School Fees: VAT

Lord Livermore Excerpts

Thursday 10th October 2024 Lords Chamber

[Lord Black of Brentwood (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare an interest as chairman of governors of Brentwood School and as president of the Institute of Boarding and the Boarding Schools’ Association.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the implication of imposing VAT on school fees with effect from 1 January 2025 will be to raise revenue to fund the Government’s objective that every child has access to high-quality education, including the 94% of children who are educated in the state sector. It will help to fund 3,000 new nurseries, the rolling out of breakfast clubs to all primary schools and the recruitment of 6,500 new teachers.

[Lord Black of Brentwood (Con)]

As the noble Lord is a distinguished economist, must he not acknowledge that the impact on state schools of this vindictive policy will be meaningless, with 6,500 extra teachers across 20,000 schools in England adding just one-third of one teacher to each school? Yet the impact on children at independent schools will be enormous, with the losers being those who have to leave half way through the year because their parents cannot afford to pay, the children of service families who rely on boarding schools so that their parents can defend us, and children with special needs who are exceptionally vulnerable. Their lives will be upended for nothing—all pain and no gain. The Prime Minister accepted £20,000 in free accommodation to ensure that his son’s schooling was not interrupted and talks about party before country. Why will he not extend that courtesy to other children and put them before party, and either scrap or delay this shambolic, shameful policy?

[Lord Livermore (Lab)]

I do not accept in any way the noble Lord’s characterisation of this policy. This is a necessary decision that will generate additional funding to help improve public services, including the Government’s commitments relating to education and young people. As far as the state sector goes, to the extent that pupils move at all, the number of pupils who may switch schools represents a very small proportion of overall pupil numbers in the state sector and is likely to be less than 0.5% of total UK school pupils, of whom there are more than 9 million.

[The Lord Bishop of St Albans]

I wonder if I might press the Minister on SEND pupils. The majority of SEND pupils, who were mentioned by the noble Lord, Lord Black, do not have an education, health and care plan, and therefore there is a genuine worry that this policy might mean that their education is interrupted. What mitigating factors are His Majesty’s Government putting in place to ensure that this particularly vulnerable group is supported?

[Lord Livermore (Lab)]

I am of course aware that this is an area of specific concern, as was said. Our proposed policy ensures that children with acute needs that can be met only in the private sector, as set out in an EHCP, will continue to be supported through their local authority and will not be impacted by this policy change. Very many private schools will take steps to absorb a proportion, or all, of the new VAT liability, so there may be no increases in fees under such circumstances.

[Baroness Hayter of Kentish Town (Lab)]

Will my noble friend the Minister remind the House of what happened when we lost office in 2010? The first thing the Government did was to cut the better schools initiative and the plans to improve schooling for the 90% who go to state schools. Will he ask the other side whether they will perhaps speak as often for the 90% in state schools as they seem to want to for the 6% in private schools?

[Lord Livermore (Lab)]

I am grateful to my noble friend for making those points, and I agree with what she said. The Government are committed to breaking down barriers to opportunity. We are determined to drive up standards in schools serving the overwhelming majority of children in this country, so that they may receive the opportunities that too often have been the preserve of the rich and the lucky.

[Baroness Bull (CB)]

My Lords, can the Minister reassure the House that the new VAT measures will not damage the UK’s ability to produce world-leading performers in music and dance? He may not know that for exceptional talent to succeed on the global stage it needs to enter professional training at a very young age and at a level of intensity that the state sector cannot provide. These schools are far from the independent schools stereotype. They do not have large endowments or wealthy parent bodies, and they recruit entirely on talent, regardless of ability to pay. Can the Government ensure that the new measures do not create a scenario in which only the most advantaged children can have the opportunities that their talent deserves?

[Lord Livermore (Lab)]

I am very grateful for the noble Baroness’s insight and expertise on this matter. In answer to her question, that is absolutely what we will seek. As she knows, where parents are paying fees for their child to attend a private music or dance school they will pay VAT on those fees following this change. The music and dance scheme funds talented pupils from low-income families to attend such specialist schools, and we will monitor closely any impact of these policy changes and consider any changes to this scheme at the forthcoming spending review.

