Non-Domestic Rating (Multipliers and Private Schools) Bill

Debate between Lord Black of Brentwood and Baroness Barran

Committee stage
Thursday 27th February 2025 Grand Committee

[Lord Black of Brentwood (Con)]

My Lords, I will speak briefly to Amendment 54A and the consequential amendments in the name of my noble friend Lord Lexden, to which I have added my name. I declare my interests as chairman of governors at Brentwood School and as president of the Boarding Schools’ Association and the Institute of Boarding. I have just two brief points to add to the comprehensive remarks that my noble friend delivered with his customary eloquence, with which I agree entirely.

First, why do we need a definition in the Bill, given that the 1988 Act, as far as I can tell, does not use the term or make any reference to schools, and talks generically only of charities? If the concern is to make a differentiation between independent schools and academies as state-funded and independent schools, it would surely be much simpler to make clear that the Bill does not apply to academies. The only conclusion you can reach is the one that my noble friend reached: the novel insertion of this definition is simply to shoehorn what I am afraid is party-political dogma into this legislation, and that makes for bad law.

That leads me to my second point. At some point this legislation may well end up in the courts, when the legal definition of independent school, which has been long established in law, as my noble friend said, may become very important. Therefore, there needs to be certainty about definition, which there will not be if independent education is dealt with in different ways in different pieces of legislation. What steps have been taken to ensure that this definition is not compromised or contradicted in some way in other legislation, which will at some point down the line cause real legal uncertainty?

[Baroness Barran (Con)]

My Lords, as the Committee and the Minister know by now, we on these Benches are opposed to the whole of Clause 5, and I will start my remarks by making the case that it should not stand part of the Bill; rather, we urge the Government to think again and remove it.

First, as we debated at Second Reading, there is the point of principle. On what basis should the Government identify a single group of charities, with no concerns about the delivery of their charitable objects, for separate treatment in relation to business rates from their charitable peers? Sadly, the only plausible reason is that it reflects some ideology that does not respect the right of parents to choose the education for their child. I am not suggesting that the Minister sees it in that way, and I accept that the Government’s plan to tax education for the first time ever in this country’s history were in their manifesto, but I cannot find another logical basis for this choice.

Secondly, this picture is confirmed when we look at the amount of money that will be raised from this change. The Government project that only £70 million will be raised. Finally, it leaves the risk that in future legislation in this area, this or a future Government will carve out another group of charities that they believe no longer justify the business rates relief. This feels a wrong-headed choice, and I very much hope that the Minister will encourage his colleagues to review it and remove the clause.

I turn to Amendments 55, 56, 59 and 62. Amendment 55 is consequential and necessary to enable the later amendments. I have tabled it to exempt specific independent schools from this measure. Amendments 56 and 59 are probing amendments to understand what is meant by the term “or other consideration” in the context of fees payable for the provision of full-time education. I would be grateful if the Minister could give the Committee an example of where another consideration has been used in practice wholly or partly to replace fees.

Amendment 62 highlights the position of smaller independent schools, many of which charge significantly less than the independent school average of £27,642, which was the figure the Minister in the other place gave as the mean annual day fee as of January 2024. I appreciate that the Government are unlikely to agree with the fee level in my amendment, but it would be helpful for the Committee to hear whether there is a fee level below which this legislation would not apply. As the Minister knows, some faith schools in particular charge lower fees than the state school equivalent per pupil funding rate. Would the Government consider exempting schools that charge less than the per pupil funding rate from this tax.

As we have heard, Amendments 54A, 55A, 59A, 69C, 69D, 77 and 78 in the names of my noble friends Lord Lexden and Lord Black of Brentwood would replace the use of “private school” with “independent school”. I agree with my noble friends’ analysis of the importance of this and some of the factors that sit behind it. The term “private school” is much more informal, and in legislation it is more commonplace to use “independent school”. We support those amendments fully; I hope the Minister will give careful consideration to them.

