Independent Schools: VAT and Business Rates Relief

Jack Rankin Excerpts

Monday 3rd March 2025 Westminster Hall

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

It is a pleasure to serve under your chairship, Mr Vickers, and to see the newly minted Minister in his place—I think it is the first time I have been in a debate with him. It is also a pleasure to follow the right hon. Member for East Hampshire (Damian Hinds), who was the Secretary of State; I sometimes see him on the District line, because we head the same way.

I rise to speak on behalf of constituents who have contacted me about this issue—in my inbox, in person at the advice surgery I do every Friday, and on the doorsteps when meeting and greeting voters in the recent general election. This issue comes alongside an array of others raised by mums and dads. I am familiar with the arguments and have read the Government’s response; it contains very compelling figures—94% of schoolchildren in the UK, including my own, attend state schools. I also know that the policy polls very well. However, there is also that 6%, and 14 of those private schools are in the constituency of Ealing Central and Act; in 2023 there were 15, in fact, but one has closed its doors since then. I want to vocalise some of their concerns to my hon. Friend the Minister.

Fourteen is a higher than average number of private schools in a constituency, and the petition was signed by 821 people in the constituency—although that is not even in the top 10. The heat map shows that the top 10 seats all have more than 1,000 signatories. I think two of those constituencies are in Surrey, but the remaining eight tend to have a W, NW or SW postcode. What I am trying to say is that the distribution of the signatures and the schools is a fairly west London-type phenomenon. In fact, if we look at the 650 constituencies across the land, the first one on the list is single digits; it is a seat in Wales starting with A—Aberconwy, or somewhere like that. This is not a phenomenon everywhere, but in west London it is not that unusual.

The high school of the hon. Member for Farnham and Bordon (Gregory Stafford) was not very far from my high school in my constituency. I was a Notting Hill girl, and I know that he was a St Benedict’s pupil back in the day. The prep school of the Minister who is often sent to respond to this debate—my hon. Friend the Member for Ealing North (James Murray), who is my neighbouring MP—was Durston House, and it is in my seat of Ealing Central and Acton. We should not demonise these parents. In some senses, they are people who I have grown up with and live alongside, and they do have genuine concerns.

As a parent, I would never dream of going private, but I can understand and accept that people do. I went to school in the 80s—the dark days of Thatcherism—before the Labour Government reforms that made excellent state schools in my constituency. My parents chose to put me in the state sector for primary school, at Montpelier primary, and as a parent myself, I have benefited from Gordon Brown’s reforms. The child trust fund came to maturity for my son recently; it did go up in the end—it was the one that could go up as well as down. I have not used the private sector as a parent—as a child I did, but it was not my own choice. I completely appreciate that people, like my own parents at the time, make enormous sacrifices to send their children to independent schools, as my hon. Friend the Member for Paisley and Renfrewshire North (Alison Taylor) said. I have heard people say on the doorstep, “We have the worst car. We never go on holiday.” That was me in the ’80s.

I want to point out some unintended consequences of the policy to the Minister aware. These are people who consider themselves to be working people. The strapline of the Labour manifesto was “No taxes on working people”. We should be careful with our rhetoric sometimes and not seek to—[Hon. Members: “Come over here!”] Hang on—let me carry on.

The first unintended consequence—or commonly misstated thing—is that pupils with an education, health and care plan still remain eligible. It is impossible to get one in west London. We have all taken on new wards in our boundaries, so now I do not only represent Ealing borough but a bit of Hammersmith and Fulham too. A head from one of primary schools was saying that they have a large percentage of special educational needs and disabilities pupils. The wards that I have inherited are from the north of the borough—Shepherd’s Bush way. Apparently, by the age that a child goes to school and those issues show up, it is kind of too late. A sharp-elbowed, middle-class parent from the south of the borough might have had their child assessed privately at a very young age, ensuring they have support all the way through, but by school age, there is a waiting list of many years to get the assessment and then it is potluck.

