Finance Bill

Edward Morello Excerpts

Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[Damian Hinds]

Of course, there has been a huge increase in the number of teaching assistants over the past 14 years, but the hon. Member is right that there are particular issues for children with special educational needs, which I will come on to.

The Government estimate that there will be 37,000 fewer children in private schools and of those, 35,000 will go to state schools. What happens to the others? Some will be international students who will not come to this country, so that is a loss of export earnings, and some will be home-schooled. The hon. Member for Twickenham (Munira Wilson) mentioned that, and we have not talked about it a great deal, but it is significant. The Government will say, “It’s only 35,000.” That is like a pretty substantially sized football stadium if we picture the number of children whose education will be changed by the measure. They say, “Don’t worry because it is only a small proportion of the total number in state schools.” At the end of the day, the number is from a spreadsheet; there is no guarantee that it will be 35,000 or any other particular number. In fact, it is rather odd that they came up with a single number at all. I would think that in any economic analysis like this we would at least have a range in which there is a central planning assumption, but also a reasonable worst-case scenario.

More importantly, as my right hon. Friend the Member for Hertsmere (Sir Oliver Dowden) mentioned earlier, the effect will not be even. I have lost count of the number of parliamentary questions I have put down trying to get out of the Government where they think those 35,000 children will show up, because there is a huge difference in where they show up. It is worthless having empty places in primary schools in inner London if that is not where the children will be displaced to from private schools. In broad terms, there will not be that much of an impact on state primary schools. There will be on state sixth forms in London, but the big effect will be on individual places, particularly in 11-to-16 education. They include not only in counties we might guess, but also Bristol, Bury, Surrey, Salford and a much longer list besides.

On why the proposed review is so important, and we need to examine this in the post-legislative scrutiny, the Government say the revenue costs will be £270 million a year. That is, in other words, the cost of educating those extra 35,000 in the state sector. They go on to say that they have calculated the number based on the average spend per pupil in England in 2024-25. That is wrong. It is a mistake to base it on the average pupil because we know children with special educational needs will disproportionately have to transfer, and that will have a higher cost to their education.

Moreover, we will get more families—we do not know how many—applying for an EHCP. The limiting case is where a child is in a private school right now and their parents are paying considerably more than the average place. They will find that they cannot afford the extra 20%, so they will apply for an EHCP and the child could get placed back in the same school, with the entire cost now being picked up the state.

[Edward Morello (West Dorset) (LD)]

Those at an independent primary school in my constituency told me that approximately 20% of their students would be in receipt of an education, health and care plan if they were in the state system, but have no additional requirements in their educational establishment, and a number of West Dorset pupils receive six-figure support. Does the right hon. Gentleman agree that more students going into the state system will increase costs for local councils, and that independent schools save the taxpayer money?

--- Later in debate ---

[Shivani Raja]

We are talking about people who have often sacrificed luxuries and gone without to afford the education that they believe is best for their children. This is not the preserve of billionaire hedge fund managers; we are talking about nurses, small business owners and tradespeople who have managed their finances meticulously to secure a particular educational path. They are the very working families who Labour claims it would never tax.

This new measure is fundamentally a tax on education, and the reality on the ground is deeply concerning. As a result of Labour’s policy of slapping VAT on independent school fees, the careful financial planning of hard-working people in my constituency has been shattered. Children are being forced out of stable, nurturing learning environments mid-term. Their friendships and routines are being severed, not by parental choice or educational necessity, but by a Chancellor’s whim. To add insult to injury, some families find themselves unable to secure a state school place locally, leaving them in educational limbo as a result of the Chancellor’s twisted game. I have already heard from one mother who, no longer able to afford her daughter’s independent school, cannot find a suitable state alternative in her catchment area. As we have heard in the Chamber today, that is not an isolated case, but a troubling sign of the turbulence that this policy is creating.

What do the Government propose for the children who are caught in the crossfire of envy-driven politics? Labour’s attempt to penalise perceived privilege has ended up punishing ordinary, aspirational families. Meanwhile, the notion that this policy will somehow improve state education is fanciful at best. Instead of supporting better standards and opportunities for all, this tax is about pitting one group of parents against another—and what is worse, this was done without a proper impact assessment. Instead of looking at the real-world consequences—the strain on families, the sudden influx of pupils into our already stretched state schools and the emotional turmoil placed on children—the Government rushed forward, blinded by the politics of envy. I call on Ministers to think again. This is not about reform or fairness; it is an attack on parental choice and on hard-working families who dare to hope for something different for their children. If Labour truly stands for working people, it must listen to their voices, look at the damage this will cause and scrap a measure that so clearly undermines the interests of children and families in Leicester East and beyond.

[Edward Morello]

The proposal to impose VAT on independent school fees is a misguided approach that risks harming families, undermining educational freedom and failing to address the deeper issues in our education system. Let me start by acknowledging that our state education system is in dire need of funding. Years of mismanagement by previous Governments have left schools struggling with inadequate resources, overworked teachers, and outdated and undersized facilities.

We must confront this crisis, and I fully agree that we need long-term sustainable funding to support our schools, but introducing VAT on independent school fees is not the answer. This measure will not impact elite institutions or those at the very top of the income ladder. The wealthiest families will simply absorb the cost. Instead, it is middle-income families—parents who are saving every penny, working multiple jobs and making sacrifices to help their children—who will be impacted, as well as families whose children have special or complex needs that cannot be serviced in state schools.

Smaller and more affordable independent schools, which already operate on tight budgets and cater to working families, will be at risk of closure. Those closures will displace students into the already overstretched state sector, exacerbating the very challenges that this policy is supposed to address. Independent schools also contribute to their local communities. They work in partnership with state schools, offering shared resources, facilities, teaching support and extracurricular activities. Instead of imposing VAT, we should encourage more of these collaborations to strengthen both the state sector and the independent system.

