Independent Schools: VAT and Business Rates Exemptions

Ben Spencer 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 ---

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

It is a pleasure, Dame Caroline, to serve under your chairmanship and I thank my hon. Friend the Member for Bromsgrove (Bradley Thomas) for securing this important debate. I am so pleased to speak in it.

I support all our schools and I am proud to have a range of independent schools in the Runnymede and Weybridge constituency. I declare an interest: my children, like one in five children in my constituency, go to an independent school.

I want to take the opportunity that we have today with a Treasury Minister responding to the debate, because Treasury Ministers are all over numbers and impacts. I am pleased to see that it would seem that, following the election, the Treasury has looked at Labour’s manifesto commitments and actually thought about them, to the extent that we are starting to get various leaks and stories that it will abandon them. I hope that the Treasury will do the same thing with this awful policy.

I know that a Treasury Minister will not make a decision without an impact assessment and I am sure that the Exchequer Secretary will express his concerns about the absence of an impact assessment for this policy. However, while he is considering what the impact of the change—I hope he comes to the Dispatch Box to tell us the numbers around it—let me share some information from my constituency, where about 7,500 to 8,000 children attend independent schools.

My schools tell me that about 5% to 10% of these pupils will move because of the imposition of a tax on education. That means there will be far more pressure on our local state school system and there will also be disruption for those children. It also means that the 10% to 15% of children with special educational needs who do not have EHCPs will start seeking them, which will mean more cost for the taxpayer and more transfers between schools, which would be a backwards policy. Most egregiously of all, the Government are going to do that halfway through the educational year, with no consideration for our constituents’ GCSE, A-level and baccalaureate exam results. Will the Minister think again and persuade the Secretary of State for Education to abandon this ridiculous policy?

--- Later in debate ---

[James Murray]

I am going to make some progress. Those recovered costs can be used to offset the increases to feepayers. We are already seeing that some schools have committed to absorbing the VAT liability entirely, while others are choosing to cap fee increases at 5% or 10% to keep fees as low as possible for parents. Members have asked today why we will introduce this policy in January 2025. The reason for doing so is simple: we want to raise the funding we need as soon as possible to deliver our education priorities to state schools across the country.

[Dr Ben Spencer]

Will the Minister give way on that point?

[James Murray]

I do not have much time and I need to address the other points that hon. Members have made in this debate. Importantly, a January 2025 start date means that schools and parents will have had five months to prepare for the VAT change. HMRC is ready to ensure that schools are supported in delivering this change. To respond to the shadow Minister’s comment, HMRC will put in place a number of measures to ensure that all private schools can be registered ahead of 1 January 2025, including publishing bespoke guidance on gov.uk ahead of 30 October, updating registration systems and putting additional resource in place to help process applications.

Ahead of the policy being implemented, the Government have carefully the considered the impact the changes will have on pupils and their families across both the state and private sectors, as well their impact on state and private schools. The Government’s costings of this policy are currently being scrutinised by the independent Office for Budget Responsibility. The Chancellor will confirm our approach to the measures at Budget, where we will set out our assessment of the expected impacts of the change in the normal way.

We recognise, as some hon. Members have raised, the changes may lead to some pupils moving into the state education sector. However, we believe that the number of pupils who may switch schools as a result of the changes will represent a very small proportion of overall pupil numbers in the state sector and such switches will take place over several years. We are confident that the state sector will be able to accommodate any additional pupils.