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[Baroness Barran (Con)]

My Lords, in moving Amendment 63, I will speak to all of the other amendments in this group. Amendment 63 would exempt schools that provide bursaries that amount to more than 7% of a school’s income. This is a small cost, but comes at a time when private schools are already facing higher costs from the Government’s decision to impose VAT on them. I am concerned that schools will not have room in their budgets to continue providing the same level of means-tested fee assistance. I hope the Minister agrees that the provision of bursaries is an important factor in enabling children from less affluent homes to access independent education.

Amendment 64 would exempt schools which provide education for gifted arts students, including music and drama. These schools tend to be small independent schools, which will not be able to absorb the costs that the Government are imposing on them. Our worry is that they will be forced to close, and the culture that is so essential to our society will no longer be available in the same way. The Minister will know of the real concerns in this sector and the impact that it risks having on our creative industries, which are such an important engine of growth in this country. These are students who attend a private school based on their exceptional talent. I hope the Minister will reflect on how best to avoid narrowing opportunities for children who access this small group of schools.

Amendment 66 would exempt schools where 10% of pupils have a parent or guardian in the Armed Forces. If I have understood correctly, it seems unfair that while the children of foreign diplomats and international military personnel will be exempted from these additional costs on independent schools, specifically VAT, the same benefits are not being offered to the children of our own Armed Forces personnel. As such, it seems fair to suggest that the children of those personnel, who provide invaluable service to this country, are treated with the same level of respect.

I very much support the spirit of my noble friends Lord Black and Lord Lexden’s Amendments 69A and 69B. Clearly, the spirit of Amendment 69A aligns with my amendments in this group, and Amendment 69B highlights the invaluable work that some independent schools do in relation to children in care. I beg to move.

[Lord Black of Brentwood (Con)]

My Lords, I will speak to Amendments 69A and 69B in my name and that of my noble friend Lord Lexden as well as to Amendment 64 in the name of my noble friend Lady Barran, to which I have added my name. I refer to my earlier declaration of interests and, for this group, I add that I am the chairman of the Royal College of Music.

On music, let me start with Amendment 64, which is an extremely important amendment. It would have long-term ramifications well beyond the terms of this Bill because specialist music education for gifted students is central to the future of our creative economy, and it therefore needs to be seen in a wider context. As noble Lords will be aware, the UK’s creative industries are vital to our future. With the economy stalling, this is one sector which, for the time being, continues to grow. It employs hundreds of thousands of people, earns huge amounts in exports and provides an essential component of the UK’s soft power, something that is more important now than ever. Right at the centre of the creative economy is music, which powers the rest of the industry.

In turn, the future of music depends absolutely on first-class, specialist music education in schools, conservatoires and universities to provide a pipeline of talent into the sector. Without that education, music dies. However, music education, including that provided by specialist schools in the independent sector, is in trouble and has been for a long time. Music has been squeezed out of the curriculum. The number of pupils taking music at GCSE and A-level has plummeted. Many schools no longer have dedicated music professionals teaching the subject. Indeed, if pupils have access to a dedicated music professional today, it is likely to be because of a partnership with an independent school. From primary schools right the way through to the end of full-time education, music is under threat as never before.

We see the results of that every day, most recently with the appalling decision of Cardiff University to close its school of music, the largest in Wales, something that the world-renowned composer Sir Karl Jenkins has put down to the decline of specialist music education in schools. The closure of the school follows hard on the heels of the closure of the junior department of the Royal Welsh conservatoire, which has enormous repercussions for music in Wales and beyond. At such a time of crisis for music education, which I have to say has not improved in any way since the general election, despite so many promises before it, the last thing we need is for independent specialist music schools, those providing education for gifted students under the music and dance scheme, as well as the leading choir schools to be threatened. It is crucial that they continue to provide music, dance and drama teaching to the most gifted students if we are to protect the pipeline of talent into the music industry.

