As part of their promises Labour have included a VAT on Private schools and the end of their business rate relief. This would be a 20% VAT charge for all private schools which they currently do not pay.

Labour expect this policy to raise £1.7bn in funds with which they plan to spend on state schools.

They especially plan to improve mental health support in state schools with talking counselling being available.

 

Would this benefit State schools?

Labour have pledged many times that they would focus on state schools and make necessary changes. These include better facilities as well as mental health support for students. Teacher pay is also a huge factor they must consider as teacher strikes are rampant due to low pay and being overworked with no overtime pay.

The Institute for fiscal studies report shows that this plan would raise around £1.3 – 1.4 billion. Whilst this is a huge amount, it only covers 2% of the current state school spending.

 

How would this affect private schools?

There are around 2500 private schools in England and Wales and half of these are registered as charities. This means that those schools can’t operate for a profit and are eligible to tax exemptions. Any money given to the school through donations or student charges are then used for the school operations. These are named as independent schools and they fund themselves with no or little help from the government.

Private schools not being charged VAT also means they cannot charge their suppliers whether that is school supplies, food caterers, exam bodies and more.

The current average price to send your child to private school is £6,944 a term for day pupils and £12,344 a term for boarders. Private school headteachers are concerned that this new policy would cause their fees to increase up to £3000 which parents will have to consider paying or removing their children from the school.

 

Update

Labour won the election on July 4th which means Rachel Reeves is our new chancellor replacing Jeremy Hunt.

It has been announced that the 20% VAT on private schools will begin on January 1st 2025. This will increase funds for the public sector.