The problem is that the words “private school” imply a whole load of things—but they are not all Eton. Some of the comms around this policy have not been done very sensitively. I know that offence was taken at a comment about how they all have astroturf pitches, swimming pools and embossed stationery; that did not go down well with parents and heads in my constituency. They are not all like that. There are smaller SEND schools and smaller faith schools—what I am trying to say is that they are not all Eton, and some of the comms are based on a caricature. We should be careful about what we do in that regard.

One parent, Matthew, forwarded me a missive from the private school that his boys are at, which read:

“For music lessons with peripatetic teachers employed by the School…VAT will need to be applied at 20%.”

He continued:

“Traditionally the tax system has been a way of discouraging people from picking up bad habits like smoking and drinking. Not from picking up a trombone”.

It seems as though people are capitalising on the policy, and then other things are coming in through the back door.

I have been replying and trying to sound sympathetic to these parents. My constituent also said:

“you referred to a consultation…on the VAT proposals—yet like most government consultations, what was passed didn’t seem, in any significant way, different to what had been proposed.”

Maybe that is a lesson in life for all of us: if we put something out for consultation, we should make it look like we listened, because he is saying that it came back exactly the same.

The right hon Member for East Hampshire raised that elitist private schools such as Eton have actually done quite well out of this policy, because they can cash in on windfalls from the new VAT rules on independent schools—they can claim it back on capital projects, such as buildings and land acquisition, over the last 10 years. All the VAT on costs, which is now 20%, is recoverable when factoring in non-business use, so the policy will basically hand money back to schools such as Eton from Treasury coffers. Surely there is a loophole there—an unintended consequence—that needs to be addressed by my hon. Friend the Minister.

There are long lists of such things. The Times says:

“Eton spent more than £20 million on a sports centre in 2023 and Winchester College’s”—

where I think our former Prime Minister went—

“accounts from the same year said it spent £15 million on capital expenditure”.

It also says that Radley College, in Oxfordshire has a 20-acre solar farm and 40-acre woodland, and that Charterhouse in Surrey

“built two boarding houses in 2021 and is developing a theatre and lecture theatre”

Again, costs can come back for the big boys, but not for the little ones.

[Jack Rankin (Windsor) (Con)]

As the MP for Windsor, Eton is in my constituency. I appreciate, as the hon. Lady says, that not all private schools are Eton, but I point out in its defence that the sports centre she mentioned is used by local schools and community groups, and that Eton does an awful lot in my community. I accept her point that Eton is not among the schools that we necessarily want to focus on in this debate, but I suggest that some of those points are a bit unfair.

[Dr Huq]

It is interesting to learn that—

--- Later in debate ---

[Jack Rankin (Windsor) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Lewell-Buck.

In Windsor, we are very lucky to have some of the finest state and independent schools in this country, and I am proud to represent them all. One has already been mentioned; it is very prominent, but it is not very reflective of the situation in my constituency.

On two constituency visits this morning before I came into Parliament, I counted the independent schools that I passed. I passed six; 23% of the pupils in my constituency attend independent schools. The caricature that my right hon. Friend the Member for East Hampshire (Damian Hinds) said was always in the papers when independent schools are discussed does not reflect 23% of the parents in my constituency.

In my recent surgeries, I have had many parents who are really struggling with the proposed policy. Often, both parents are working, and one of them may have taken on a second job. In many instances, they have remortgaged their house. They have gone without. Many marriages are under pressure, and I am concerned about those parents and their children.

Because we have such a high percentage of independent schools in my constituency, they are not the only ones affected, even though they might be the most directly affected. The displaced children hit my state schools, and that means our state sector is bracing for an influx of children that it will struggle to accommodate. That is why I think this is a false choice: it should not be state versus independent.

Our schools are an ecosystem, and they are all valuable, because education is a public good. It promotes social mobility, strengthens our economy and benefits society at large. No other country in the world tries to tax it. When they have tried—as in Greece, where it lasted only four months—it has massively backfired. In fact, many developed countries look to subsidise independent education to promote parental choice and drive up school standards, so the Government are unique in their policy and, frankly, their vindictiveness.

