the areas of the country with the highest proportion of children educated in independent school—it is one in four. That is reflected in the figures in the petition. There were 740 signatures from my constituency, which is a higher number than for any other petition that I remember from my almost eight years in this place. That fact is also reflected in my mailbox and in the concern that parents in Edinburgh regularly express to me. They do not always have their children in the independent sector; a lot of them have their children in the state sector. Every week, parents come to me who cannot get a place for their child in the local state school because it is close to capacity. That problem will only be made worse if many of those one in four children are forced, by this Government, into the state sector because their parents can no longer afford the choice that they made.

[Dr Huq]

The hon. Lady and I were both girls in those schools, and she talked about her daughter. Does she accept that it is often the parents who want their daughters to have an all-girls education. There are figures from the Girls’ Schools Association. There is also the head of Dame Allan’s girls’ school, who said that girls thrive better in all subjects in all-girls environments and that they choose things such as physics and maths more when there are not boys around mucking about.

[Christine Jardine]

I accept that point and absolutely agree. It reminds me of the point that for a lot of parents, their children are in independent schools because they were struggling in the state sector. They moved their children into the independent sector, where they are thriving. Rightly or wrongly, that was the parents’ choice, and we—or, at least, the Labour Government—would be taking that choice away from them, because of the fee increase. I also find it difficult to understand a Labour Government who would support the principle of taxing education. As well as the practical issues with the policy, they are taxing education, which is surely not something that they would support.

Introducing the change halfway through the school year has caused issues for many parents, who have suddenly found that all the budgeting they have done is out the window. They may have more than one child at a school that they can no longer afford due to the increase in school fees. That is why so many people are writing to me every weekend to say that they are having to think about what they will do about their child’s education and where they will find a place.

[Dr Arthur]

I find it really interesting that Conservative and Liberal Democrat Members are talking about how wrong it is to place VAT on school fees, even though they thought nothing about introducing university fees, which place a huge cost on education, particularly for people from poorer backgrounds.

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

That was 1998!

[Dr Arthur]

The massive rise in tuition fees came later. Hon. Members know exactly what I am talking about. [Interruption.] Can I speak, please? Nobody here is questioning the motives of parents—every single parent who sends their children to an independent school wants the best for their children—but what we are questioning is, if we were to scrap this policy, what would we cut instead? I am just not hearing an answer. This policy will generate additional income for the constituency of the hon. Member for Edinburgh West (Christine Jardine). Where does she want that to be cut from instead? What does she say to the majority of people in Edinburgh who voted for parties that supported this policy?

[Christine Jardine]

Like the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont), I would like to see the evidence that half of the people in Edinburgh voted for this policy. I have to tell the hon. Member for Edinburgh South West (Dr Arthur) that there are 311 signatories to this petition from his constituency. More than half of the people in Edinburgh West voted for me, so I would like to see where he is getting the figure that parents in the city have voted for the measure.

Where does the hon. Gentleman think that the City of Edinburgh council will find the places, when its own figures, produced by a Labour Administration before this policy was announced, showed that 16 schools in the city will be at capacity by 2030? The problem is that where there are places, they are not necessarily convenient for the children who will be forced, by this policy, to look for a new school place. State school rolls are already stretched in Scotland because of the SNP’s cuts to local government, and this change can only make that situation worse.

[Dr Arthur]

My goodness me. If this policy generates the £1.8 billion we heard about earlier—[Interruption.] It could generate more. If it generates £1.8 billion, it will benefit schools in Edinburgh—of course it will. The hon. Lady made reference to school roll analysis, and stressed that it was conducted before the policy was introduced. Since then, there has been an update, and it shows more than adequate capacity in Edinburgh, particularly as we have only 55 students moving from the private sector to the state sector. She is well aware of that analysis.

[Christine Jardine]

Yes, I am aware of that analysis, and it does not show a healthier figure. The point that I was making in saying that it was conducted before the policy’s introduction is that the instant this Government came out with the policy, the Labour council went back and redid the figures. [Interruption.] No, I did not say that, but what I will say is that state schools across the country are stretched. If the hon. Gentleman is insisting that this £1.8 billion will go to Scotland, perhaps his Ministers will tell us how it will get to schools in Scotland, because they have no power to put that money into state education in Scotland.

This is a national policy. It is affecting families up and down this country, and it is putting more pressure on the state education system everywhere from Caithness to Cornwall. It is not just about Edinburgh; it is about the entire country. I am here to speak on behalf of my constituents, but I feel that their fears are reflected elsewhere in the country. If this Labour Government can tell us how they are going to make that money effective in protecting state education, and how they will get it into schools like ones in my constituency, then we might listen. The problem is that all they say is, “Find a different way of making the cuts.” Well, we did put forward different ways of raising money. They could have raised money by reforming capital gains tax. They could raise money for schools by putting a tax on social media platforms, which we suggested. The alternatives are there, and they would not be a tax on education—an ill-thought-through, ideologically driven policy that does not take account of the unintended consequences.

17:31

[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Vickers. I thank my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for presenting the petition. Out of the nearly 115,000 petitioners, 500 were from my constituency.

Education has always been an important part of my purpose in coming to this place and in all my 21 years of elected office, because I know that education can change people’s potential. I am lucky enough to have been brought up in this country, and educated well at school and university. As others in the House will be aware, I am dyslexic. My dyslexia was not diagnosed until my mid to late 20s, and I take that as a reflection of the excellent education that I was able to benefit from.

My concern is that the new Labour Government have come in with a strong mandate from the electorate, but I think that they are rewriting the terms of how they got that mandate. Comments have been made about previous manifestos talking about reform of the independent school sector, but I would argue that given the turnout figures, the Labour party having 411 MPs is probably the fault of my own party, rather than to the credit of the Labour party. I look forward to the next general election for those roles to be reversed.

My concern specifically with the proposal on independent schools is one that others have mentioned: the policy of taxing education. For me, that is a dangerous policy; others have described it as a policy of envy. We have spoken about VAT, but there is also the reform of the charity status of independent schools and the knock-on consequences for business rates. It is a pleasure to see the Treasury Minister in his place, because this is more a financial question than an education policy one. The issue is about the potential revenue generation of the policy, but for me, it is also about the wider conversation on supporting wealth creators and driving economic growth.

As with any business plan, assumptions are made, and the proposed £1.8 billion in revenue is probably a bit ambitious. I say that based on two things. First, the policy was introduced mid-term, at the beginning of this calendar year, and that did not allow families to adjust—there was no element of transition. I have spoken to parents who benefit from being able to send their children to independent schools, and they feel aggrieved because, in their view, they are paying twice. They are subsidising the state sector because their child is not using their place, and the parents are instead paying for a place at an independent school.

My biggest concern is about SEND provision in the state sector. Hertfordshire has had failings over many years that I know the county council is working hard to resolve. Part of that work has been subsidised and supported by the excellent private schools in my constituency, Merchant Taylors’ and the Royal Masonic School for Girls being two of them. Where parents are able, they can send their children to independent schools to make sure that their children get the support they need in, typically, a smaller class. If those parents were reliant on the state and not able to afford an independent school, they would not necessarily get that provision; the timeframe to get an EHCP can be years. The Government are fundamentally destroying the life chances of children in the position I was in 35 years ago, and that worries me.

The Government’s impact assessment admits that the education tax will impact girls more than boys because there are more single-sex private schools for girls than for boys, and those schools have less of a financial background and have not been around for as long. Given the pressure that this tax would place on single-sex schools like the Masonic School for Girls in my constituency, I am concerned about its impact on the excellent work that has been done by the private sector to lead the way in ensuring a high quality of education for girls, particularly in science, technology, engineering and maths and other fields where they are under-represented.

