Non-Domestic Rating (Multipliers and Private Schools) Bill

Lord Waldegrave of North Hill Excerpts

2nd reading
Wednesday 29th January 2025 Lords Chamber

[Lord Waldegrave of North Hill (Con)]

My Lords, it is a pleasure to follow the noble Earl, Lord Lytton. He speaks with immense knowledge on these matters. I join in sending condolences to the noble Lord, Lord Khan, as he passes through one of the terrible watersheds of life that we all pass through.

I am going to speak primarily on the second part of the Bill and declare my very recent interest as provost of a famous school—namely, Eton College. Provost means chair of governors in ordinary language. Before we come to that, until a couple of years ago, my wife and children owned a small, historic pub in Dorset Street in Marylebone in which, I am sorry to say, I now have no interest. My daughter Harriet was the licensed publican. She reminded me that it had a very annoying rateable value of £51,000, which was always just above some decimal threshold.

As the noble Earl, Lord Lytton, and the noble Lord, Lord Fox, both said, so many moving parts are coming along in the rating relief world in the next year that it is very difficult to tell whether the Barley Mow will gain or lose, but I recommend that noble Lords give it the benefit of the doubt and go there to support it against any possibility of trouble.

I shall speak mostly today about the sense of sadness—and it is a sadness—that I have about the educational approach of this Government. There are many things about this Government, such as in prison reform and other areas, which I strongly support, but there is a genuine sense of grief about what is happening in secondary education in particular. I have been involved in policy for quite a long time, as have many in this House—in my case since 1971, when I was a civil servant—and I know that very few important things are ever achieved by Governments unless they are persisted with for decades. It is utterly ludicrous, for example, to suppose that the underlying growth rate of a country can be changed in a year or two, or three or possibly even 10. You only have to look at the long-term trends to see that. The same is true of the NHS, for which I once had the privilege of being Secretary of State. Any reform of that great leviathan needs a decade, probably, of consistent working, across party, in the same direction to make any real change. The same is true of education.

The miracle was that it was thanks to visionary Ministers on both sides of the Houses. I name the noble Lord, Lord Adonis, Mr Nick Gibb, my noble friend Lord Baker and Mr Michael Gove. I could also name many who spoke in the debate last week, including the noble Lord, Lord Harris, and many others, such as our new Member, the noble Lord, Lord Young of Acton, who have taken part in the establishment of academy chains and free schools and, more important than the details, the establishment of a more or less bipartisan approach to education over the last 20 years or so.

The biggest element of that—I will not repeat last week’s debate, which I found very moving—has been the spread of academy chains, with their freedoms and drive. I name, for example, the one with which Eton was in close co-operation, Star Academies, which emerged out of Blackburn with a great deal of help from Mr Jack Straw, under the brilliant leadership of Hamid Patel, now rightly Sir Hamid. It is a quite extraordinary academy chain, and there are many others like him. Since that debate, we have had the added voice of the Children’s Commissioner making the same points that so many made last week, and from different sides of this House.

That was the main plank of the bipartisan approach: the spread of academy schools and the release of extraordinary energy, originality and social entrepreneurship of the best kind in so many schools. A lesser but not trivial plank of the bipartisan policy was the chivvying and pressing of those private schools with charitable status to work with the public sector to exchange expertise—both ways, I have to say—and to develop an educational ecology, if you like, in Britain where the two sectors work together for mutual benefit.

I was chivvied as provost of Eton by the noble Lord, Lord Adonis, who rang me up and said that I had such a distinguished governing body that I should jolly well get on with it and sponsor a new free school—and we did. We became the academic sponsor of, and in various other ways sponsored, Holyport College, the first new state boarding school for many years. I was chivvied peremptorily by my noble friend Lord Cameron, who, as Prime Minister, sent for me to come to Downing Street at a moment’s notice. I was allowed to park my car on Horse Guards Parade; it was very smart. So we went faster: we were one of the partners in the London Academy of Excellence, that outstanding school in Stratford East, which has created an ecology there that other schools, such as Brampton Manor Academy, have now followed. They compete with it; some are doing even better, which is wonderful and everything we hoped.

Eton was in the process of proposing, with Star Academies—maybe it will still happen; I pray that it does—similar schools to the London Academy of Excellence in Oldham, Dudley and Middlesbrough. Our analysis, with the help of people in those localities, was that GCSE results there were perfectly good but there was not good passage into top universities. Statistically, there must be just as many people in Middlesbrough who deserve to go to Oxford, Cambridge or King’s, and all the other great universities that we have, but they were not getting there. In our school, we really know nothing about and could not contribute to one of the other great things that needed to be done—my noble friend Lord Baker is the great leader on this—of spreading better technical education. But we knew that we could help with getting clever people into really good universities, and that is what we proposed to do.

