Independent Schools: VAT Exemption

Baroness Barran Excerpts

Thursday 5th September 2024 Lords Chamber

[Baroness Barran (Con)]

My Lords, I too thank and congratulate my noble friend Lord Lexden on securing this debate and on his exceptionally clear and lucid introduction. I also congratulate noble Lords on the high quality of all their contributions today. Like others, my inbox has been full of correspondence from numerous parents who wrote to me. I thank them too and share with the Minister—her private office inbox may also be full, but they might not have got to her —just some of the questions they asked, because I would be interested to know her response and what she would say to those parents.

Many of them point to the sense of rushed policy and poor planning that we have heard from so many of your Lordships this afternoon. I do not know what the Minister would say to the mother of a child who has just finished their first year of A-levels in subjects that their local state schools do not offer, or to children in year 11 who have been doing the IGCSE syllabus, which again would not be available to them, to the parents of children in state schools who will have bulge classes to accommodate new entrants from private schools, or to the parents of children with special educational needs who now feel that they will need to go through the process, which we heard about so vividly from the noble Lord, Lord Addington, of getting an EHCP for their child in order for their needs to be met.

We have heard from many of your Lordships, including, of course, my noble friend Lord Lexden, about the very important contributions that independent schools make to our education system and economy. That is through bursaries, through partnerships with state-funded schools, such as those that the noble Lord, Lord Winston, articulated, through the provision of places for children in the care system and, crucially, as we have heard from around the House, through support for 90,000 children with special educational needs and disabilities.

We have heard about the range and variety of schools, including from the right reverend Prelate the Bishop of Southwark, and we even had the noble Lord, Lord Alton, channelling his inner Lord Pannick to raise questions about the legality of the policy, which I am sure the Minister will take away and consider. I shall pick up on some of these themes and ask the Minister a number of questions.

In terms of timing, which my noble friends Lord Maude and Lord Lucas and many others raised, could the Minister explain to the House and the parents who will be impacted by this change why the Government judge it to be the right balance to introduce VAT in January 2025 rather than in September next year? We all understand that it raises more money, but the disruption of moving a child part-way through the school year is something that every parent seeks to avoid. The technical note provided by the Treasury states that:

“The Government understands that moving schools can be challenging”.

I have to say that is quite an understatement, even from the Treasury.

Why the rush? It leaves so many unanswered questions and puts so much avoidable pressure on parents, teachers and, most importantly, children. I hope the noble Baroness will consider some of the suggestions about a phased introduction, such as those raised by my noble friend Lord Forsyth of Drumlean.

I turn to the amount of money this may raise, which was touched on by the noble Lord, Lord Hacking. The Government tell us that this change is not ideological; it is about raising an estimated £1.3 billion to £1.5 billion to fund additional teachers and a long list of other things. Will she confirm that, if the tax fails to raise additional revenue, her Government will reverse this proposal, and if not, why not? Will she confirm that the Office for Budget Responsibility will give an annual update on the net financial impact of the proposed change once it is clear how many children have left independent schools and joined the state sector, and not simply—again, I quote from the technical note—

“certify the government’s costings and impact analysis for these measures”?

I turn to capacity in the state sector. The Government have said that they are

“confident that the state sector will be able to accommodate any additional pupils and that there will not be a significant impact on the state education system as a whole”.

I know that the noble Baroness understands that this is not really about the system as a whole. We know that there are parts of the country with plenty of capacity in the state system, but it is about what happens in each local area. It would help reassure the House if she could explain what assessment the Government have made of the impact on children in state schools in areas with very high percentages of children in independent schools—for example, Surrey or, as we heard, Edinburgh? There are also areas such as Bristol, where there is already pressure on state school places, and Salford and Birmingham, where there are many small Muslim and Jewish schools.

Turning special educational needs and disabilities, can the Minister reassure the House that VAT will not be charged on places for children with special educational needs? We heard very powerfully from the noble Lord, Lord Addington, about some of the issues. My noble friend Lady Monckton of Dallington Forest spoke about specialist further education colleges. It would be helpful if the Minister could clarify if they will be impacted by this. Will non-maintained special schools be able to recover VAT? What assessment have the Government made of the demand for additional EHCPs as a result of this policy?

A number of noble Lords, including the noble Earl, Lord Devon, and my noble friends Lord Black of Brentwood and Lord Kempsell, raised the important issue of military families who serve their nation abroad and, as we heard, need boarding places for their children. Can she confirm that their personal contribution will be exempt from VAT?

I look forward to the Minister’s response to the questions from my noble friend Lady Fraser and the noble Baroness, Lady Bull, about the impact on specialist music and dance schools, the future of which is now in peril. I hope the Minister can respond to these questions from the Dispatch Box but, if not, perhaps she could confirm that she will write to me with the answers.

Time does not permit me to cover other points today, so I will close with the feeling these proposed changes give me, and many others, as we have heard in your Lordships’ House today. This feels like a Government who are focusing on division, rather than aspiration; a Government who are seeking to run down private schools, rather than challenging them to contribute more to the overall education sector. The suggestions from the noble and learned Lord, Lord Etherton, were extremely helpful. These proposals will take away parental choice not from the super-rich—from the people the Prime Minister described as having the broadest shoulders —but from those with shoulders already burdened by choosing to prioritise education for their children in the way that they want. That erosion of choice bodes ill for our country.

I will leave the Minister with one last question. I think the House is just asking the Government to listen. I hope very much that she can answer that they will.