VAT: Independent Schools

Ben Coleman Excerpts

Tuesday 8th October 2024 Commons Chamber

[Alicia Kearns (Rutland and Stamford) (Con)]

I welcome the hon. and gallant Member for North East Derbyshire (Louise Jones) to her place. We need more people in Parliament who have service in their hearts. I also thank her for her good comments about her predecessor and in particular for her comments about Corporal Riley, which I know my hon. Friend the Member for Huntingdon (Ben Obese-Jecty) felt deeply. I thank her for taking the time to do that.

Sadly, I turn to a decision by the Government that does not have service to the country at its heart. This is a cruel, vindictive policy that will damage the prospects of children in both state and independent schooling. It is particularly damaging also for rural economies, which seem to have been entirely overlooked. In Rutland and Stamford, we have 10 independent schools that cater for a vast number of pupils—particularly those from military families and those with SEND—and what is common to all those families is how hard they work for their children to have the right education for them.

I have received heartbreaking emails from parents who have had to sacrifice the education they have worked so hard for. One was from a mother of twins who are midway through their GCSE year. There is no space in the state sector for them—twins who now question whether they will be able to sit their GCSEs because of this policy.

The entire county of Rutland has zero available state school spaces in years 10 and 11, and only three SEND spaces.

[Ben Coleman (Chelsea and Fulham) (Lab)]

rose—

[Alicia Kearns]

Is the hon. Gentleman just going to stand, or will he ask to intervene?

[Ben Coleman]

Will the hon. Member give way?

[Alicia Kearns]

There we go.

[Ben Coleman]

I am most grateful to the hon. Member. Does she not think that a little bit of an apology from her and her colleagues for the disgraceful SEND system that they left as a legacy is merited? As people cannot get EHCPs or support in the state sector, and councils and cash-strapped families are turning to the private sector, should she not apologise for the legacy that she and her colleagues have left the country?

[Alicia Kearns]

I am so pleased that the hon. Gentleman is repeating the lines that the Whips gave him for this morning’s Westminster Hall debate. I was not talking about SEND. It is deeply discourteous to the House to intervene on a Member with a point that is completely separate from the point that they are making; he will come to learn that in time.

As I said, the entire county of Rutland has zero available state school places for years 10 and 11. That means children will now not be able to get their education. I ask the Minister directly: what would he say to 16-year-olds who are to be forced out of their school in January with no alternative place to go and nowhere to do their studies? This is a vindictive policy, and it is absolutely wrong.

I want to touch on the contribution to local rural economies. In Rutland, education is the biggest single employer. As I said, we have 10 schools across 11 sites. In 2022-23, one secondary school in Rutland and Stamford contributed £50 million to UK GDP. It contributed £30 million to local GDP, £14 million was paid in tax to HMRC, and savings of £5.5 million were made to local schools through school places that were not taken. Some 70% of this school’s expenditure is on staffing and, with the imposition of VAT, it is forecast to make a loss for the first time ever. Jobs are being lost. When 70% of the budget is staffing, what does a school do? Cuts have to be made in people’s jobs. More than 2,000 people locally are employed directly by independent schools, and that is not to mention those working in the supply chain, whether driving buses, providing food or flowers, or working in cafés and shops. Rural economies do not have many options at the moment, and independent schools are a bedrock for them. The economic impact of these jobs on rural communities should be considered in an impact assessment, but I very much doubt one has been carried out.

Looking at the national economic picture, the Adam Smith Institute concluded that every child in independent schooling contributes £28,000 to the public finances. The average £2,700 saved on VAT makes a return to the taxpayer of 1,040%. If 5% of independent school pupils leave, the Government will generate £1 billion through this policy. If 10% to 15% of pupils leave, the Government will generate no revenue. If 25% of pupils leave, the Government will lose £1.58 billion, because they are doing something vindictive and wrong.

Independent Schools: VAT and Business Rates Exemptions

Ben Coleman Excerpts

Tuesday 8th October 2024 Westminster Hall

[Ben Coleman (Chelsea and Fulham) (Lab)]

I am amazed by the Conservative Opposition’s chutzpah when they talk about special educational needs. No one would have thought that they had been in power for the last 14 years and overseen the running down of the system so that it is almost impossible to get an education, health and care plan—these days, 98% of tribunals award plans against councils. We have a system without special educational needs co-ordinators. We have a special educational needs system that, thanks to the legacy of the Conservative Government—14 years of decline— is failing.

