Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Education (Olivia Bailey)
It is a pleasure to serve under your chairship, Sir Alec. I thank all hon. Members for attending, and particularly the hon. Member for Strangford (Jim Shannon) for securing this debate and for his characteristically engaging speech. I am grateful for the suggestions that he made, which have all been noted. I also congratulate his staff member, who is in the Public Gallery, on her super-human efforts with the volume of wonderful speeches she produces. It was great that the hon. Member was able to congratulate her as well. While I perhaps did not agree with the content of the speech given by the hon. Member for Beaconsfield (Joy Morrissey), I admire the speed with which she assembled it here today.
Education matters. It sits at the very heart of this Government’s mission to break down barriers to opportunity, ensuring every child, wherever they live and whatever their background, has the best possible start in life and access to a high-quality education. Our priority is clear: to raise school standards for every child. I believe that this is a priority shared by colleagues across the House, as is clear from the speeches in this debate.
The Government value the contribution that faith schools make to our diverse education system. Faith schools, whether private or state funded, have long played, and continue to play, a really vital role. We continue to work closely with faith school providers, representative organisations and local authorities to find ways to support private faith schools. The Government respect parental choice, and faith schools in the private and state sectors will remain part of that choice.
The truth is, however, that we inherited a dire fiscal situation from the previous Government, and families, including those in faith communities, were dealing with sky-high interest rates, underfunded public services and a broken NHS. That is why we have taken some fair and necessary decisions on tax, which will stabilise public finances and secure the additional funding required to deliver on our commitments to education and young people. The measure that we are discussing will raise essential revenue that will be invested in our public services, such as the £1.7 billion increase to the core schools budget in 2026-27, taking core school funding to £67 billion compared with £65.3 billion in 2025-26.
The Government carefully considered a range of representations made by faith schools, including a proposal for a low-fee carve out. However, the Government concluded that in line with the principles of protecting revenue and fairness, faith schools should remain in scope of the VAT policy. We understand that some parents make the decision to send their child to a private school because of its particular faith ethos, and because they feel that a particular type of school is better able to meet their child’s needs than their place in the state sector. It is the case, however, that all children of compulsory school age are entitled to a state-funded school place should they require one, and of all the faith schools in England, around one third are state funded.
We are also supporting faith groups in their engagement with local authorities to explore options for those private faith schools that are interested in joining the state-funded sector. Where there is a sustainable need, local authorities can bring schools serving particular faith communities into the state sector as voluntary-aided schools, and the school must meet all required standards within the state-funded sector. Since the introduction of the VAT policy, we are aware of one private faith school that has joined the state sector as a voluntary-aided maintained faith school, opening in September 2025.
Furthermore, not all income received by smaller faith schools will be subject to VAT. Some faith schools are likely to be less impacted by changes to private schools tax, where some of their income is derived from other sources, such as voluntary donations or support from religious organisations. That is because VAT is out of scope for donations that are freely given and where there is no reciprocal obligation. That means that some private faith schools may be affected proportionately less than others.
All private schools, including private faith schools, can decide for themselves how to manage the additional cost of VAT. There are a variety of ways in which a school may choose to do that. For example, they may reduce their surpluses or reserves, make savings on non-essential expenditure or, like any VAT-registered organisation, reclaim input VAT on their costs.
Jim Shannon
Respectfully, it is not about how the schools can do things; it is about the parents who make that sacrifice so that their children can get to those schools. I suggest—the Minister has it in front of her—a simple solution, which is to introduce a VAT registration threshold that is below the state funding benchmark. I understand that the Minister does not have the final say, but my No. 1 request would be for her to ask the relevant Minister whether they would consider reviewing that idea as a possible solution. I think I gave the figures for the savings and costs. If everybody went to state schools, it would cost even more. [Interruption.] I am sorry, Sir Alec, but that is the point I am trying to make.
Olivia Bailey
The hon. Gentleman made his case well in his speech earlier, and he makes it again now. The Government have carefully considered the options that he has put forward today. I have heard all of his points and they have been noted by my officials.
Private schools have steadily increased average fees by 75% in real terms since 2000, and that has not affected pupil numbers. Fee increases can also reflect wider cost pressures beyond VAT and business rates.
The Government are closely monitoring the impact of VAT policy on the private school sector. We remain confident in the estimates made when this policy was introduced, which said that the number of private school closures was expected to remain relatively low and influenced by various factors, not just by the VAT policy. On average, 74 private schools, including independent special schools, have closed per year over the past 20 years. However, only 60 private schools closed in academic year 2024-25, which is the school year that the VAT changes were introduced. That means that school closures announced thus far remain firmly within historical patterns and sit comfortably within our expectations. Indeed, even after the VAT policy came into effect, private schools continued to open in England. In the same time period—between 1 September 2024 and 31 August 2025—106 private schools registered and opened.
We are confident that the state sector can accommodate any additional pupils, including any pupils transferring from private state schools.
Sir Ashley Fox
The justification for this tax given in the Labour party manifesto was to raise revenue to employ more teachers in the state sector, yet we now know that in November 2025, there were 1,400 fewer teachers than 12 months previously. Can the Minister tell us where the money has gone?
Olivia Bailey
I will. I am just coming on to that, if you will bear with me. I am grateful for that. [Interruption.] Did I do something wrong, Sir Alec? I apologise.
Sir Alec Shelbrooke (in the Chair)
Order. The word “you” has crept into a couple of speeches today. I am not responsible for any decisions, so please, let us not use it. I give everyone a timely reminder that we do not use the word “you”.
Olivia Bailey
It is a very timely reminder. I am grateful to you, Sir Alec. I thank the hon. Member for Bridgwater (Sir Ashley Fox) for his intervention. He raises an important point. I have just skipped through my notes, and I realise that I will not be coming on to that point; I have, in fact, already covered it. I will just repeat that we are managing to increase the schools budget significantly as a consequence of this policy, which has also raised significantly more than our initial estimates. We are also recruiting teachers, on which more detail was published in our schools White Paper earlier this week.
In closing, I once again thank the hon. Member for Strangford for securing this debate, and I thank Members from across the House for their contributions this afternoon. As they eloquently outlined in their speeches, independent schools, including faith schools, make a valuable contribution to our diverse education system. The Government have made necessary and fair choices to safeguard the public finances, invest in our public services and increase funding for our schools. We will keep working with faith groups, school leaders and local authorities to ensure that every child in this country has access to a high-quality education.