Data reveals a notable increase in applications to state schools in anticipation of a proposed tax hike on private school fees. With the UK government planning to introduce a 20% VAT on private education, many parents are opting to transfer their children to state institutions, leading to potential overcrowding issues.
In Surrey, nearly 600 enquiries were recorded over a two-week period last month, according to information obtained by The Telegraph. Surrey County Council reported receiving 582 email queries from private school parents between 4 and 19 June, seeking details on vacancies in local state schools. The actual number is likely higher, considering this count excludes telephone queries and some emails may regard multiple children.
The government’s proposal aims to generate £1.5 billion to fund 650 new teachers by imposing a 20% VAT on private school fees. However, the state education system could face difficulties in accommodating up to 40,000 students who might transfer from private institutions due to increased costs, as projected by the Institute for Fiscal Studies (IFS). Former shadow attorney general Emily Thornberry acknowledged that this policy could lead to larger class sizes in state schools.
In response to the expected influx of private school pupils, Merton Council in south-west London has explored options to expand capacity at two state secondary schools and reconsidered a previous decision to reduce pupil numbers at another school. A briefing note from Merton Council indicated that up to 20% of private school students might be displaced due to the proposed tax changes. While the council expressed optimism about eventually accommodating the additional pupils, it noted that student numbers would likely remain stable for the next two years.
Shadow Education Secretary Damian Hinds criticised Labour’s plan, stating, “This just goes to show that hard-working parents are already paying the price for Labour’s politics of envy.” Despite assurances that the tax will not be implemented until the 2025-26 academic year, some parents have proactively withdrawn their children from private schools to secure spots in state schools and avoid long waiting lists. Since January, parents of 227 private school students in Surrey have applied for mid-year transfers to state schools. Surrey, known for having one of the highest proportions of private school students in the UK, could see a significant impact from the proposed VAT on school fees.
Analysis by Baines Cutler for the Independent Schools Council predicts that within five years of implementing the VAT policy, 25.4% of private school students could be forced to leave due to higher fees. In constituencies like Runnymede and Weybridge, nearly 1,800 pupils might be affected, but there is only space for an additional 887 places, potentially leading to schools operating at almost 6% over capacity. Ben Spencer, MP for Runnymede and Weybridge, voiced concerns about the potential impact on state schools and families, questioning whether class sizes would increase, if children might need to travel further distances, or if playgrounds would need to be repurposed to accommodate the influx.
IFS Deputy Director Helen Miller has recommended capping or removing various tax reliefs, including those for agricultural land, businesses, and pensions, arguing these measures should be considered independently of revenue goals. Neil Davy, chief executive of Family Business UK (FBUK), cautioned that eliminating business relief could hinder economic growth, compelling companies to reserve funds for future tax obligations or liquidate assets upon the owner’s death to cover tax bills. Ollie Saiman, co-founder of wealth manager Six Degrees, described the removal of inheritance tax relief on private company shareholdings as “the nuclear option,” with severe consequences for small businesses.
The proposed VAT on private school fees is poised to shift significant numbers of students into the state education system, creating potential challenges related to overcrowding and resource allocation. As this policy develops, it will be crucial to monitor its impact on both state and private educational institutions, as well as the broader economic implications.
