Independent Schools: VAT and Business Rates Relief

Rupa Huq 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—

[Rachel Gilmour (Tiverton and Minehead) (LD)]

Will the hon. Member give way on Eton?

[Dr Huq]

I am not finished addressing the first point. Can we do this sequentially? I will respond to the hon. Member for Windsor (Jack Rankin) first and then I will take the hon. Lady’s intervention.

It is interesting to learn that, but my point is that such schools are still going to be quids in after this.

[Rachel Gilmour]

Will the hon. Member give up on all this stuff about Eton? I speak as a mother of two Old Etonians. I was a single parent; I worked three jobs. The right hon. Member for East Hampshire (Damian Hinds) said there is more money from Old Etonian parents, but there certainly is not—not from this one. Eton hands out completely free fees to 100-plus boys a year; they do not even have to pay for their pencils. When it comes to things like Dorney Lake and the sports centre, it hands that back a thousand times to local communities across the country. Give it up!

[Dr Huq]

I do not know how parliamentary that language is. I am not going to join in the praise of Eton, particularly because I think the hon. Lady may have been an atypical parent. I imagine that some parents there would be able to bear a 20% increase, and for a school that is clever with its accounts, these things may just be a rounding error. I am talking about smaller schools for which that does not apply.

It is interesting to see the hon. Member for Boston and Skegness (Richard Tice) here. I have a massively remain constituency, with 72% of my electorate voting remain, but, perversely for Reform, it is leaving the EU that has made this policy possible—it is a Brexit benefit. If only we had never left the EU, this would not be happening.

Usually education is not a taxable luxury good, and there is a fear that if this increase happens, what could be next—nurseries or universities? I used to work in that sector. There is a slight worry that there is a loophole, because the policy contradicts the EU’s VAT directive that specifies there should be no VAT on any form of education. In Greece in 2015, the left-wing Syriza Government wanted to introduce VAT at 23%. They had to abandon that for a slew of different reasons, including because it was contrary to the EU’s VAT directive.

University tuition is zero rated, and there is a worry among my friends in the sector there, who say, “You’re lucky to have got out when you did, because they’re closing so many university departments in the UK.” What could be next? I hope that my hon. Friend the Minister can assure me that nurseries and universities are off limits.

We have heard all these things—that schools are going to close—and we have heard a lot of catastrophising, but it remains to be seen whether those things will come to pass. One of my schools went in 2023. My worry is that this policy will make an elitist system more elitist. The Government say in their response:

“Ending tax breaks for private schools was a tough but necessary decision”,

but when growth comes, is there a way of undoing it? It was a very clear policy in many manifestos, so I understand that it will not all be undone, but let us think a bit creatively.

[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

What does the hon. Lady expect her Government to do if they will not give way on this point?

[Dr Huq]

I would suggest implementing it in a slightly different way, based on turnover—so doing it for the enormous schools that can afford it, but not for smaller ones that have been caught in the trap.

There is also an argument for looking at grammar schools, which are a legacy from many years ago. We do not have them in my area, but when I was the Labour candidate in Chesham and Amersham in 2005, they came up as a hustings issue. The argument that the Labour party always gave me in those days was that we respect parental choice. At times, the Conservative party has flirted with bringing back more grammar schools, but they are even more elitist in a way because they take state funds for private school-type facilities. Dr Challoner’s grammar school in Amersham was way bigger than the school I went to; I felt very small when I went there. Perhaps something could be done about the grammar school system, because that is an inegalitarian one.

I wanted to vocalise some of the concerns from my electorate and remind hon. Members that one size does not always fits all. In this case, that is far from the truth.

[Christine Jardine (Edinburgh West) (LD)]

It is a pleasure to serve with you in the Chair, Mr Vickers, and to follow the hon. Member for Ealing Central and Acton (Dr Huq). I feel as if the speakers so far have been talking about me, because they have been talking about parents who are not rich but who send their children to independent schools. I no longer have a declarable interest, but my daughter did go to an independent school. We were not wealthy, and it was not easy, but it was our choice. We never regretted it, but we often struggled to finance it. I know that there are thousands of parents, many in my constituency, who face an even bigger challenge because of this change.

My daughter went to an independent school in the west of Scotland. It was originally the town school—anyone from Glasgow knows which one I mean—and it had a tradition of awarding a large number of bursaries every year. A lot of the children who were at her school and are now doing well would not have got that place otherwise. A lot of them faced challenges, and the school helped them. We need to remember that we are talking not about the Etons and the Harrows—the big schools—but about a lot of independent schools that often provide a service in communities. It is a choice made by parents who are not always rich.

My city of Edinburgh is one of the areas of the country with the highest proportion of children educated in independent school—it is one in four. That is reflected in the figures in the petition. There were 740 signatures from my constituency, which is a higher number than for any other petition that I remember from my almost eight years in this place. That fact is also reflected in my mailbox and in the concern that parents in Edinburgh regularly express to me. They do not always have their children in the independent sector; a lot of them have their children in the state sector. Every week, parents come to me who cannot get a place for their child in the local state school because it is close to capacity. That problem will only be made worse if many of those one in four children are forced, by this Government, into the state sector because their parents can no longer afford the choice that they made.

[Dr Huq]

The hon. Lady and I were both girls in those schools, and she talked about her daughter. Does she accept that it is often the parents who want their daughters to have an all-girls education. There are figures from the Girls’ Schools Association. There is also the head of Dame Allan’s girls’ school, who said that girls thrive better in all subjects in all-girls environments and that they choose things such as physics and maths more when there are not boys around mucking about.

[Christine Jardine]

I accept that point and absolutely agree. It reminds me of the point that for a lot of parents, their children are in independent schools because they were struggling in the state sector. They moved their children into the independent sector, where they are thriving. Rightly or wrongly, that was the parents’ choice, and we—or, at least, the Labour Government—would be taking that choice away from them, because of the fee increase. I also find it difficult to understand a Labour Government who would support the principle of taxing education. As well as the practical issues with the policy, they are taxing education, which is surely not something that they would support.

Introducing the change halfway through the school year has caused issues for many parents, who have suddenly found that all the budgeting they have done is out the window. They may have more than one child at a school that they can no longer afford due to the increase in school fees. That is why so many people are writing to me every weekend to say that they are having to think about what they will do about their child’s education and where they will find a place.