Question to the HM Treasury:

To ask His Majesty's Government what assumptions they have used in estimating the amount of revenue that will be raised as a result of VAT being levied on private education fees; and whether these assumptions take into account costs incurred as a result of pupils transferring to state schools because of the resulting increase in fees.

The estimated revenue from the introduction of VAT on private school fees, as set out at Autumn Budget 2024, is as follows:

The assumptions and methodology used for this costing are set out in the Annex to the Summary of Responses to the Technical Note on Applying VAT to Private School Fees, published alongside the Budget.

As stated in the policy paper published at Budget, alongside the revenue raised, this policy will result in some additional costs on state schools due to pupil moves. Based on average 2024 to 2025 per-pupil spending in England, the government expects the revenue costs of pupils entering the state sector as a result of the VAT policy across the UK to steadily increase to a peak of around £270 million per annum after several years.

Overall, this means that expected revenue will substantially outweigh additional cost pressures. The funding raised by this measure will help deliver the government’s commitments relating to education and young people.

The Office for Budget Responsibility has certified the government’s costing of this policy.