Not only will the tax impact children who are educated in the private sector and children who will feel the impact of increased pressure on the state sector, but it will greatly impact the industry and those employed in it. With over 100 independent schools allegedly expected to close over the next three years as a direct result of the tax, many who work in the sector face unemployment, and there is a risk of highly skilled teachers leaving the profession or the country. We live in a global world. One of the main drivers for communities and successful families to stay in this country is family links, but another is educational standards. Middle-class parents—who are typically those generating economic growth and employing people—are now considering leaving the country and home-schooling or privately educating their children in schools in other parts of the world. In the modern world, especially with the Government’s drive for increased airport capacity, moving back and forth between here and the middle east or other parts of Europe will be less burdensome than the increase in the cost of private schools associated with the tax that this Government have suggested.

If children are forced to move to a new school within the school year, or at a key stage of their education, it will greatly disrupt their education and could cause long-term damage to their prospects. These are the same children who, not many years ago, were directly impacted by the pandemic. I do not think we have seen a lot of the harms associated with that come through yet. My concern is about not just finances, but the educational outcomes and life chances of those children if we force disruption on them during an academic year based on financials that may not stack up to the ambition of the Treasury.

The Government’s own impact assessment admits that disruption will be caused to the education of SEND pupils, hurting progress in their education and the opportunities and resources available to pupils in the state sector. That will put more pressure on local authorities, which are already stretched to their capacity—I referred to Hertfordshire county council earlier.

My right hon. Friend the Member for East Hampshire (Damian Hinds) mentioned faith schools and art schools. In my old constituency of South West Hertfordshire, we had world-leading schools of both types. I am not their representative any more—others in the House have that honour—but I am sure they will be having meetings with their MPs to say that their ability to attract world-class pupils, who will go on to become world-class artists and be successful in the years ahead, will be greatly diminished by the Government’s decision.

I am glad that a Treasury Minister will respond to this debate rather than a Department for Education one, because we have all been in education debates before. If he were being brave, at what point would the Minister look to reverse this decision? There was talk of a review in two years. I ask him to go further and put a sunset clause on the policy, because one of the greatest attractions of our great country has been its educational standards. I applaud my right hon. Friend the Member for East Hampshire for the great work he did over many years. For us to remain a global leader, both in the economy and in education, we need to give pupils the best opportunities possible, but we also need to attract the best educators in the world. Historically, we have done that with pay scales. My party has suggested that, given some of this Government’s policies, teachers may end up taking a pay cut. I will be interested to hear what the Minister says on those points.

17:41

[Richard Tice (Boston and Skegness) (Reform)]

It is a pleasure to serve under your chairmanship, Mr Vickers. I congratulate the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) on securing this debate on the back of the petitioners.

[Mrs Emma Lewell-Buck in the Chair]

How many of us were elected to this great place to damage the prospects of our children? I would hope that the answer is none, but that is the direct consequence of this ludicrous policy to tax education. I think we are the only country in the developed world to do so. The unintended consequences are truly shocking. Within a fortnight of the policy coming into force at the beginning of this year, some four schools announced they were closing this summer—over 1,000 children were immediately plunged into uncertainty about where they were going to school and who were going to be their friends. The anxiety that that put on them as children, let alone their parents, should shame everybody in the Government. Tens of thousands of pupils will end up leaving the independent sector—and it is independent, not private, because most independent schools are charities that reinvest their surpluses.

[Dr Arthur]

I have independent schools in my constituency, and the challenges we face with this policy are real, but the numbers people are citing make it difficult to talk about those challenges. People have said that tens of thousands of students are going to move from the independent sector to the state sector, but I do not think anybody really thinks that is going to happen. Those sorts of numbers make it really difficult to have a serious debate about this issue. Does the hon. Gentleman agree that “tens of thousands of students” is perhaps at the upper end of estimates?

[Richard Tice]

I am grateful to the hon. Gentleman, because he has reminded me to declare a historical interest. Not only did I have children in independent schools, but I was the chairman of the finance and general purposes committee for a significant independent school over the past six or seven years; I finished just before the election. Even when this policy was announced as a prospect, I saw an immediate drop-off in applications for places at that school, so I can confirm with absolute experience that tens and tens of thousands, if not 100,000, will leave the sector.

Surely, of all children, those whose prospects we want least of all to damage are those with special educational needs, yet that is where the independent sector excels. Let me give a small example from the county of Lincolnshire. I got a letter from a constituent who can no longer afford to send two children, both with special educational needs, to the independent school. They are going to have to go into the state sector, where there is a capacity crisis that we keep hearing about in the Commons. Because of the distance, she cannot provide the travel, so the county council has to provide it. For those two children alone, the annual cost of taxis is £20,000 per child. This is absolute insanity, I would respectfully suggest, Mrs Lewell-Buck—it is lovely to see you.

So we have damage to children and the worst of all worlds. Then we look at the prospects of children in the state sector, and we hear that the policy is going to pay for 6,500 teachers. That is about one teacher in every four or five schools—three, it is thought, in the secondary sector. Seriously? When we look at the extra children who will go into the state sector—the tens and tens of thousands—we see that actually there will be more pressure on existing class sizes and the existing teachers, who will therefore be able to dedicate less time per child in their existing school. The prospects of children are damaged not just across the independent sector, but across the whole of the state sector, under this deeply misguided policy.

I touched earlier on the cost. When the policy was announced, it was to raise £1.5 billion, and suddenly it is £1.8 billion. I suggest it will raise the square root of net zero. The reality is that schools will be recovering input costs, including on capital schemes. The reality is that schools will be losing children to the state sector. The reality is that bursaries will have to be slashed. We have heard about some schools giving hundreds of free places. All these things will put extra costs on to the state sector—the state schools—as well as the pressures on county councils’ taxi budgets, which is ludicrous.

From an educational-quality point of view the policy makes no sense, and from a cost point of view it makes no sense. There was an opportunity for the Government to say, “You in the independent sector are doing some things really well, particularly with regard to special educational needs, so we would like the independent sector to help us a bit more—share some of your expertise. Can you give some more places for special educational needs?” That was the opportunity, and I can tell Members that the independent sector would have welcomed with open arms a request to share expertise with local schools. That would have been the right thing to do to improve the prospects for everybody.

The other right thing to do to improve the prospects for everybody was to adopt the Reform UK policy during the general election, which was to say, “If you can afford to pay a bit more, we encourage you to take your children out of the state sector and into the independent sector,” and to relieve the pressure on class sizes by granting tax relief at the basic rate for those who sent their children to independent schools. That would have improved the prospects for everybody.

Those were the opportunities, but instead we have seen deep ideological socialism, with no evidence whatsoever that the policy will make any difference. It is discriminatory, because if it was logical, the Government would be applying VAT on university fees, because of course universities are elitist. Three or four in 10 youngsters go to university, so surely the same policy should be applied to universities.

Will the Minister confirm that if, when the legal cases go all the way up to the European Court of Human Rights—which some people love and some of us do not—the ruling from that court is that the policy is unlawful, the Government will agree with that ruling and apply it? This policy has no logic whatsoever. It is a tragedy for us all, but most importantly it is an absolute tragedy for children.

17:48

[Dr Al Pinkerton (Surrey Heath) (LD)]

It is a pleasure to speak with you in the Chair, Mrs Lewell-Buck.

My Surrey Heath constituency is home to many outstanding state schools and academies and to six small, extraordinary, highly performing independent schools: Hall Grove, Lyndhurst, Coworth Flexlands, Woodcote House, Knowl Hill and Fernways school. It is quite possible that no hon. Members have heard of those schools. They are not necessarily the big names, but they provide extraordinary education to an extremely loyal following. They provide not only excellent education but essential support, catering to a wide range of educational and pastoral needs. For children with special educational needs and disabilities, they offer tailored learning environments with small classes, dedicated learning assistants and specialist therapies that parents would otherwise have to battle to access through Surrey’s appalling state system—very often unsuccessfully.

Beyond academic provisions, the schools foster a nurturing environment that prioritises wellbeing. That is particularly crucial for children from military families, who rely on their schools for stability and continuity of education amid the turbulence of frequent relocations and parental deployments overseas. For those children, the stability offered by the independent sector—particularly independent boarding schools—helps to ease the disruption of constant change, providing a reliable support system that nurtures mental health and lifts academic achievement. By offering structure, stability and familiarity, the schools play a crucial role in helping military children to thrive.

