Independent Schools: VAT and Business Rates Relief

Monica Harding Excerpts

Monday 3rd March 2025 Westminster Hall

[Monica Harding (Esher and Walton) (LD)]

It is a pleasure to serve under your chairmanship, Mrs Lewell-Buck. I thank the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont), who secured this debate, and I thank those who signed today’s petition. I would like to point out, as other Members have done, the unintended consequences of this policy, which are affecting my constituents in Esher and Walton. For context, independent schools serve around 20% of pupils in Surrey.

First, I am concerned that this Government’s policy will put at risk the many valued partnerships between state and independent schools, which work so well in my constituency. In Esher and Walton, the independent sector supports some of our state schools with capital projects, such as redecorating and renovating, and state primaries make use of independent schools’ playing fields to open up sport and outdoor activities. I wish that there was more of that, and I was encouraging my independent schools to do more, but they now say that the VAT increases make it unaffordable.

Secondly, alongside other Members, I want to focus on how this policy will impact the more than 40,000 pupils in Surrey who receive support for special educational needs. Surrey’s SEND system is in crisis. The six Liberal Democrat Surrey MPs have been shining a light on this fact ever since we were elected, even in meetings with the Minister for School Standards, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), and the Education Secretary. However, this Government’s policy is only putting more pressure on an already strained and even broken system.

To understand that clearly, it is important to look first at the situation in Surrey, which my hon. Friend the Member for Surrey Heath (Dr Pinkerton) alluded to, where more than 3,000 children are in limbo awaiting diagnosis for autism and ADHD, many for almost two years. These are colossal waiting lists at a critical juncture in a child’s education.

As recently as last year, Surrey was delivering fewer than one in six EHCPs on time. The quality of provision is so poor that more than 1,800 children are missing at least a third of school days because their needs are not being met. In despair, parents are turning to the independent sector, knowing that their child is unable to access education and, critically, sliding into poor mental health. These are not rich families but families in desperation, who cannot watch their children being unhappy and not attaining. As has been pointed out, often simply the smaller class sizes help an autistic child or a child who has ADHD.

The Government’s position is that local authorities will be able to reclaim the VAT on fees for a pupil with an EHCP who attends the independent school named in their plan, but that leaves a critical blind spot. Almost 30,000 children are receiving SEN support without having an EHCP, and it is increasingly difficult for strained state schools to give them adequate provision.

Following a lack of appropriate funding for schools from previous Governments, it is only in the past year that real-terms funding per pupil has reached the same level as in 2009. When we factor in the drop in capital spending on schools in the last 15 years and the fact that schools’ costs have risen faster than overall inflation, we are faced with the bleak reality that there is significantly more pressure on state school budgets than there was 15 years ago. We see the interaction of ballooning costs for state schools with rising demand for SEN support—even excluding ECHPs, that has risen by 50% in the last decade. Schools are therefore being asked to do more with fewer resources.

Although this policy may be intended to give schools more money, my understanding is that none of the money will go to better special educational needs provision. Indeed, the £1 billion that was put aside for that in the Budget does not even touch the sides of the £4.5 billion overspend in local authority budgets on special educational needs, let alone the ballooning cost of special educational needs provision.

Thirdly, at this particularly challenging moment for our economy, the Government have chosen to impose further burdens on families. Independent school fees have risen by 13%—a surge in costs so severe that, alongside other factors, it has powered an uptick in inflation across the entire economy. That is due to the addition of VAT to fees and the decision of many schools not to absorb any of the costs, but rather to pass them along almost entirely to families.

For many hard-working parents, sending a child to an independent school has been made more unaffordable, and that particularly hurts families with SEN children who are looking for an alternative to a school in Surrey’s failing system. That risks placing more financial strain on families at a time when the pain of inflation is still being felt, harming the mutually beneficial partnerships between state and independent schools and leaving more children languishing in a failed SEN system.

No headteacher I have met who complains about the strain that SEN places on their budgets has asked for the private sector to pay. They ask for the radical overhaul in education that the Government promised but are yet to deliver.