Labour MP Proposes VAT Exemption for Lower-Fee Private Schools

Rachael Maskell, Labour MP for York Central, has become the first member of her party to challenge its controversial policy of implementing a 20% Value Added Tax (VAT) on private school fees starting January 2025. Maskell proposes exempting schools charging less than £6,500 annually from this tax, arguing that these institutions often serve working-class families in deprived areas.

The Labour Party's plan aims to raise approximately £1.5 billion to enhance state school standards. This funding would support the recruitment of 6,500 new teachers, 8,500 mental health specialists, and 1,000 care advisors. However, Maskell is preparing a report, set for release in October 2024, examining whether the policy might exacerbate social divisions.

Maskell expressed concerns about the policy's implementation timeline, stating, "If it's announced in the Budget, it will come in the finance bill in November. Schools usually break up in early December, and then their VAT systems will need to be set up before the new tax year. Is there really enough time?"

The MP highlighted the York Steiner School in her constituency as an example of a low-fee institution that could be adversely affected. This school, following the Steiner Waldorf educational approach, charges fees based on household income, ranging from £3,090 to £10,042 annually, with an average of £5,500 per year.

"At the Steiner school here, many parents are living hand-to-mouth, making sacrifices daily. They're working class families who can't pay upfront – something parents in higher level private schools are doing [to try to avoid the policy]."

The impact of the proposed VAT policy has already led to the closure of some private schools. St Joseph's Preparatory School in Stoke-on-Trent announced its closure, citing the VAT raid as the reason. Former headteacher Roisin Maguire emphasized that the school served a deprived area and not a wealthy population.

Since May 2024, when Alton School in Hampshire announced its closure, nine private schools have shut down, displacing a total of 1,140 pupils according to the Department for Education's most recent figures.

The government maintains its stance on the policy. A spokesperson stated, "We want to ensure all children have the best chance in life to succeed. Ending tax breaks on private schools will help to raise the revenue needed to fund our education priorities for next year, such as recruiting 6,500 new teachers."

As the debate continues, the proposed VAT policy highlights the complex interplay between taxation, education, and social equality in the UK. The outcome of this discussion could have significant implications for the future of private education and its accessibility to families across different socioeconomic backgrounds.