Back in October, I stood in this Chamber to highlight the damaging impact that VAT rises would have on independent schools, and particularly on service families. I am pleased to say that the Government subsequently committed to increasing funding for the continuity of education allowance to offset rising private school fees. That adjustment is undoubtedly welcome, but does not adequately cover the full cost of the VAT increase. As the RAF Families Federation has pointed out, military families who receive continuity of education allowance for private schooling are required to provide and contribute a minimum of 10% towards tuition fees. With rising school fees that by necessity reflect inflationary pressures, business rates, national insurance increases and the new VAT imposition, that 10% minimum contribution is growing significantly in real terms for hard-working, committed service families.

As a country, we ask our military families to make extraordinary sacrifices on our behalf. With the rapidly shifting geopolitical landscape, it looks as though we will need to lean on those families even more in the future. Arguably, nowhere is that more apparent than in my constituency of Surrey Heath. The presence of the Royal Military Academy Sandhurst and Army Training Centre Pirbright means that my constituency plays a vital role in supporting and accommodating service families. The six independent schools in Surrey Heath, and many others beyond, are essential pillars of support for those families, whose lives are often marked by uncertainty in the service of the state.

I ask the Minister to look again at the continuity of education allowance and to ensure that it keeps up with rising school fees, while making sure that service families are not financially penalised for their continued commitment to the defence of the United Kingdom.

17:52

[Gregory Stafford (Farnham and Bordon) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Lewell-Buck. I congratulate my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) on leading today’s debate. I declare an interest as the father of children who currently attend an independent school.

I am afraid it is not a pleasure to speak today about the vicious, vindictive and, ultimately, financially valueless policy that the Labour Government have brought in. As has been said, no other country—no serious country—in the world taxes education. The sorts of schools being taxed are faith schools; arts, drama and music schools; single-sex schools; and independent schools to which armed forces parents send their children. As a side note, a member of our armed forces said to me last week that, in their view, this policy was a breach of the military covenant.

This is not about a tax break, as Labour Members have said. Tax has never been levied on education in this country, so this policy is an additional tax on education. It is not a tax break. As other hon. Members have said, parents who make the sacrifice to send their children to the independent sector are saving money for the state sector.

Across my constituency of Farnham and Bordon, including Haslemere, Liphook and the surrounding villages, we are lucky to have 11 excellent independent schools that cater both to junior and to senior pupils. But unfortunately, only last Friday we discovered that one of those schools will close at the end of this academic year. The Royal school in Hindhead has been a cornerstone of education since 1840. It was formerly the Royal Naval school, and was specifically set up to educate girls—the founder had the ambition for girls to become independent members of society, and it was a pioneering school in that effort.

As other hon. Members have said, single-sex education has worked wonders for girls in terms of not only their education but their social mobility. The school became co-educational more recently but, as my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) said, this is a real problem. I recognise that the school had ongoing financial difficulties, but it is deeply unfortunate that the Labour party’s policies on low-fees schools—those that charge around £3,000 per term—seem to have been the final blow to the school’s long-standing viability.

The Royal school has been not only a significant education institution for generations of pupils but a key part of the fabric of our community, employing people and helping the state sector with areas where it cannot produce. I take this opportunity to express my sincere gratitude to its dedicated teachers and staff who have worked tirelessly over the years, and to acknowledge the sense of loss felt by all of us in the Haslemere community. However, it is equally important to highlight the profound impact that the closure will have on the parents and families who are now faced with the difficult task of finding alternative provision.

Mr Chancellor, a single father of an adopted child, spoke to my office only this morning. He took on the financial strain of a fee-paying place at the Royal school to allow him to drop his child at school and know that, between the hours of 7.45 am and 5.30 pm, his child would be cared for, fed and looked after. That allowed my constituent the flexibility of extra time to work on his small business. That is the sort of impact there is on the hard-working local people the Labour Government profess to want to support. Families such as Mr Chancellor’s will either have to seek places in other independent schools or, regrettably, be forced to turn to an already overstretched and underfunded mainstream education system.

Although Mr Chancellor has commended the work of Surrey county council admissions team—who were also left in the dark about the school’s closure—there is clear anxiety for parents whose children’s fate is currently unclear. State schools across Farnham, Bordon, Haslemere and Liphook are already bursting at the seams. The fees charged by independent schools are often only a quarter, or even perhaps half, of the cost of state school provision per pupil. That has meant that for decades independent schools have taken huge strains from the state system in educating a percentage of pupils from nursery age until they are young people.

Last October, following a meeting I organised in my constituency with the then shadow Chancellor—my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt)—and my right hon. Friend the Member for East Hampshire (Damian Hinds), I wrote to the Department for Education and the Treasury. The Exchequer Secretary’s reply emphasised that the policy was supposedly forecast to raise around £1.8 billion, but realistically, even if that were true—the Opposition dispute that heavily—that is a mere drop in the ocean for Government spending, particularly when TaxPayers’ Alliance research reported that the policy comes at a net loss for the Treasury, as state spending has been forced to stretch per capita to facilitate 35,000 pupils now expected to be educated in the mainstream schooling system. Last week, Surrey county council admitted to me that it does not have enough state school places to accommodate children transferring to state schools. When will the Government understand that these policies are crippling local authorities that are trying immensely hard to cope with the volume of displaced children?

It is not just about the fact that there are not enough places in the state sector. My right hon. Friend the Member for East Hampshire will know all too well that Alton Convent school in his constituency closed last year. During the general election campaign, I knocked on the door of a gentleman whose children had just got a place at that school, only to find that they now would not have it. But they could not get a place in the local state school because he had not sent his children to the local junior feeder schools. He would not have been able to get a place at the local school even if there had been one.

In my constituency, no group has been more profoundly affected by the Government’s damaging policies towards independent schools than the parents and families of children with special educational needs and disabilities. The closure of the Royal School and the narrowing of available educational options serve only to exacerbate the already significant challenges faced by these families.

Across my constituency, we are fortunate to have three special schools: Undershaw, Pathways and More House. Since my election, I have met multiple headteachers, including Jonathan Hetherington, the headteacher at More House, a renowned SEND school for boys in Frensham.

Only this morning, I attended a meeting with 25 parents from the Last Wednesday SEN support group in Farnham. Because Wednesdays are not great for Members of Parliament, they were charitable enough to change their name to “First Monday” this week, just for me. I joke, but one lady was in tears this morning about the impact that this spiteful policy will have on her child. Many will be forced to navigate a new school and new academic curricula, all while receiving little to no support and without a formal education, health and care plan.

Some of my constituents, across both counties—Surrey and Hampshire—are having to wait 24 months to receive their EHCPs. Between 2019 and 2024, the uptake of EHCPs increased by 63% in Surrey and 93% in Hampshire —both well above the national average. When he responds, can the Minister tell us what is being done, and what conversations he is having with the Department of Health and Social Care and the Department for Education to expedite that process?

In my local area, I am genuinely concerned about the fact that 17% of independent school pupils receive SEND support, but only 6% of them have a formal EHCP. I want to quote the Prime Minister, who shared the Government’s supposed plan for SEND pupils who do not have an EHCP, or who are in the process of acquiring one. In June, the Prime Minister told LBC listeners:

“Where there isn’t a plan, then that exemption doesn’t apply.”

So there is no assurance for those children and those parents. I did not receive any assurance in last week’s debate on SEND education support, so I ask the Minister to confirm that the 93,000 children in the independent sector who receive SEND support but do not have a formal EHCP will not be included at all in the SEND education support plans, as the Prime Minister seemed to outline in June.

Increasing VAT on independent school fees to 20% is not just a fiscal policy; it is a direct assault on the educational choice and social mobility of our constituents. This policy threatens to attack thousands of students in an already strained system, undermining the very fabric of our diverse educational landscape. The influx from the independent sector will exacerbate existing pressures, leading to larger class sizes and diminished resources for all.