[Baroness Garden of Frognal (LD)]

My Lords, this is a deeply damaging and mean measure, as the noble Lord, Lord Black, said. It is unlikely to hurt wealthy parents but it will hit those with limited means trying to do their best for their children with special needs or, as the noble Baroness, Lady Bull, said, with specialist skills. Please will the Government at least defer to September to avoid the trauma of mid-term changes, which I am quite sure no educationalist would ever have agreed—I do not know who came up with this policy for a January date? Can the Minister say whether the allowances for children of military personnel will be increased to cover the extra cost for them?

[Lord Livermore (Lab)]

The answer to the noble Baroness’s first question is no and the answer to her second question is that that is a matter for the spending review. I disagree fundamentally with her characterisation of this policy. I want to see excellence in education for children in places like where I grew up, whose parents will never be able to afford to pay for their education. They are every bit as ambitious for their children as any other parent.

[Lord Altrincham (Con)]

Will the Minister confirm that any gains from this policy will accrue to the education budget and that any shortfall will be met by the education budget? Will he commit to sharing with this House the OBR’s impact assessment of the number of pupils moving from the private sector to the state sector and the number where the overall policy would be at a fiscal cost to the Exchequer?

[Lord Livermore (Lab)]

There were several questions there. Yes, this money will go to the state sector; I do not accept that there will be any loss from this policy; and yes, the OBR will publish the impact assessment alongside the Budget.

[Baroness Blower (Lab)]

Can my noble friend the Minister confirm that, over the years of the Tory Government, education was treated shamefully? We have lost huge amounts of money. I recognise that 6,500 teachers is not the number we need, but it is certainly a first step in the right direction. Will the Minister confirm that, far from being an unacceptable policy, we need this policy to make sure that the 94% of children who are in our state schools have a fair crack of the whip?

[Lord Livermore (Lab)]

I am grateful to my noble friend for those points; I fundamentally agree with her. As I said, this is a necessary decision that will generate additional funding to help improve public services, including the Government’s commitments relating to education and young people, helping the overwhelming majority of children in state schools.

[Baroness Fraser of Craigmaddie (Con)]

My Lords, there are key differences between the education systems in Scotland and England. We have a different curriculum and exam structure; different term dates, starting dates and starting ages; and different arrangements for teachers’ pay and pensions. Most importantly, CSPs are not the same as EHPs. A CSP is not required for a child to go to a special school or receive extra support. Given these fundamental differences, can the Minister share the impact of this policy on the education system in Scotland, given that, because of devolution, the Government cannot guarantee that any consequential funding given to Scotland would actually be spent on the education sector there?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her insight on those points. I can confirm that the final policy design of this measure will be announced at the time of the Budget, alongside a tax information and impact note, which will include details of the Government’s assessment of the expected impacts.

[Lord Addington (LD)]

My Lords, do the Government agree that it is universally accepted that you can get access to an education, health and care plan only if you have money to afford lawyers to get through the process, or at least to get through it fast? If so, are the Government not saying to people that they can get the money only if they have resources in the first place? Does this not contradict a lot of what has been said?

[Lord Livermore (Lab)]

I do not accept that in any way, shape or form. The whole point is that you should have access to high-quality education whether or not you have the money in the first place.

[Lord Aberdare (CB)]

My Lords, further to the question from my noble friend Lady Bull, the Government’s dance and drama award scheme enables a small number of specialist providers to offer higher-level qualifications, at levels 5 and 6, to some of the country’s most talented performing arts students, many of whom might otherwise be unable to access such training. What reassurance can the Minister give that these providers will not be affected by the proposed VAT imposition, which might force some of them to swithdraw completely from the scheme? What progress has been made in the discussions on this issue, including with the Treasury, mentioned by the noble Baroness, Lady Smith of Malvern, in the debate on 5 September?

[Lord Livermore (Lab)]

As I said earlier, we will monitor closely any impact of these policies on the scheme mentioned by the noble Lord. The right time to consider changes to the scheme is at the forthcoming spending review.