Whenever the Labour Government hike taxes, there are unintended consequences. Just as their jobs tax is hitting charities and hospices, their tax on independent schools will hit military families and the 130,000 SEND pupils who are currently in independent schools. Many of the parents I have spoken to use those schools as a way of giving their children that extra bit of support that they would struggle to find in the state system. I think every single Member of this House recognises the challenges facing their local authority when it comes to SEND provision.

From my involvement with the all-party parliamentary group on Down syndrome, which my right hon. Friend the Member for East Hampshire chairs, it is clear that getting an EHCP is already an uphill struggle, and taxing independent schools will create the most regressive possible outcome. It will add to the pressures already facing our local authorities, and the SEND children in the existing state provision will pay the highest price.

In a similar vein—the hon. Member for Surrey Heath (Dr Pinkerton) discussed this—2,666 military families in this country rely on independent schools to give their children a stable education. For those families, VAT relief can make all the difference. I previously co-signed a letter that my hon. Friend the Member for Solihull West and Shirley (Dr Shastri-Hurst) sent to the Chancellor, calling on the Government to protect from VAT military families who make use of the continuity of education allowance.

Although the Chancellor has committed to re-rating CEA, I maintain that the full exemption from VAT is needed to truly support military families. That would make a real difference to those enlisted at either of Windsor’s two great garrisons, to whom we owe so much. That support should be given special consideration in the light of the Prime Minister’s discussions over the weekend and in the House today.

Labour Front Benchers frequently refer to parents who pay for independent education enjoying a tax break, but parents actually save the state £8,210—the money it costs to educate a child in the state sector—and receive no compensation for the income taxes that they pay. In my book, that is no tax break at all. Frankly, the numbers do not add up. The Adam Smith Institute has estimated that if even 10% of children move to the state sector—anecdotally, in my constituency I am seeing more than that—any revenue will be nullified. Any more than that 10%, and the policy will actually cost taxpayers money. That highlights the ideology behind the decision.

In my view, the Labour party is playing politics with children’s futures. It is forcing families to have difficult conversations mid-year and make tough decisions. The saddest conversations I have had have been with parents who have felt the need to separate children from classes mid-year. Frankly, only a Labour Government could set out with the aim of improving education in this country and introduce policies that have led to 40 school closures since the Budget.

[Dr Arthur]

The hon. Member is talking with great understanding about the schools in his constituency, including state and independent, which is fantastic to hear. But we have heard in this debate about full state schools in England, about overloaded schools and underfunded schools. He will acknowledge that funding had to be found somewhere to try to fix the problems. We have one solution. Is there an alternative?

[Jack Rankin]

My point is that this will not raise any money. It will exacerbate the problem, because if 10% of the students are displaced, that nullifies the revenue.

One thing that has not been mentioned is that all our local authorities are under some kind of financial strain, and the royal borough of Windsor and Maidenhead is under more than some others. One of the biggest exploding bills on its books is the school transport budget, which this policy harms by putting another unexpected pressure in the system that local authorities will have to pay for. I do not know whether that is in the numbers; perhaps the Minister will comment on that.

I find it almost humorous that some teachers’ unions—it is not often that Conservative Members agree with them—are raising concern about the impact of this policy on staff and pupils in state schools. After only a few months, we are seeing pupils being taken out of private school at three times the previous rate. We will have to wait until September to see the full extent of the damage, as many parents are doing everything they can to get to the end of the school year before, sadly, taking their children out of the schools they love.

In this country, we should be aiming to set the highest standards across the board, using schools that excel in the independent and state sectors as examples of what can be achieved. Labour would rather cut down that aspiration in return for uniformity. We are seeing this attack in their dismantling of the academy system, which has blossomed under successive Governments of all colours. Far from guiding the invisible hand, Labour’s education policy is strangling the school system. I wholeheartedly reject this “politics of envy” policy, which places politics above children, families and the good of the country, but if the Government are determined to stick with it, I urge them to introduce full exemptions for all SEND children, military families and specialist schools.