Independent School Fees: VAT

Baroness Vere of Norbiton Excerpts

Monday 21st October 2024 Lords Chamber

[Lord Livermore (Lab)]

The noble Lord asks about the assumptions we are making. As I said, we will set out our assessment of the expected impacts of this policy in the normal way by publishing a tax information impact note at the time of the Budget. At that point he can judge those assumptions for himself.

[Baroness Vere of Norbiton (Con)]

According to the Government, VAT is a tax on consumption and therefore falls on the parents. Yet the Minister keeps saying that this consumption tax will be absorbed by the producer—the schools. Many noble Lords have pointed out today that schools cannot simply magic up lots of cash to mitigate against this consumption tax on the parents. Has he considered that he is undermining what a tax on the consumer actually is?

[Lord Livermore (Lab)]

The noble Baroness will know that how schools will fund this additional cost is a commercial decision for each school. Some schools have already announced a very wide range of fee increases, from zero to 5%, to 10%, up to, for example, Eton at 20% above the average expected VAT liability. This reflects the Government’s expectation that private schools will take steps to absorb a significant proportion of the new VAT liability.