Independent Schools: VAT Exemption

Debate between Baroness Butler-Sloss and Baroness Smith of Malvern

Thursday 5th September 2024 Lords Chamber

[Baroness Smith of Malvern (Lab)]

My noble friend is right, and I am very proud of that. Our position, as I said, has been tested in the legal advice in the consideration of these changes. Our view is that being charged at the standard rate of VAT paid by millions of businesses across the UK is not discriminatory and is clearly proportionate to the objective of better funding for state schools. To the extent that I am able, I will certainly ensure that I write further about that issue to my noble friend and to others.

[Baroness Butler-Sloss (CB)]

May I ask the Minster, before she sits down, about the children taking GCSEs and A-levels? What are the Government going to do to help them where there will be changes in the programmes they are doing?

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[Baroness Smith of Malvern (Lab)]

I apologise to the noble and learned Baroness: with respect, I was showing my inexperience in this House and asking my Whip about the situation. If the House will allow, could the noble and learned Baroness repeat her question?

[Baroness Butler-Sloss (CB)]

I was asking about children taking GCSEs and A-levels when this starts in January.

[Baroness Smith of Malvern (Lab)]

I think I covered that point in talking about the arguments for introducing this in January, while also making it clear that it is the Government’s view that introducing the VAT liability does not necessarily imply that a sudden increase in bills will arise; nor does it imply that the whole of that increase in VAT will be passed on in fees. In fact, if we look at the behaviour in the private school sector, we see that, despite very large increases in fees—well above inflation—parents have tended, where they have made that choice, to keep their children in the private sector anyway, and I am sure that the vast majority of parents will continue to do that. The analysis, including that carried out by the Institute for Fiscal Studies, suggests that, even if there is going to be a movement of pupils away from the private sector, that will tend to be not immediately in January but over a much longer period, and I imagine that will be the approach that most parents take.