Is this really the legacy that this Labour Government want to leave: a society in which educational diversity, which leads to educational excellence, is sacrificed at the altar of a misguided and malign fiscal policy fuelled by class envy? I urge the Minister to reverse this punitive tax and champion a system that upholds choice, fosters excellence and truly invests in the future of every child.

18:02

[Monica Harding (Esher and Walton) (LD)]

It is a pleasure to serve under your chairmanship, Mrs Lewell-Buck. I thank the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont), who secured this debate, and I thank those who signed today’s petition. I would like to point out, as other Members have done, the unintended consequences of this policy, which are affecting my constituents in Esher and Walton. For context, independent schools serve around 20% of pupils in Surrey.

First, I am concerned that this Government’s policy will put at risk the many valued partnerships between state and independent schools, which work so well in my constituency. In Esher and Walton, the independent sector supports some of our state schools with capital projects, such as redecorating and renovating, and state primaries make use of independent schools’ playing fields to open up sport and outdoor activities. I wish that there was more of that, and I was encouraging my independent schools to do more, but they now say that the VAT increases make it unaffordable.

Secondly, alongside other Members, I want to focus on how this policy will impact the more than 40,000 pupils in Surrey who receive support for special educational needs. Surrey’s SEND system is in crisis. The six Liberal Democrat Surrey MPs have been shining a light on this fact ever since we were elected, even in meetings with the Minister for School Standards, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), and the Education Secretary. However, this Government’s policy is only putting more pressure on an already strained and even broken system.

To understand that clearly, it is important to look first at the situation in Surrey, which my hon. Friend the Member for Surrey Heath (Dr Pinkerton) alluded to, where more than 3,000 children are in limbo awaiting diagnosis for autism and ADHD, many for almost two years. These are colossal waiting lists at a critical juncture in a child’s education.

As recently as last year, Surrey was delivering fewer than one in six EHCPs on time. The quality of provision is so poor that more than 1,800 children are missing at least a third of school days because their needs are not being met. In despair, parents are turning to the independent sector, knowing that their child is unable to access education and, critically, sliding into poor mental health. These are not rich families but families in desperation, who cannot watch their children being unhappy and not attaining. As has been pointed out, often simply the smaller class sizes help an autistic child or a child who has ADHD.

The Government’s position is that local authorities will be able to reclaim the VAT on fees for a pupil with an EHCP who attends the independent school named in their plan, but that leaves a critical blind spot. Almost 30,000 children are receiving SEN support without having an EHCP, and it is increasingly difficult for strained state schools to give them adequate provision.

Following a lack of appropriate funding for schools from previous Governments, it is only in the past year that real-terms funding per pupil has reached the same level as in 2009. When we factor in the drop in capital spending on schools in the last 15 years and the fact that schools’ costs have risen faster than overall inflation, we are faced with the bleak reality that there is significantly more pressure on state school budgets than there was 15 years ago. We see the interaction of ballooning costs for state schools with rising demand for SEN support—even excluding ECHPs, that has risen by 50% in the last decade. Schools are therefore being asked to do more with fewer resources.

Although this policy may be intended to give schools more money, my understanding is that none of the money will go to better special educational needs provision. Indeed, the £1 billion that was put aside for that in the Budget does not even touch the sides of the £4.5 billion overspend in local authority budgets on special educational needs, let alone the ballooning cost of special educational needs provision.

Thirdly, at this particularly challenging moment for our economy, the Government have chosen to impose further burdens on families. Independent school fees have risen by 13%—a surge in costs so severe that, alongside other factors, it has powered an uptick in inflation across the entire economy. That is due to the addition of VAT to fees and the decision of many schools not to absorb any of the costs, but rather to pass them along almost entirely to families.

For many hard-working parents, sending a child to an independent school has been made more unaffordable, and that particularly hurts families with SEN children who are looking for an alternative to a school in Surrey’s failing system. That risks placing more financial strain on families at a time when the pain of inflation is still being felt, harming the mutually beneficial partnerships between state and independent schools and leaving more children languishing in a failed SEN system.

No headteacher I have met who complains about the strain that SEN places on their budgets has asked for the private sector to pay. They ask for the radical overhaul in education that the Government promised but are yet to deliver.

18:08

[Jack Rankin (Windsor) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Lewell-Buck.

In Windsor, we are very lucky to have some of the finest state and independent schools in this country, and I am proud to represent them all. One has already been mentioned; it is very prominent, but it is not very reflective of the situation in my constituency.

On two constituency visits this morning before I came into Parliament, I counted the independent schools that I passed. I passed six; 23% of the pupils in my constituency attend independent schools. The caricature that my right hon. Friend the Member for East Hampshire (Damian Hinds) said was always in the papers when independent schools are discussed does not reflect 23% of the parents in my constituency.

In my recent surgeries, I have had many parents who are really struggling with the proposed policy. Often, both parents are working, and one of them may have taken on a second job. In many instances, they have remortgaged their house. They have gone without. Many marriages are under pressure, and I am concerned about those parents and their children.

Because we have such a high percentage of independent schools in my constituency, they are not the only ones affected, even though they might be the most directly affected. The displaced children hit my state schools, and that means our state sector is bracing for an influx of children that it will struggle to accommodate. That is why I think this is a false choice: it should not be state versus independent.

Our schools are an ecosystem, and they are all valuable, because education is a public good. It promotes social mobility, strengthens our economy and benefits society at large. No other country in the world tries to tax it. When they have tried—as in Greece, where it lasted only four months—it has massively backfired. In fact, many developed countries look to subsidise independent education to promote parental choice and drive up school standards, so the Government are unique in their policy and, frankly, their vindictiveness.

Whenever the Labour Government hike taxes, there are unintended consequences. Just as their jobs tax is hitting charities and hospices, their tax on independent schools will hit military families and the 130,000 SEND pupils who are currently in independent schools. Many of the parents I have spoken to use those schools as a way of giving their children that extra bit of support that they would struggle to find in the state system. I think every single Member of this House recognises the challenges facing their local authority when it comes to SEND provision.

From my involvement with the all-party parliamentary group on Down syndrome, which my right hon. Friend the Member for East Hampshire chairs, it is clear that getting an EHCP is already an uphill struggle, and taxing independent schools will create the most regressive possible outcome. It will add to the pressures already facing our local authorities, and the SEND children in the existing state provision will pay the highest price.

In a similar vein—the hon. Member for Surrey Heath (Dr Pinkerton) discussed this—2,666 military families in this country rely on independent schools to give their children a stable education. For those families, VAT relief can make all the difference. I previously co-signed a letter that my hon. Friend the Member for Solihull West and Shirley (Dr Shastri-Hurst) sent to the Chancellor, calling on the Government to protect from VAT military families who make use of the continuity of education allowance.

Although the Chancellor has committed to re-rating CEA, I maintain that the full exemption from VAT is needed to truly support military families. That would make a real difference to those enlisted at either of Windsor’s two great garrisons, to whom we owe so much. That support should be given special consideration in the light of the Prime Minister’s discussions over the weekend and in the House today.

Labour Front Benchers frequently refer to parents who pay for independent education enjoying a tax break, but parents actually save the state £8,210—the money it costs to educate a child in the state sector—and receive no compensation for the income taxes that they pay. In my book, that is no tax break at all. Frankly, the numbers do not add up. The Adam Smith Institute has estimated that if even 10% of children move to the state sector—anecdotally, in my constituency I am seeing more than that—any revenue will be nullified. Any more than that 10%, and the policy will actually cost taxpayers money. That highlights the ideology behind the decision.

In my view, the Labour party is playing politics with children’s futures. It is forcing families to have difficult conversations mid-year and make tough decisions. The saddest conversations I have had have been with parents who have felt the need to separate children from classes mid-year. Frankly, only a Labour Government could set out with the aim of improving education in this country and introduce policies that have led to 40 school closures since the Budget.

[Dr Arthur]

The hon. Member is talking with great understanding about the schools in his constituency, including state and independent, which is fantastic to hear. But we have heard in this debate about full state schools in England, about overloaded schools and underfunded schools. He will acknowledge that funding had to be found somewhere to try to fix the problems. We have one solution. Is there an alternative?

