The Labour government also recently announced an intention to introduce VAT on private school tuition and boarding fees. This decision in late January has raised eyebrows and raised red flags about job cuts in this high-growth sector. The government’s move, aimed at funding additional state school teachers in England, comes at a time when private school fees have already surged, averaging 22.6% higher in January compared to the same month last year.
The consultation process on the VAT imposition started in May. On January 1, that changed as the government finally lifted the exemption from oversight that private schools had long enjoyed. This recent shift has already caused many private institutions to adjust their financial plans, causing treasury panic and bankruptcy-at-the-gate concerns. One of Scotland’s leading private schools has confirmed plans to make staff redundant. This decision is consistent with their broader campaign to cut costs.
The High Court in London recently addressed this issue, stating that the government’s policy could “interfere with the fundamental right to education.” This ruling serves to demonstrate the detrimental effect the VAT imposition would have on education. Given that 94% of pupils are educated in state-maintained schools, this announcement will have a huge impact as it does the clear majority of students.
Despite the widespread concern, the government maintains that eliminating the VAT exemption for private schools will ultimately benefit the broader education sector. Unfortunately, private schools are already facing increasing costs to operate. A spokesman for one affected institution noted, “Various factors have conspired to increase costs on all organizations, and schools are not immune, particularly with the recent imposition of VAT on school fees and rise in national insurance contributions.”
Recent data paint a mostly grim picture for student enrollment. One area private school saw their enrollment plummet after last year’s 780 students scattered to a mere 751 this August. This decline only adds to the already severe financial stress these institutions experience.
In the context of these changes, schools have to choose between teachers and support staff, putting schools in a challenging position to meet their needs. “This difficult decision may result in some redundancies,” a spokesman from a private school stated, highlighting the uncertainty that lies ahead for both staff and students.
