Independent Schools: VAT Exemption

Baroness Monckton of Dallington Forest Excerpts

Thursday 5th September 2024 Lords Chamber

[Baroness Monckton of Dallington Forest (Con)]

My Lords, I declare my interest as set out in the register: I am the founder and chairman of a charity that, among other things, is a special post-16 institution. Our aim is to prepare young people for employment. The charity is Team Domenica, named after my daughter, who has Down’s syndrome. Also, we have staying with us a Ukrainian refugee child, who attends the nearest public school, free, along with four others.

Non-maintained special schools have been excluded from the new 20% tax. However, these schools are only a very small part of the special educational needs landscape. Department for Education data shows that there are only 52 such schools, educating 3,965 pupils. Yet there are 753 independent special schools, educating nearly 25,000 pupils, all of whom are potentially liable for VAT. Where their place is funded by the local authority, this can be claimed back, but the school still faces the cost of registering for VAT and the burden of managing the system.

Where does that leave specialist colleges such as ours, of which there are 130 in England? At the moment, all Team Domenica’s candidates are over the age of 18, but, if we decide to take on students between the ages of 16 and 18, the VAT would fall upon not only those individuals but on every single pupil at our college. We would also lose our business rates relief, as pointed out by the noble Lord, Lord Bilimoria. In a field where there is already such a grotesque volume of form-filling, we will have the pointless bureaucratic nightmare of recycling money that comes from the state only to return it. The Government would effectively be taxing themselves. This would perversely discourage extending this potentially life-transforming service to some of our most disadvantaged young people. These 130 institutions, of which we are one, are the only alternative to mainstream further education for people with more complex learning disabilities.

On the wider point, which other Members in your Lordships’ House have raised, concerning the 94,000 SEN pupils placed in private mainstream schools, only 7% of them have an education, health and care plan, which means that the overwhelming majority are paid for by the parents, many of whom will already be at the limits of what they can afford. A large number of these pupils will have been taken out of maintained schools and transferred by their parents to the private sector out of desperation, as these children, particularly those on the autistic spectrum, have not been able to cope with the large class sizes.

The general effect of this tax will be to drive more SEN young people into the maintained sector, which is already inadequate at meeting these needs. This will make more parents go to tribunals if the local authority refuses to give their child an EHCP—which happens all too frequently. I have sat in on some of those tribunals. I would like to invite the noble Lord, Lord Addington, who articulated with such passion and anger what happens in those tribunals, to come with me to the next one that I have to attend. This is an exhausting option for parents already struggling to cope. Some 96% of such hearings end in favour of the family, but at a huge emotional cost.

No previous Government have taxed education—it is seen quite rightly as a public good. But to tax parents of children with special educational needs, parents whose lives are already so challenged and difficult, and who often struggle more than people could imagine, is cruel. I hope that this is merely an oversight on the part of the Government, but, if such is the case, that is itself a problem, because people with learning disabilities are too often forgotten. They deserve so much better