[Jack Rankin]

My point is that this will not raise any money. It will exacerbate the problem, because if 10% of the students are displaced, that nullifies the revenue.

One thing that has not been mentioned is that all our local authorities are under some kind of financial strain, and the royal borough of Windsor and Maidenhead is under more than some others. One of the biggest exploding bills on its books is the school transport budget, which this policy harms by putting another unexpected pressure in the system that local authorities will have to pay for. I do not know whether that is in the numbers; perhaps the Minister will comment on that.

I find it almost humorous that some teachers’ unions—it is not often that Conservative Members agree with them—are raising concern about the impact of this policy on staff and pupils in state schools. After only a few months, we are seeing pupils being taken out of private school at three times the previous rate. We will have to wait until September to see the full extent of the damage, as many parents are doing everything they can to get to the end of the school year before, sadly, taking their children out of the schools they love.

In this country, we should be aiming to set the highest standards across the board, using schools that excel in the independent and state sectors as examples of what can be achieved. Labour would rather cut down that aspiration in return for uniformity. We are seeing this attack in their dismantling of the academy system, which has blossomed under successive Governments of all colours. Far from guiding the invisible hand, Labour’s education policy is strangling the school system. I wholeheartedly reject this “politics of envy” policy, which places politics above children, families and the good of the country, but if the Government are determined to stick with it, I urge them to introduce full exemptions for all SEND children, military families and specialist schools.

18:16

[Rachel Gilmour (Tiverton and Minehead) (LD)]

It is a joy to speak under your chairmanship, Ms Lewell-Buck. I will be brief.

I grew up the eldest of four children, and the only girl. My brothers and I were all grateful recipients of scholarships and bursaries to public schools. I am, believe it or not, a Cheltenham lady, and my brothers all attended King’s, Canterbury. Two served in His Majesty’s armed forces—Johnny was a half-colonel in the Grenadier Guards, and Ben still serves as a brigadier in what we still call the Black Watch. My other brother, James, worked as a heart surgeon before serving his community in Wales as a GP. In my own small way, I have tried to contribute to my country and my community. I am now serving as an MP, but I have also been a town and district councillor. I worked for international and national non-governmental organisations, and the National Farmers Union and the Environment Agency. That was made possible for all of us in large part by the education that we were fortunate enough to receive.

As Members can imagine, I very often get asked by people who tend to put their cross in the blue team box why I am a Liberal, and my answer is this: I am a Liberal because I was very well educated and I have a conscience. As a Liberal, individual political choice is part of my political DNA, and that is why I resist any attempts to erode choice. Steps taken to remove parental choice over where and how children receive their education are, to my mind, politically indigestible. Ultimately, parental agency must come first in any discussion about children’s future; it is not for the state to disrupt that dynamic.

There are a few misconceptions about private schools in this country. One is that most of those who are fortunate enough to attend independent schools are somehow part of the elites. Many students in such schools up and down the country hail from families that have saved and made many a sacrifice to strive to provide the best possible education for their children. My parents were both teachers—not a particularly highly paid profession. This policy would overturn a long-established VAT exemption on independent schools and would hit hard-working families the most. Those schools would be forced to increase fees to stay afloat, cutting off opportunity for many children and driving the further balkanisation of our education system, with the result that only the most financially fortunate would be able to afford private school fees.

[Clive Jones (Wokingham) (LD)]

The Government’s policy will harm SEND children currently enrolled in independent schools One constituent wrote to me to say that their daughter goes to a local independent school because of her autism, and that it is an environment that is best suited for her needs. Does my hon. Friend agree that the Minister should recognise the potentially detrimental effect on children with SEND if the VAT exemption causes schools to cut scholarships and bursaries?

[Rachel Gilmour]

I thank my hon. Friend for his interesting and adept intervention. I will be coming to that matter in a minute. There are some shocking—shocking—statistics on this from the Conservative party in Devon.

This policy will immeasurably increase the strain on the state school system, which is already bursting at the seams, through a large influx of pupils transferring across to comprehensive schools. This tax will not offset the impact. Moreover, many pupils at private schools are there because bursaries and scholarships have enabled them to be there, as was the case for me. For example, Blundell’s school, the independent school in my constituency of Tiverton and Minehead, has a proud reputation of offering a very high number of bursary places to disadvantaged children from low-income households, who would otherwise not have the opportunity of a first-class education. It also opens its doors to the community, who regularly make use of its wonderful facilities. That is the case for independent schools up and down the country—I think I referred to one earlier.

What about those pupils in need of extra support with their learning? Here comes the shocking statistic about EHCP roll-out across Devon, where Conservative-run Devon county council fails to meet its statutory duty to issue 95% of EHCPs within 20 weeks. I think all of us—even the blue team—would agree that that is shameful. Many parents whose pockets are not bottomless and who have children whose needs are not being met see independent schools as a means of securing the best possible future for their child. Who could possibly decry parents doing such a thing? [Interruption.] Mutter, mutter.

Of course, my desire is to see our state school system rise to such standards that parents would not feel as though independent schools were the only way for their children to receive a first-class education. I sincerely hope that that day comes sooner rather than later, and I have confidence that this Government will make that happen, but I cannot help but come back to choice, which is the central premise of my argument—the choice of parents to decide themselves, and themselves alone, where their children learn.

18:23

[Munira Wilson (Twickenham) (LD)]

It is an absolute pleasure to serve under your chairmanship, Ms Lewell-Buck. I thank the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for introducing this debate and setting out the argument so eloquently. I also thank the almost 115,000 people who signed the petition, of whom 873 live in Twickenham.

I start by apologising to you, Ms Lewell-Buck, hon. Members and people in the Gallery if I have seemed a little distracted over the past 45 minutes. I have just found out that my daughter got her first choice of secondary school—a state school, I should say—for this September, so I have been a little distracted. All her classmates’ parents have been messaging to find out, and I was trying to communicate with my husband to let our daughter know that she will be going where she wants to go. Forgive me, but I thought it was quite appropriate to mention that, given that we are talking about schools and independent schools. I am proud that my borough of Richmond upon Thames has outstanding secondary schools—in fact, all of them are outstanding or good—and some of the best primaries in the country, but that is not necessarily the case everywhere.

It goes without saying that every person in this House, whatever their party affiliation, aspires for every child to receive an excellent education. Every child deserves the opportunity to reach their full potential, yet too many children are not being supported to achieve it. We Liberal Democrats believe in creating state schools that provide a rich curriculum together with rich extracurricular options—schools so high performing that parents do not feel compelled to send their children to the independent sector. That is why we set out an ambitious education offer in our manifesto last year; we see education as an investment, not a cost. However, as we all know too well, that is very far from the current reality of our state system. For too many children, our school system is just not working; too many are simply not getting the support they need and are entitled to, especially if they have additional needs.

Teachers and other school staff as well as school leaders are struggling with ever tighter budgets to hire and keep the staff they need, especially in maths and science, with crumbling school buildings, and with a SEND system that is utterly broken. Is it any wonder that many parents, for some of whom it is far from an easy financial decision, choose an independent education for their children? They want to invest in their children’s future in the same way that I argue the Government should invest in our children, yet it is in that context that this Government have decided to tax independent schools and penalise families for making that choice.

We Liberal Democrats oppose in principle the taxation of education, whatever form it takes—whether it is tutoring, higher education, nursery fees or music lessons. Even more, we believe this measure is counterproductive. Since the policy was announced, pupil movement out of the independent school sector has been three times higher than the Government predicted, with the fall being highest in transition years of year 7 and reception, at 4.6% and 3.9% respectively. The Independent Schools Council’s survey last year found that there were already 10,000 fewer pupils in independent schools. According to the ISC, this fall in numbers alone cost £92 million in state pupil funding, which is more than the Government will raise from business rates on independent schools that are charities.

