Finance Bill

Kieran Mullan Excerpts

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

[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mismanagement by previous Governments have left schools struggling with inadequate resources, overworked teachers, and outdated and undersized facilities.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.

--- Later in debate ---

[James Murray]

As I said to the right hon. Gentleman, pupil numbers in schools fluctuate regularly for a number of reasons, and the Department for Education, and indeed the devolved Governments, already work with local authorities to identify pressures and take action where necessary. As I said in my earlier remarks to him, the Government already provide capital funding through the basic need grant to support local authorities in England to provide school places, and the Government have already announced £700 million over this academic year and the next, which can be used to provide places in new schools and to expand existing places.

Finally, the hon. Member for Bexhill and Battle (Dr Mullan) raised the motivation behind our policy, which other Opposition Members also spoke to. Let me be clear on this: our decision to fix the public finances to fund public services, including education, means that difficult decisions have to be taken. Our choice to end the VAT exemption for private school fees has been a difficult but necessary decision that will secure additional funding, which will help to deliver on our commitments to improve education for all.

[Dr Mullan]

I did not talk about motivation in my speech; I spoke about how the Minister has framed it. Does he accept that with a general taxation pot, where all the money goes into one amount that is doled out as the Government see fit, there is absolutely no basis for saying that children in the state sector have less because of the exemption of VAT for private schools? The two things are totally unconnected in the Budget and the financing of the Government.

[James Murray]

What is connected is that if we want to fund public services and fix the public finances, we have to take difficult decisions. This is one of those difficult decisions we are taking today: a difficult but necessary decision to restore fiscal responsibility after the mess we inherited from the Conservative party and to fund our public services. It is necessary to take those decisions, so that we can get that funding into education for all. If the hon. Gentleman does not want to take that decision, he is, in effect, denying the choices that we are making about funding public services.

I will now make some progress to address the new clauses tabled by Opposition Front Benchers. New clause 8, which was tabled by the right hon. Member for Central Devon, would require the Government to make a statement to Parliament about the impact of removing the VAT exemption for private school fees within six months of the Act being passed. It states that it

“must include details of the impact on…pupils with special educational needs and disabilities…small rural schools, and…faith schools.”

It would require the Government to

“make a statement about the impact of the removal of the exemption on schools that take part in the music and dance scheme”

within 18 months of the Act being passed.

I want to make it clear that in developing this policy, the Government carefully considered the impact it would have, including the impact it would have on pupils with special educational needs and disabilities, rural and urban schools, faith schools, and schools that take part in the music and dance scheme. As I said before, the Government considered a wide range of representations, including over 17,000 consultation responses, before finalising the policy design. The Government set out the expected impact of the measure in a tax information and impact note published at autumn Budget 2024 in the usual way.

I set out earlier today how the Government will ensure that those children with an EHCP, or its equivalent in other nations, will not be subject to VAT on any private school fees. I am not clear whether the right hon. Gentleman’s new clause, when it refers to “pupils with special educational needs and disabilities”

refers to only those in the private sector, or whether he intends the new clause to consider also the 1 million or more pupils with SEND in the state system. If it is the latter, I am sure he will welcome the extra £1 billion for high-needs funding next year that we have been able to announce thanks to our decisions on tax policy, including that which we are debating today. In addition, based on the evidence provided, it is not apparent that small faith schools will be more affected by this policy than other schools.

The hon. Member for Twickenham, the Front Bench spokesperson for the Liberal Democrats, tabled new clause 9. I think I have addressed most of those points already in my remarks today.

To conclude, I hope I have been able to reassure Members that the new clauses are not necessary, for the reasons I have set out. I therefore urge the Committee to reject new clauses 8 and 9.

Question put, That the clause stand part of the Bill.