The future of these schools and their continuing ability to provide world-class teaching will be much more secure if they are protected from full business rates. This is not a niche subject or special interest pleading; it is fundamental to the artistic future of our country and the success of the creative economy. Does the Minister acknowledge the vital importance of the pipeline of musical and dramatic talent into our creative industries? If he does, will he explain why the Government are putting it in jeopardy in this way?

Amendments 69A and 69B deal with boarding schools. Boarding schools play a vital role in our education system, with around 65,000 boarding pupils educated in the independent sector. They contribute just over £3 billion each year to our economy, generating £900 million in revenue for the Exchequer and supporting more than 64,000 jobs. Like the rest of the sector, they are a vital instrument of soft power and one of our strongest exports. Like the rest of the independent sector, they are already under significant strain as a result of not just VAT but the damaging increase in employers’ national insurance contributions. For many, especially the smaller schools, the end of business rates relief will be a huge added burden. Already the signs of the impact are clear: the Government’s figures show that visa applications to study at UK independent schools fell by 23% in the first two quarters of 2024 compared to the same period in 2023. That is a significant straw in the wind.

Recently, one agent told the Boarding Schools Association:

“This tax penalty is making our clients think twice and wonder if the UK is still the holy grail of academia”.


Another commented:

“The reputation of British boarding is already damaged and while it was the destination 10 years ago, it is now one of many”.


With international numbers down and likely to fall further, now is not the time to be adding to the increasingly intolerable burden on so many boarding schools with the withdrawal of business rates relief.

Boarding schools play a crucial role in a number of areas, including the provision of places for military personnel serving our country at home and abroad, as my noble friend said, and for vulnerable pupils with special educational needs and disabilities. My two amendments seek to recognise their importance and, in certain circumstances, exempt them from the withdrawal of relief.

Amendment 69A would discount boarding facilities from a school’s business rates bill if 10% of boarders are on a government continuity of education allowance, or CEA. This reflects the importance of boarding provision for the children of those who serve our country and often risk their lives for it. In the last academic year, 4,000 pupils were supported by CEA for 2,666 service personnel and their families. By easing the commercial pressures on them, this exemption would give a measure of continued support and protection to schools providing places for CEA pupils and reflect the inherent public benefit in ensuring that service families have confidence that they can provide a stable school life for their children.

In the same vein, Amendment 69B would discount boarding facilities from a school’s business rates bill if that school is supporting looked-after pupils supported either directly by local authorities or by charities. It recognises the hugely important role of boarding schools in educating some of the most vulnerable children and the significant pastoral support that they provide. One of the best known charities supporting this work is the Royal National Children’s SpringBoard Foundation. The RNCSF widens access to the opportunities available for young people facing the greatest barriers to their development. Along with local authority and community organisation partners, it works with boarding and independent schools to help them target their fully funded school places on the young people who need them most and help them access them effectively. To date, it has supported more than 1,000 pupils, 98% of whom get two or more A-levels, compared to 16% of disadvantaged children.

Brentwood is one school the RNCSF works with, taking students into boarding places, hosting regional interview days and supporting its excellent campaign to help children in care who are applying to university with their UCAS applications. This is clear public benefit work, supporting not only society’s priorities for vulnerable children but assisting our stretched local authorities support children in their care to achieve their full potential. This is, rightly, an intensive and involved process for any school to engage in to ensure that pupils have the right level of support and guidance around them at school. If anything properly fits the definition of a charitable activity clearly in the public interest, it is this. My question to the Minister is: why on earth do the Government judge that the facilities that care for and support these young people are unworthy of charitable relief?

These are all focused amendments which do not in any way challenge the central tenets of the legislation but recognise the special importance and public policy significance of crucial aspects of independent education. They seek to protect those schools educating gifted students whose careers will power the creative economy, children of military families who serve our country and those who are vulnerable because of special needs. I hope the Minister will accept them. Not to do so would, frankly, be callous and short sighted.

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[Lord Black of Brentwood (Con)]

My Lords, I support all the amendments in this group but I shall speak in particular to Amendment 72A in my name and that of my noble friend Lord Lexden. I refer to my earlier declaration of interests.