The majority of independent schools are small: 40% have fewer than 100 pupils. With apologies to the hon. Member for Windsor (Jack Rankin), we are not talking about the Etons and the Harrows here. What I really struggle with in this policy is that, as others have said, it is not the very wealthy who will be impacted by it. The Minister will be very pleased to hear that I have met some rather wealthy people who have told me that they agree with the policy—but they can afford it; they can absorb the extra cost. It is especially the parents who never deliberately set out to secure a private education for their children, but felt forced to for various reasons, who are bearing the brunt and will be priced out. The impact of Labour’s policy is to make our private schools yet more elitist, which is what the Government are waging a campaign against. I think the right hon. Member for East Hampshire (Damian Hinds) made this very point.

I wish to talk about two groups who are particularly harmed by the Government’s policy. The first is families of children with SEND. As we have heard, there are in our independent schools almost 100,000 children with special needs who do not have EHCPs, and who, under this Government’s policy, are not exempt from VAT. Often, their parents opted for private schools as a last resort, after being continually failed by the state system and even rejected. This policy penalises parents for trying to do right by their children.

One family in my constituency came in tears to a surgery last year, after it was announced that this policy was going ahead and would be implemented in January this year. Their son was in a local state primary school, but his challenging behaviour, which had manifested as a result of his additional needs, which the school could not support, had put him at risk of exclusion. His parents made the very difficult decision to move him to a local private school, where he is now thriving. They are paying an extra £18,000 a year on top of the basic school fees for the additional support he needs to learn and thrive. All those costs—not just the basic fees but the additional support fees—are subject to VAT under the Government’s policy. They do not know how they are going to meet the cost, but they know that if their son goes back into the state sector and to the primary he was at, he will be at risk of being excluded. I ask the Minister: why are the Government punishing families such as these? Arguably, they have saved the taxpayer a lot of money in terms of not just the child’s schooling costs, but all the further knock-on costs that we know result from a child being excluded from school.

We all know that SEND provision in this country is utterly broken. Our local authorities and state schools are buckling under the demand, yet this policy threatens to place an ever-greater burden on the state SEND system, as parents are incentivised to battle the system for EHCPs—which many children probably could get if their parents tried hard enough—in order to secure the VAT exemption. Indeed, some parents of SEND children are simply being priced out of the independent sector and back into state schools, where the additional needs will need to be supported. I have repeatedly asked Ministers to monitor and report to the House on that particular impact of the VAT policy, and I ask again: will the Minister monitor and report on the impact on SEND provision for those children who do not have EHCPs and are not exempt?

The second impacted group that I will briefly touch on is military families. Statistics from the Boarding Schools’ Association reveal that the Government’s new policy will have an adverse impact on military families using the continuity of education allowance scheme. Under the scheme, parents must make a minimum 10% contribution to fees, but even with the Ministry of Defence’s recalculation in response to the Government’s policy, parental contributions will have to increase by a further 18% on average, rising from £14,000 to £17,000 for a child in senior school. As my hon. Friend the Member for Surrey Heath (Dr Pinkerton) pointed out, that will be unaffordable for many families, and will impact retention in the forces. Those serving our country should not be financially penalised for doing so, and we should endeavour to provide service families with continuity and stability. I hope that the Minister, alongside his colleagues in the Ministry of Defence, will make a clear statement on how the impact of VAT will be monitored for CEA families, and the criteria by which they will decide to make further changes. I hope they will also commit to reviewing the CEA over the longer term to ensure that families are protected from the impact of VAT, or exempt CEA families from VAT all together.

Aside from the two specific groups that I have talked about, who I think the Government have overlooked, I want to return to the wider principles. We Liberal Democrats would like to see independent schools routinely giving back to their community by way of recognition of the tax exemption they had previously benefited from, and that we believe should continue. Many of these schools already give back a huge amount to their communities through exemplary partnerships with local schools, where not only facilities but learning and experiences are shared between the state and the independent sector.

Independent schools ran over 9,200 partnerships in 2024; each school involved in partnership worked with approximately 11 state schools and with 403 pupils in those schools. Examples of those partnerships include sharing sports facilities, theatre spaces, specialist teachers, mentoring schemes, cooking schools, higher education support and debating clubs, as well as bursaries and scholarships. The Liberal Democrats want to see that become the norm for every independent school, but as my hon. Friend the Member for Esher and Walton (Monica Harding) pointed out, the VAT policy will mean that greater partnership work is the first thing independent schools cut back on.

In these debates, I have often referred to Hampton and Lady Eleanor Holles schools in my constituency, which have a brilliant partnership with a Reach academy in Feltham that is serving a disadvantaged community that has typically not had many children going into further or higher education. That school has seen its results soar and pupils accessing university and medical school as a result of the partnership. The headteacher of Hampton, Kevin Knibbs, said to me this morning:

“While it’s too early to identify the immediate impact of the Government’s policies on our schools…it is deeply regrettable and a missed opportunity that independent schools elsewhere in the country will simply be unable to replicate the Reach-LEH-Hampton partnership model due to the new tax regime. Moreover, the imposition of a tax on education will compromise our and other independent schools’ ability to provide transformative, means-tested free places that are such excellent examples of social mobility in action.”

I thought that was something that the Minister and his colleagues were all in favour of. We should be making the most of the benefits that independent schools can provide, opening them up to more children, not making them more exclusive and adding to the state system’s burden.

I am coming in to land now, I promise. The Government have dismissed the stories of families affected by this tax, choosing to prize numbers over human experience. I fear they are being driven by ideology, but I am perplexed as to why Ministers have been hellbent on this particular policy, which hits parents’ pockets directly, and yet they have resisted my party’s attempts to amend the Children’s Wellbeing and Schools Bill to ensure that private equity companies that are profiteering from private special schools are not being subjected to the profit cap that this Labour Government are imposing on children’s homes and fostering agencies that are often run by the same companies. They are making eye-watering profits, with margins of more than 20%, which local authorities have to pay. The Labour Government do not want to do anything about that, but they are attacking parents who want to send their kids to private schools. It makes no sense to me, and I hope the Minister will address that point.

I understand that the fiscal situation right now is hard. Unlike the Labour party, during the election campaign my party laid out a whole host of areas where taxes could be raised fairly in order to invest in our children’s education and our country’s future. Whether that is properly reforming capital gains tax, reversing the Conservatives’ tax cuts for bankers or increasing the tax on big tech companies, we are ambitious for every child. We want to put a dedicated mental health professional in every primary and secondary school, to expand free school meals for all children in poverty and to ensure that those children who have fallen behind are supported through tutoring. That vision can be realised without penalising parents who are choosing to do what every parent naturally wants to do: to invest in their children’s education and future.

18:36

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Lewell-Buck. We have had some superb speeches on all sides of the House today, starting with my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) who led us brilliantly. I thank the nearly 115,000 people who triggered this debate by signing a petition against the education tax, and particularly those who are here today.

There is a good reason why all previous Governments of all colours have avoided taxing education. It is hard to imagine a Tony Blair Government doing what this one are now doing. In fact, we know that he slapped the idea down hard when it was suggested. Likewise, Clement Attlee did not do it, and nor did Harold Wilson or Jim Callaghan. The rest of Europe does not do it. But under this Government, schools are being hit by a triple whammy of VAT, business rates and higher national insurance. Even some Government Ministers have their doubts about this. The Chief Secretary to the Treasury, no less, told the girls at Redmaids’ high school in 2022 that he opposed his party’s policy on taxing independent schools and said that it would not bring in what his own party was claiming. What an extraordinary thing for the Chief Secretary to have said.

As the Labour hon. Member for Ealing Central and Acton (Dr Huq) said, the Government are doing exactly what they promised they would not do by raising tax on working people. The Government’s claim is that they need to find some money. I note that they are able to find billions and billions to fund their bizarre payment to Mauritius to take our own territory off of us, but even if I could not think of anywhere that the Government could save some money—and I can—my advice would be that, if they want to tax people who have more money, they should tax people who have more money, rather than taxing education. The problem with taxing education is that it catches people who are not rich; it catches people who are sacrificing so much to invest in education. That is unselfish and has wider social benefits. If the Government wanted to tax fancy cars or holidays, or meals out or something like that, I would at least understand, but taxing investment in education is a mistake—and starting it halfway through a school year makes it worse and is vindictive.

