Independent Schools: VAT and Business Rates Relief

Debate between Rupa Huq and Gagan Mohindra

Monday 3rd March 2025 Westminster Hall

[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.