The Minister has been very emollient and courteous in batting off all our amendments today; I thank him for the way he has dealt with them. Although he and his colleagues throughout government like to bury their heads in the sand and pretend otherwise—as we have seen, I am afraid—the impact of their onslaught on independent education, of which the removal of business rates is just one strand, will have profound ramifications for not just the sector and the children educated in it but a wide range of public policy areas. This is a bit like that game of Jenga, which we have probably all played, where blocks of wood are taken out until a point comes where the removal of one of them causes the whole edifice to crumble. That is what is in danger of happening here, with the sustained attack on independent education in danger of causing policy failure in a wide range of other areas.

Consider quite how far-reaching are the consequences of this policy underpinned by Clause 5. It impacts on public health and the care of vulnerable children; on the future of music, drama and the arts in the UK, which we have talked about today; on military families and defence personnel; on state schools, whose class sizes will increase; on multiculturalism and respect for different faiths; on jobs, export and investment; on local communities, volunteer groups, charities and so on, which depend on partnership with independent schools; on sport, as we have heard so eloquently described; and on soft power and Britain’s standing abroad. As a result of this web of different aspects that will be affected and will impinge on so many different aspects of government policy, it is vital there is an impact assessment of the consequences of Clause 5 taken in conjunction with the Government’s other policy changes. That is what my Amendment 72A provides for.

Apart from everything else, Parliament has a continuing responsibility to scrutinise the Government’s actions in this area. That is what this House, in particular, is here for. To do that, we need not just the data provided by the industry’s own excellent associations but data from across government and a detailed assessment of its implications. Given the profound changes to policy that Clause 5 exemplifies, ripping up five decades of orthodoxy about parental choice, such an impact assessment is the very least we should expect to allow us to fulfil our responsibilities and make clear to the public what its consequences are.

[Baroness Barran (Con)]

My Lords, I shall speak to Amendments 71 and 72 in my name and express my support for Amendment 72A in the name of my noble friend Lord Black of Brentwood. Amendment 71 would require an impact assessment on rescinded facilities that private schools offer to state schools. Amendment 72 would require an annual statement of how many pupils have been moved into the state system as a result of Clause 5. Many in this Committee have expressed concerns about the impact of the combined tax measures on private schools introduced by this Government. We had a number of examples from the noble Baroness, Lady Pinnock. The changes announced in this legislation, combined with VAT applied to private schools, will no doubt harm many institutions. Indeed, as we have heard, we are already seeing the consequences of the Government’s decisions, with a number of private schools, including, most recently I think, Bedstone College in Shropshire, closing their doors.

As my noble friend Lord Lexden said in relation to an earlier group, there appears to be an emerging trend of small, rural private schools being particularly vulnerable. This raises the real risk of thousands of pupils across England being displaced and moving into the state system. As we discussed earlier, in particular parts of the country, that is not much pressure on the state system, but is potentially the reverse. However, in some parts of the country, such as Bristol or Surrey, schools are operating at full capacity. It is essential that we have proper oversight and transparency of the impact of this legislation on the state sector. It is with that in mind that I tabled Amendment 72. I also welcome Amendment 70 in the name of the noble Lord, Lord Storey. It is clear that all of us share many of the same concerns.

On Amendment 71, as we have heard, many private schools have a long history of collaboration with state schools and of sharing their facilities and resources. My noble friend Lord Moynihan gave an eloquent exposition on the value of sports grounds, but theatres and science laboratories provided by private schools offer many state school pupils opportunities that otherwise they might not have. Therefore, the closure of such schools would be felt by state school students as well as private school students as they would lose access to these resources. The Minister says—and I understand why—that it reflects the Government’s expectations for these schools to continue to offer public benefit, and one option for that is sharing their facilities, but, as we have heard, their income is being pressured from a number of different directions, including by this legislation, so I urge the Minister to consider my Amendment 71 and all the others in this group.