In my constituency on the edge Leicester, we benefit from lots of different types of people, but particularly from second-generation communities who really value education. I see whole extended families in my constituency coming together to spend what money they have not on fancy cars or luxuries, but on school. In the biggest independent school in my constituency, Leicester grammar, probably the most common occupation among parents is to be a doctor working in the NHS, and being a doctor is still a very common dream for the pupils there, too. Education has these wider social benefits, and I am struck that the Government praise these people one minute and then wallop them the next; one minute they love them, and the next they hate them.

The other common reason that my constituents end up paying twice over for education is that their child has some sort of special needs. They first pay the tax, then they do not use the service that they paid for and then they pay again themselves to get what they think is the right thing for their child. Parents know what the EHCP system is like and they can see the ever-rising demand, so instead of adding to that demand they pay up themselves out of their own pocket. They are content to make sacrifices to get the care they need for their child and their special needs.

Independent schools educate more than 130,000 pupils with SEND, of which around 100,000 do not have EHCPs. This is one of the big challenges created by the education tax: if a significant chunk—maybe not even a big chunk—of that 100,000 or so children with special needs but no EHCP are taxed into the state system, that will be a huge new load on a special needs system that has already seen demand explode over recent years. Councils are already struggling, and will have to do more assessments and find even greater resources.

We know that 100,000 figure from both the Government’s own data and the ISC’s census, but behind every statistic is a real child. There was an example recently of how this is playing out just over the border from us into Lincolnshire: a girl was forced to move school because her parents could not afford the new tax, and the council has now gone from paying nothing to spending £8,200 a year of taxpayers’ money to transport her a long way to the nearest school that can take her.

Some of these cases are profoundly sad. There was a report in The Independent recently about a girl who was hospitalised for eight months last year with a rare brain condition, which left her needing a very high level of support and unable to cope with the change of school placement. The daughter had attended a private school, which her dad says they had just about afforded, but the 20% charge on top made it unaffordable. She had been living in intensive care, and once she came out, she had only eight months left at her old school because she was in year 11. Her father raised her plight with the DFE, and he says of the letter back from Ministers:

“I could have smashed my head against a wall when I got that letter, I was so angry and upset. It’s so heartless.”

The Government claim that this is a great and vital revenue raiser, but in reality, that has always been highly uncertain. The rate at which it will shift pupils into state education is hard to predict, and the effects of this large group of children with SEN moving makes it even more uncertain. Pupil movement out of independent schools is already three times higher than predicted, as has been noted in the debate. Some 10,000 fewer pupils are in independent schools already, according to the September 2024 ISC pupil numbers survey. The drop was largest in the transition years, with a drop of just over 4.5% in year 7 entrance.

The Government want to present all the parents who end up sending their children to independent schools as incredibly wealthy, but according to analysis by Diarmid Mackenzie, around 90,000 families who use independent schools are on below average incomes. They will be the ones who are most affected, and independent schools will become more exclusive.

The hon. Member for Paisley and Renfrewshire North (Alison Taylor) talked about the ability of schools because of this change to reclaim historical VAT on capital spending. That is worth about £5 million for Eton, but nothing at all for lots of smaller schools that are less well resourced—and some of them are not well resourced.

I think of a small Christian school in Leicester, which got in touch with me because it was so concerned about this. Its income per pupil is probably below those of the neighbouring state schools, its fees are low, the teachers could get paid a lot more elsewhere and the parents are definitely not rich. Why do those people do it? They do it because it is a labour of love, and it is a labour of love for others, too. There are all kinds of reasons that children end up in the independent sector. Maybe it is their special needs; maybe it is faith; maybe it is to do with language; or maybe it is a particular educational approach that works for their child. In a word, this is pluralism.

On the other side of the ledger, what do we have to show for it? The Government occasionally try to claim that the money is ringfenced for some purpose or other, but of course the truth is, as the Minister knows, that there are no ringfences at the Treasury. In the troubled schools Bill, we see measures that will unwind the educational reforms to state schools that propelled England up the international league tables. The Institute for Fiscal Studies says that, over the last Parliament, per pupil spending in mainstream schools rose by about 11% between 2019 and 2024 when adjusted for inflation. That is an 11% per pupil real-terms increase, but for this coming year, the IFS has pointed out that state schools’ costs are going up faster than their income, with costs up 3.6% and funding up only 2.8%. It is therefore not the case that the education tax is unlocking some great funding bonanza for those of us who have got our kids in state schools. In fact, I see that the National Education Union has recently relaunched its “Stop School Cuts” campaign.

There are 43 schools that have closed or announced closure since Labour came to power, and many of them have explicitly pointed to the education tax as the thing that tipped them over the edge. Schools that have closed include Hemdean House school, Abercorn school, Portland Place school, River House Montessori school, Alton school, Conifers school, Kilgraston school, the Study school, Ursuline preparatory school, the Hampshire school, St Joseph’s preparatory school in Stoke-on-Trent, Wings school, Argyll House, Chartfield school, Gracefield preparatory school, Lawrence House, North London Rudolf Steiner school, Redbourn Park secondary school, Sheiling school, the Copper academy, the GFC school, the Prepatoria school, Ashcroft school, Downham preparatory school, LIFE Wirral Sports school, Iona school, Brighton Waldorf school, Progress Schools, Summit school, Advance Education, Tashbar boys nursery, Maidwell Hall school near me in Northamptonshire, Loughborough Amherst school, Godolphin prep in Salisbury, the Village school for girls in Camden, Highfield prep in Maidenhead, Oxford House school in Colchester, Carrdus school in Oxfordshire, Bedstone college in Bucknell and Fairfield PNEU school in Backwell. Schools that have merged and reduced in numbers include Headington and Rye St Antony; Orchard House and Chiswick and Bedford Park; and Westbury House and the Study schools.

I read those out because, as well as the number of children who will move into the state sector and have their education disrupted in that way—which seems to be much higher than the Government predicted—a huge number will have their education disrupted even if they end up in another independent school. That is precisely what is happening to a lot of parents in my constituency because of local closures. The Government will say that those children are privileged; I say they are children. Being forced to change schools and perhaps being separated from friends is disruptive and bad, whoever they are.

The Government have often countered that not many pupils will be affected. We hear about the small percentage of pupils who will move, and how easy it will be for the state sector to accommodate them. We hear much less about how much extra that will cost, and we have heard nothing from the Government about the 10,000 fewer children in independent schools I already mentioned. The official impact predictions for VAT estimated that 3,000 pupils would leave this academic year; now we have seen 10,000 in the first term. There are still five months until August, so it may get worse before the year is out.

If the number of pupils leaving the sector continues to run at three times the predicted levels, we would face not just—“just”—35,000 pupils displaced, but more than 100,000. In many cases, they will struggle to get a state school place. In at least 27 authorities, schools are full in certain age cohorts and, since Labour announced this policy, pupil number projections in the state sector have been revised up nationally—significantly so in many local authorities. That means fewer people in the state system will get their first choice of school.

Although there is uncertainty about the fiscal impact of this policy, there is no uncertainty about it not being the best way to raise revenue. The other day, the Chancellor announced the introduction of a special new business rates relief for the film industry, even as the Government take away business rates relief for schools. The argument is, “The film industry is good. This is an investment in our future”—but schools are an investment in our future. The argument is, “This is good culturally. This is part of our culture”—but education is good for our culture as well.

I will come to an end. There is uncertainty about the fiscal impact of this measure, but there is no uncertainty about it causing a lot of misery for parents with special needs kids and for parents who do not want to have their kids’ education disrupted. The Government are doing this for political reasons. There is no doubt that this is not the best way to raise revenue; this is a purely political decision and it is having significant, real-world, bad effects on our constituents right across this country.

18:47

[The Parliamentary Secretary to the Treasury (Torsten Bell)]

It is a pleasure to serve under your chairship, Mrs Lewell-Buck, for this debate secured not by an hon. Member, as is often the case, but by public petitioners, including some who are present in the Public Gallery. The public paying attention to an issue is good grounds for it being debated. I also thank the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for introducing the debate—also, for closing it shortly—and all hon. Members who have spoken during it.