I speak as someone who was for 14 years the governor of two special schools near my constituency. I am proud of what the last Labour Government achieved: £1 billion into services for disabled children and young people and their families, and lots of new rights for those people. Under the Conservatives, we have gone backwards, and the situation in the special educational needs sector is dire. As a result, young people cannot get the EHCPs they need.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

Will the hon. Gentleman give way on that point?

[Ben Coleman]

Let me make a little bit more progress. Cash-strapped councils are having to send their constituents’ children to private schools because state provision is not available. Parents from my constituency have written to me saying that their only reason for sending a child to a private school to meet their dyslexia, neurodivergence or other needs is not that they are ideologically in favour of doing so, but that they cannot do anything else. The provision is not there locally, and that is because of 14 years of Conservative decline. It is absolutely extraordinary.

[Dr Spencer]

Bearing in mind that around 15% of children in independent schools have special educational needs and only around 5% have an EHCP, given the move back into the state sector that this policy will cause and given the hon. Gentleman’s experience and personal concern about EHCPs, will he be voting against the policy?

--- Later in debate ---

[Ben Coleman]

The one thing I did not hear from the hon. Gentleman was an apology for what his party did to the special educational needs system in this country over 14 years.

We do have a problem as a result of the policy, however. Parents who cannot easily afford to send their children to private schools are digging deep into their pockets, as my constituents in Chelsea and Fulham have written to me. That is the situation we are faced with. Local councils are sending kids to private schools because they cannot do otherwise, and the schools are small and cannot easily absorb the VAT. I am pleased that the Government recognise the particular challenges facing children with additional needs and have agreed to exempt those with EHCPs from VAT. I am pleased that the Government have committed, as the Minister said when discussing SEND in a debate before the recess—

[Mr Amos]

I appreciate the point the hon. Member is trying to make, but given that children simply cannot get an EHCP, how does he expect them to get the support they need?

[Ben Coleman]

I am glad the hon. Member appreciates the point I am trying to make. I will make the point it absolutely clear: because children cannot get an EHCP thanks to the failures of the Conservative Government, local councils and parents who can ill afford it are having to send their kids to private schools. I am concerned that the use of EHCPs as a criterion for VAT exemption is too limited, but I do not think that any Conservative Member here has a right to talk about SEND without first saying, “I am sorry.” I support the suggestion of my hon. Friend the Member for Ealing North (James Murray) that before we go ahead with this policy, we undertake a proper assessment of the impact on the education of children with special educational needs who do not have EHCPs. That is a perfectly reasonable point to make, given the hideous, cruel and inept situation in which the Conservative party has left this country’s special educational needs system.

--- Later in debate ---

[Nigel Huddleston]

My right hon. Friend raises another important point, and I believe some legal challenges are already in place. Regarding timing, is the Minister truly confident that the policy could be implemented within weeks? Is His Majesty’s Revenue and Customs adequately resourced and prepared for it? Is the legislation ready? Is the legislation and guidance sufficiently clear? Even if the answer to all of the above is yes, is it fair on independent schools to expect them to suddenly get their heads around new legislation, register for VAT, implement new systems and processes, and logistically carry out the execution of this policy, all before Christmas? The answer is clearly no. I implore the Minister at least to delay the implementation, and carefully consider some exemptions and special considerations, my fourth category of concerns, which have been raised by many hon. Members today.

The rushed policy appears not to have properly considered carve-outs for pupils from military families, students on the music and dance scheme, children attending small or small faith schools, those paying low fees or who are on bursaries, or children in exam years who may have to move to another school that does not offer their current subject, offers different syllabuses, or has different examination boards. I hope that when we finally see the impact assessment, we will see some consideration of those matters.

My fifth category of concern is what consideration has been given to pupils with special educational needs and those with an EHCP or who are in the process of getting an EHCP.

[Ben Coleman]

Given that the situation confronting the Government is entirely of the previous Government’s making, will the hon. Member apologise for the terrible state of the SEND system?

[Nigel Huddleston]

I applaud the hon. Gentleman for his bravery, given that 2,500 pupils attend independent schools in his constituency. I think they will have a different view from his.

[Ben Coleman]

Will he apologise?

[Dame Caroline Dinenage (in the Chair)]

Order.