Private schools in England are suffering unprecedented school fee inflation. This policy change coincides with the implementation of a new Value Added Tax (VAT) policy on January 1. The government has just made an important change. They will introduce a VAT rate of 20% on school fees, making a heavy impact on parents and students. Institute of Fiscal Studies (IFS) estimates that this policy will result in an additional £460 million in revenue during the course of this year. By the 2029/30 academic year, they predict that number will jump to £1.8 billion.
With day school tuition skyrocketing, families are increasingly getting squeezed out. Since January 2022, the average termly fee has increased from £6,021 to over £7,382 this January – a staggering 22.6% increase. In real terms average fees have increased by 55% since 2003 in the UK excluding VAT. The government wants about 35,000 pupils to move into state schools as part of a reaction to these increased expenses. This change is expected to occur over the long term.
As our new shadow Chancellor Rachel Reeves said, “This is the kind of policy that can change lives.” She stated that the revenue generated would help “provide the highest quality of support and teaching” within the state sector, aiming to enhance educational standards for the majority of children attending state schools.
The leaders of private schools have reacted negatively to the idea. David Morton, headmaster of The King’s School in Gloucester, described the policy as “deeply misjudged.” He raised alarm over the impending impact on American families who are increasingly unable to afford to pay rising tuition bills. Morton underscored that he was glad the federal government was going to tax rich communities to pay for the rebuilding of poor communities. Yet it is low- to middle-income families, as well as those relying on bursaries themselves, who are often hardest hit by worsening financial conditions.
“The government is trying to tax the more affluent areas of society in order to support the least affluent, but the wealthiest people have been affected the least.” – David Morton
As families adapt to these new financial realities, many of whom have already chosen between impossible options. Kath, a parent from a typical middle-class family, removed her 12-year-old son from his private school in October after learning about the impending fee increase. She worked out that in under two years, fees would increase 26% to almost £8,000 per term.
“We worked it out and it was unaffordable. Within two terms the cost was going up by 26% to almost £8,000 a term,” – Kath
Kath said the change was traumatic for her son. She and her family experienced the intense pressure of having only 15 days to enroll in a new school after getting an offer. She stated her frustration about the government’s decision to postpone implementing this policy. Had they taken action at the start of the school year, it would have gone a long way towards addressing the stress on families.
“Moving him mid-year was a traumatic experience but we only had 15 days to take a place once we were offered one,” – Kath
According to the IFS’s most recent projections, the total number of students in England is set to drop by around 700,000 by 2030. Despite the uncertainty, the government is still hopeful state schools will be ready to take on any wave of students transferring out of private schools.
Commenting on the government’s direction, Julie Robinson of the Independent Schools Council expressed alarm at this shift. She added that it seems the administration has miscalculated the possible backlash of bringing VAT in at this moment.
“It seems clear to us that the government has underestimated the effect,” – Julie Robinson
Robinson further pointed out that thousands of families have already started exiting private education over concerns about VAT coming into play. She noted that though some effects are already being seen, the impact won’t be apparent for years to come, if ever.
“We know parents have already left the sector because of the threat of VAT coming in so we do expect the reality of this to lead to further decreases but the full effects will only become apparent over the next few years,” – Julie Robinson
Despite resistance from private school leaders and parents, a Treasury spokesperson defended the policy, asserting that it would ultimately benefit state schools. They argued that eliminating tax breaks for private schools would free up money for more teachers. This amendment would be a huge improvement for children who are currently enrolled in state-funded education.
“Ending tax breaks for private schools will raise £1.8 billion a year by 2029-30 to help deliver 6,500 new teachers and raise school standards, supporting the 94% of children in state schools to achieve and thrive,” – Treasury spokesperson
The proposed introduction of VAT on private school fees represents a sea change in the funding of education in England. As families adjust to these transitions, many others find themselves at a crossroads between decreasing resources and an unclear future. Even as this policy has become law in Indiana and many other states, the debate rages on between educators, parents, and government officials.