There are lots of things that are not common ground on this issue, as I will come on to, but I will start by noting that we are all motivated by the same determination to support the aspirations of every parent in the UK to get the best education for their children. In that context, we should all congratulate the hon. Member for Twickenham (Munira Wilson) on her good news and agree with my hon. Friend the Member for Ealing Central and Acton (Dr Huq) that we all know people who have made a wide range of decisions about the educational choices for their children and that no one here is judging other parents’ choices.

The best education for children is also what motivates the Government to break down barriers to opportunity to ensure that every child has access to high-quality education—and every child includes the 94% of children who attend state schools. The reforms to VAT and business rates that we are debating will raise about £1.8 billion a year; I will come on to the questions about the costing shortly. That will help to improve state education.

In the autumn Budget, the Government announced a £2.3 billion increase to the core schools budget, and it is to deliver such commitments—not for any other purpose—that we have made the tough but necessary decisions that we are debating today. The hon. Member for Harborough, Oadby and Wigston (Neil O’Brien) called for even larger increases in spending on schools, but it was noteworthy that he did not set out the means by which such increases would be paid for.

I will briefly outline the policy changes that the Government are making, before turning to the important issues that hon. Members have raised during the debate. Since 1 January, education services provided by private schools have been subject to VAT. While private schools are now required to charge VAT, they are also able, as has been discussed, to recover the VAT that they incur when purchasing goods and services. The Government are also legislating to remove the eligibility for charitable rate relief from private schools that are charities in England. This is intended to take effect in England from April; it is already the case in Scotland and is being taken forward in Wales.

As I have said, the goal of those changes is to provide additional funding for the state education sector. However, I fully recognise that they will increase the cost for some parents and carers who have chosen a private education for their children. This change is necessary, but I am not hiding from the reality that any rise in costs is unwelcome for those affected by them.

[Gregory Stafford]

We disagree on whether this change is going to raise any money. However, I want to understand the policy point being made here, namely that to raise the money to fund the state education sector, the Government have decided to raise tax on the independent education sector. Why did they decide to raise money from the education sector rather than from any other sector, or from any other rich individuals?

[Torsten Bell]

I thank the hon. Member for his intervention. I might be a bit more sympathetic to Conservative Members focusing on this change if I saw them supporting any of the revenue measures that we have had to take to start turning around public services and improving the public finances. They oppose this measure, they oppose changes on national insurance, and they oppose cuts to the winter fuel payment and the rest. Now, I will make some progress.

On the timing of implementation, as my hon. Friend the Member for Paisley and Renfrewshire North (Alison Taylor) pointed out, this change was clearly signposted in Labour’s manifesto. Also, His Majesty’s Revenue and Customs is working hard to support schools through this change by providing bespoke support to schools alongside comprehensive guidance on how they can register for VAT. A dedicated mailbox for queries has also been made available to schools and their tax representatives.

Several hon. Members have discussed the impact that the changes will have on pupils and their families, and on state schools and private schools more widely. Many Members have understandably returned to questions that were addressed in the tax information and impact note, or to the Government’s response to the consultation that was conducted between July and September last year.

The issue of costings was raised by the hon. Member for Boston and Skegness (Richard Tice). The underlying methodologies used were certified by the independent Office for Budget Responsibility, and the costings take into account exactly the issues that he raised about behavioural responses.

On the issue of pupils moving schools or sectors, we recognise that there will be some movement of that kind. However, we believe that the number of students who will switch to the state sector represents less than 0.5% of all UK state pupils, so we are confident that the state sector will be able to accommodate any change.

The hon. Member for Farnham and Bordon (Gregory Stafford) raised the issue of school closures. The evidence suggests that around 50 private schools close each year during normal business. Although we would expect some additional closures, we have not seen any evidence to revise our view that the overall number of extra closures will be modest—perhaps something in the order of 100 schools over three years.

We also recognise the concerns that have been raised about the impact on pupils with special educational needs, including by the hon. Member for South West Hertfordshire (Mr Mohindra). That is why we will ensure that those pupils with the most acute additional needs, whose needs can be met only in private schools, will be unaffected. For example, in England, where attendance at a private school is required by a child’s EHCP, that child’s parents or carers will not pay VAT and councils supporting them will be able to reclaim the VAT. In Wales, post-16 provision of this kind is funded by the Welsh Government rather than by councils. They cannot reclaim VAT in the same way, so ringfenced funding will be provided until 2028-29, when responsibility will pass to local authorities.

More broadly, we are committed to transforming the system of supporting children and young people with SEN, because it is badly needed, as the hon. Members for Esher and Walton (Monica Harding) and for Tiverton and Minehead (Rachel Gilmour) clearly set out. The Budget announced a £1 billion uplift to high needs funding in 2025-26, providing additional support for more than 1 million children in the state sector with special educational needs and disabilities.

The hon. Members for Surrey Heath (Dr Pinkerton) and for Windsor (Jack Rankin) raised the issue of service families, but I fear they downplayed the increase of more than 12% in the continuity of education allowance from the Ministry of Defence. The issue of faith schools was also raised. They are an important part of our educational landscape, but the argument that private faith schools should be exempt from these changes is not compelling. An exemption would reduce the revenue available for pupils in state schools, including those of faith, and would be inconsistent with this Government’s strong view that a state education is suitable for children of all faiths and for children of no faith.

[Damian Hinds]

On faith-based education, the Minister is quite right that there are large numbers of faith-based schools in the state sector. However, there are some denominations and particular religious traditions for which there are not large numbers of schools, and whose actually charge fees sometimes considerably below the average cost of a state school place. Does he recognise that there may be a case for an exemption in such cases?

[Torsten Bell]

I recognise the description of the status quo as the right hon. Gentleman describes it, but I reiterate my view and the Government’s view that a state education is suitable for all families of all faiths.

A public petition has decided that we should have today’s debate. On those grounds alone, it is right that we have had it. I recognise many of the points that hon. Members have raised, even if I have attempted to set out why the Government believe that in some cases they are overdone. As we rightly debate the impact of these policies, we must recognise the reason that they have been made: the priority that we must attach to providing extra resources for our state schools—resources that I have not heard a huge number of suggestions for replacing today. These are schools where 94% of our children are educated, and where this Government will deliver an education system fit for all.

18:55

[John Lamont]

I am conscious of the time and that the House of Commons is about to vote. I will not detain hon. Members much longer.

I thank the petitioner for bringing forward this petition and the 115,000 people who bothered to sign it. I also thank all hon. Members who contributed to this important debate. I think it is telling that the vast majority of right hon. and hon. Members spoke against the Government’s policy regarding the VAT charge on school fees and the removal of business rates relief. The empty Government Benches are also very telling, although there were notable exceptions in the hon. Members who did come to try and defend their Labour Government’s policy. It was interesting to hear some of the caution that was also being expressed, however, most notably by the hon. Member for Ealing Central and Acton (Dr Huq), who gave a very important contribution.

I was struck by all the contributions about the impact that this policy will have on young people with additional needs, and the fact that it is not simply about wealthy families choosing to send their children to independent schools. There are lots of young people who go into the independent sector to get the educational support that they need to be able to achieve their full potential. Many of them will be deprived of that opportunity because of this policy. We also heard from a number of hon. Members about the impact on military families, which I had not previously considered.

I am deeply disappointed by the Government’s response, as I am sure all the petitioners are. There was no recognition that there might need to be a review of this policy in future and of how it will affect the independent sector and the opportunities of young people.

Again, I thank Hugh, the petitioner. One of the highlights of the day was meeting his daughter, Amelia, who is in the Gallery. I hope that she has enjoyed the debate and has found it interesting, although I suspect that the purchase of a House of Commons teddy bear before the debate will be the high point for her.

Question put and agreed to.

Resolved,

That this House has considered e-petition 701268 relating to VAT on independent school fees and business rates relief for independent schools.

18:58

Sitting adjourned.