The Liberal Democrats believe in parental choice and in policies that unite, not divide, our communities. We must focus on finding equitable solutions to fund our state schools, but we must do so without undermining the choices and aspirations of families or the stability of our broader education system. Families should have the freedom to choose the best educational path for their children without being penalised by the state. I urge the Government to work with all parties to find a fairer way to address the funding crisis in our schools—one that does not come at the expense of parents, students and the principles of educational freedom.

[Dr Kieran Mullan (Bexhill and Battle) (Con)]

I rise to support new clause 8 in the name of the shadow Chancellor, because it will help ensure accountability on this policy, and ensure that its impacts are fully understood. I want that because of the policy itself, but perhaps more because of how the Labour party has framed it, which I have found deeply concerning. I know all parties in this place are sometimes less than accurate in how we describe tax and spending, and about how it works for political advantage at different times, but the one thing out of all the things that the new Labour Government have done that I find genuinely appalling is the vindictive way in which they have rolled the ground for this measure by pitching schoolchild against schoolchild and parent against parent. I have genuinely found it really deplorable.

We do not have hypothecated tax or spending in this country. Money from road taxes goes on things other than roads, and our national insurance payments do not get put into a pension pot. The Government know that, so to suggest that someone spending money on their own child without being taxed is taking money away from other children is completely and utterly wrong. The UK Government spend more than £1 trillion a year, and the Government can choose what they spend that money on. The suggestion that this money is going into a legally defined pot of money for education, and that if it was not there, there would be less money available for education, is completely without merit, not least because if there was such a pot, the parents we are talking about would for many years have been contributing to it, not taking money out of it. They would already have been subsidising mainstream education, according to the Government’s own arguments.

The idea that schoolchildren in mainstream education are going without directly because we did not have VAT on private schools—that all sorts of parents for all sorts of reasons are choosing to invest some of their money in their own children’s education, but because we have not been taxing that, children elsewhere are missing out on their education—is a deeply unpleasant and unnecessary way to frame this argument.

Imagine being a parent who—like people I know—had a modest start in life but then perhaps went on to medical school and became a GP. They are honest, hard-working people, and the fact that they were not being taxed on that spend means that they are now being made to feel that somehow that has been taking away from the education of other children. That is completely wrong. It really is the worst sort of politics. It was exemplified by the despicable tweet from the Education Secretary, which was rightly and roundly criticised. A private school having a swimming pool does not in any way affect the availability of mental health support in other schools, any more than spending extra money on potholes or defence or healthcare does. I reiterate that the Government have more than £1 trillion to spend every year on what they want, and ways in which to raise that.

Employer National Insurance Contributions

Edward Morello Excerpts

Wednesday 4th December 2024 Commons Chamber

[Jake Richards (Rother Valley) (Lab)]

The new intake of youngish—I use that description carefully—Members on this side of the House might be forgiven for having shorter memories than other, more long-suffering Members, but this is not the first time a Labour Chancellor has made difficult decisions on tax to invest in the future of public services, particularly our NHS. Twenty-two years ago, a Labour Chancellor told this House that the NHS was in need of reform and modernisation, and that investment was needed not only to deliver better services but to, in the inimitable style of Gordon Brown,

“define the character of our country.”—[Official Report, 17 April 2002; Vol. 383, c. 589.]

That decision to raise national insurance contributions, combined with far-sighted reforms, delivered the shortest waiting times, and the highest public satisfaction with the NHS, in our country’s history. Now, after 14 years of Tory Government, history has repeated itself. Once again, a Labour Government are fixing the mess made by the Tories, and our NHS is facing questions over its future and quality. Indeed, the choices are more stark today. The challenge before us is not simply to improve standards and resources in the NHS, but to save the very idea itself.

Back in 2002, the Tories opposed making difficult decisions on tax to support our NHS. Their then leader, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), used precisely the same slogans as the current Leader of the Opposition—the politics of protest, not government. A year later, he was out of his job; his own party lacked confidence in him and got rid of him. We are not able to gamble on political events, but what are the odds of history repeating itself here, too?

The Opposition crow about the Budget, but what is their alternative? Do they oppose the £22 billion investment in our NHS? From which magic money tree will they fund their ever-spiralling spending commitments? Fixing our public finances, without compromising our belief in a strong NHS, is at the heart of this Government’s agenda. That is so important, because I have had countless conversations with constituents who face agonising waits over years for basic operations, and with those who dread the 8 am rush to book an appointment at the local GP, knowing full well that they will often be disappointed. They know that the NHS needs urgent investment, but they also know that the NHS must change.

That is why the investment by this Government has been said to be a down payment on reform. We must transform the way in which our NHS operates; otherwise, the investment will be wasted. The NHS serves a wholly different population in a wholly different context from when the Labour party created it in 1947. We are living longer, our health issues are more structural, technology can transform our interactions with healthcare provision, and patients can feel more empowered, but we need to get funding into the NHS now.

The Tories want all the benefits of investment, but they have no idea how they would pay for it. We can look to history again to tell us what happens when Conservatives make promises without a clue about how they would fund them. Look at the 40 hospitals that have not been built. Look at the £6 billion black hole in our asylum system. Look at the mini-Budget.

[Edward Morello (West Dorset) (LD)]

The hon. Gentleman rightly points out the need to invest in the NHS. Does he recognise that imposing NICs on primary healthcare providers such as my constituency’s Weldmar Hospicecare, which provides vital end of life care to residents and must raise £26,000 a day to fund its service, will result—

[Madam Deputy Speaker]

Order. That was perfectly long enough.