All this kind of partnership is now put under threat. That is what is so sad; it genuinely saddens me. It is not easy to find many areas of our national life where we have been outpacing our many competitor countries, such as France, Germany and the United States, over the last 20 years, but in the PISA tests and other tests we have been. It has not always been upwards, but it has been compared with what they have done, so we have outperformed them. Now backwards we go towards the old days, with academies threatened with being robbed of some of their crucial freedoms, and Britain the only country that I know of seeking to drive a wedge between private and public, by making independent education subject to tax. I think we are virtually alone in the advanced world on that.

I come in particular to the effect of the taxation of charitable schools, which is removing from charitable schools their rating relief and charging the parents VAT. Then there is a sort of hidden tax of the Teachers’ Pension Scheme, which is unfunded. State schools are reimbursed for it, so the Treasury can really put any number it likes on it. It is another source of taxation on those independent schools which have teachers in that scheme.

This divide will get worse. First, of course, the charitable test goes back to a great judgment of that wonderful and famous jurist of the latter half of the 20th century, Lord Wilberforce. His seminal judgment said that there are plenty of charities that have to charge fees. His judgment was actually attached to a supplier of medical scanners, which charged fees, but he said that the test is not whether you charge fees—plenty of charities do that—but whether you make what you provide available to enough people who cannot pay the fees.

The first thing that the charitable schools will have to do with this additional taxation burden is to withdraw everything back into the bursary provision. I have nothing against bursary provision; Eton has spent more than £10 million a year on bursaries, to the great benefit of the school and, I hope, the pupils who benefited from them. That will be the first place where schools will have to put the money. Everything will have to go back into that, because the Charity Commission does not give direct credit for outreach or partnership things; it should but does not. The bursaries will have to come first. For many schools, including Eton, which is one of the richest, the search for economies to try to protect parents as best they can in future, and to protect the bursaries, will lead them to say, “We can’t really do so much of the other side of the thing that Lord Adonis and co. were rightly chivvying us about”.

The paradox here is that one of the Back-Benchers on the government side in the House of Commons said, “Oh, these things are just businesses like any others”. Well, there are schools that will be “just businesses” over which the Government and society will have no control at all, and there will be more. In the half of independent schools that are charitable, we have a whole structure of regulation to ensure that we carry out social benefit but we will have schools, like in America, France, Germany and Switzerland, that have no particular social benefits at all. There are no levers for the noble Lord, Lord Adonis, or my noble friend Lord Cameron to pull. That seems to me really paradoxical; we will end up with a much wider division between that different kind of independent school and those that are charitable. Build on the charitable levers and pull them; I am sure that is the right approach.

Finally, the noble Earl, Lord Lytton, made a point that I have not seen much made elsewhere; namely, this is the first time, to my knowledge—I may be ignorant and probably am—that we have taken one little group of charities and aimed taxation at it. I wish people would not refer to it as a tax loophole or tax break. That is like saying that not having VAT on children’s clothes is a tax loophole. It was a decision taken, by all the countries of Europe and wider, that education, as a public good, should not be taxed. It was not a loophole. That is just shoddy language.

The danger of this is the precedent that is now being set. Imagine that an incoming, right-wing Government—perhaps too right-wing for me and led, goodness knows, by he who shall not be named—finds that some charity has just published a great paper, based on what this incoming Government says is out-of-date Marxist economics. It says that we owe the Republic of India £23 trillion, so is called inconvenient nonsense, being Marxist and so on. That Government might say, “Look at that charity: they’ve got shops all up and down the high street. Let’s take their rating relief away”. This is setting a precedent which will be used by others. The Bill’s supporters will be to blame for it, and they really might want to think again about that.

I was Chief Secretary to the Treasury once, a wonderful job where you get into all the nooks and crannies of government. Do not believe a word about the hypothecation of this taxation. The Treasury never hypothecates anything—it never lets you do that. That is just political flummery. We have done it in the past—everybody does it. The proof that it is not actually hypothecation is that if the Government do not raise the money they expect to out of this, which they probably will not, they will not change the policy or cut the number of teachers they say have been financed by it. That is just politics. It is bad principle taxation and it will do long-term damage. Above all, it is breaking up that consensus, and, my goodness, in this country we need more areas of consensus, not fewer.