Armed Forces Personnel: School Fees

Lord Coaker Excerpts

Wednesday 5th February 2025 Lords Chamber

[Baroness Goldie]

To ask His Majesty’s Government what engagement they have had with armed forces personnel whose children are currently educated at fee-paying schools to ascertain the impact on such families of imposing value added tax on school fees.

[The Minister of State, Ministry of Defence (Lord Coaker) (Lab)]

My Lords, the Ministry of Defence is continuing to monitor the impact of the Government’s change to VAT rules for private schools on service personnel who claim the continuity of education allowance. The Ministry of Defence recalculated CEA rates based on the new fees published by schools for January 2025, and this increased the income tax-free amounts available to claimants.

[Baroness Goldie (Con)]

I thank the noble Lord. I am aware that the continuity of education allowance has been uprated, but that still leaves a parental contribution. What we do not know is by how much the parental contribution will increase as a consequence of VAT on school fees. Indeed, even the combined talents of Sherlock Holmes and Einstein would fail to penetrate MoD methodology on this issue. We know that Armed Forces personnel will have to pay more in school fees. Can the Minister answer a simple question? How much more will they be paying?

[Lord Coaker (Lab)]

I thank the noble Baroness for her question. I will always check the figures and, indeed, check hers, as she will know. She will also know that the allowance contributes towards the cost of boarding school education, with the MoD paying a fixed rate of up to 92% of fees for children attending state-maintained schools and up to 90% of fees for those attending independent schools. I would say to her that, in essence, this is exactly the same policy as the previous Government had.

[Lord Craig of Radley (CB)]

My Lords, what impact has this policy had on recruitment and retention? Have the Government made any assessment yet of that?

[Lord Coaker (Lab)]

The noble and gallant Lord will know that there have been considerable concerns around recruitment and retention. The Government have undertaken a review of that. He will also know that we have taken a number of measures alongside that to deal with it, not least of which was to ensure that we implemented in full the pay rise for Armed Forces personnel. We have extended childcare grants to armed services personnel serving overseas, and one of the biggest things we have done as a radical Government is to bring back from Annington Homes over 36,000 military houses, the state of which was a disgrace. This will be a major contribution to improving the morale and the recruitment and retention of Armed Forces personnel.

[Lord Beamish (Lab)]

My Lords, my noble friend the Minister knows the good record that the Labour Party has of investing in military schools, with the £20 million- plus that it put in to rebuild The Duke of York’s school in 2009. Can he say how many children have left because of this announcement?

[Lord Coaker (Lab)]

My noble friend makes a good point about the record on investment. He did a good job himself in ensuring that we had investment into schools such as The Duke of York’s. On the number of children, approximately 2,650 service personnel claim CEA for around 4,000 children. The figures that I have show that none have left the CEA system following this policy change. Five children out of those 4,000 have moved schools, but that is within the CEA framework.

[Baroness Garden of Frognal (LD)]

My Lords, as one whose children benefited from the RAF allowances, as both my daughters embarked on their seventh school at the age of nine, I know how important these forces allowances are. It is good that the Government are reviewing them to see how they can support them, but I wonder about those military personnel who have children at the small independent schools that specialise in special educational needs or skills. They are most under threat from this, because the parents are very often not wealthy; they are hard-pressed and trying to do the best for their children. If those schools are forced to close, has any thought been given to the military children who might need to resort to local schools, where there will be no resources and no places for them?

[Lord Coaker (Lab)]

The noble Baroness makes a really important point. The maintenance of schools such as those that she has pointed to is exceptionally important, hence the rise that I mentioned in the continuity education allowance to meet the increase in fee. Of course, she also makes a really important point about special needs. She will know that if a member of the Armed Forces or service personnel believes that there are needs for a particular child over and above what the continuity education allowance makes possible, they can apply for an additional grant to help with the support for that child and their special needs.

[Lord Lamont of Lerwick (Con)]

The Minister knows well that it is not just service personnel but other people employed in the Civil Service who have their fees paid by the Government. Does what he has announced to do with the armed services apply equally to those other people, including, as I instanced the other day, people in the Diplomatic Service?

--- Later in debate ---

[Lord Coaker (Lab)]

The noble Lord will know that diplomats who are based here—I am in the process of writing to him about this, as I said I would in answer to his previous question—in many circumstances have their children’s fees paid. They are exempt from them, as indeed are our Armed Forces personnel and our diplomats when they go overseas. There is a multiplicity of tax and benefits arrangements which benefit our diplomats and our Armed Forces personnel when they go abroad, and similarly when their counterparts come here. Those multiple arrangements between different Governments have existed for decades. That is exactly the same now as it has been in the past.

[Lord Watts (Lab)]

My Lords, the Opposition seem to be very worried about the impact of this on recruitment. What would have been the impact had we followed the advice of the Opposition and frozen public sector pay?

[Lord Coaker (Lab)]

I think my noble friend has answered his own question. I thank him for that. The important point to make is that, when we came into government, we were determined to ensure that the recommendations of various public sector pay bodies were met in full. The pay recommendations of the Armed Forces’ Pay Review Body were met in full and that was an important statement made by the Government about the importance not only of public service workers in general but of the Armed Forces personnel who serve our country.

[The Lord Bishop of Norwich]

My Lords, as the father of a soldier, I am particularly interested in this topic, particularly where both parents are serving in the Armed Forces, often in different locations. What assessment has the Minister made of confidence in the Armed Forces covenant with this change?

[Lord Coaker (Lab)]

I go back to the answer I gave before. If the Government were taking no action with respect to the increase in fees resulting from the VAT increase, that would no doubt be a matter for concern and consideration in this Chamber. The fact of the matter, as I said to the noble Baroness, Lady Goldie, and others, is that the Government have continued with the policy that existed under the previous Government where up to 90% of the fees of eligible children are to be met through the continuity of education allowance. That policy is important and has not changed. We will continue that policy, because we recognise the sacrifice that is sometimes made by Armed Forces personnel who, because of their duty, have to move regularly between different bases or between bases here and bases abroad.