School VAT tax raid to go ahead in major win for Bridget Phillipson

The Treasury has confirmed it will go ahead with a controversial VAT tax raid on private schools in what is being seen as a victory for education secretary Bridget Phillipson.

The senior minister came out fighting last night as the Treasury initially refused to commit to the Labour manifesto pledge in Rachel Reeves’ budget on 30 October.

The Guardian reported government plans to impose VAT on private schools from 1 January next year may have to be delayed, following warnings that meeting the deadline could cause administrative chaos and job losses, as well as putting pressure on the state sector.

In response, the Treasury initially failed to confirm that the plan to impose VAT on private schools would go ahead from the start of 2025, instead saying it would be introduced “as soon as possible”.

But later that day, the Treasury changed its line and said it was planning to stick by the 1 January deadline, in what appears to be a win for the Department for Education.

Treasury sources have since told The Independent that The Guardian article was based on a misunderstanding.

On Saturday evening, Ms Phillipson came out swinging on social media, sharing a news story about the impact of the VAT policy, which suggested schools are going without embossed stationery and new pools to cope with the tax hike.

She wrote: “Our state schools need teachers more than private schools need embossed stationery. Our children need mental health support more than private schools need new pools.

“Our students need careers advice more than private schools need AstroTurf pitches.”

The changing tune from the Treasury comes amid wider chaos in Sir Keir Starmer’s administration, with the prime minister being forced to accept the resignation of his chief of staff Sue Gray on Sunday and reset his top team.

After less than three months in office since the election, the loss of Ms Gray who he personally recruited to ensure he could drive through his policies through Whitehall once in power, is a major blow for the prime minister and follows weeks of infighting.

The controversial plan to impose VAT on private schools will fund 6,500 new teachers for state schools, Labour has said.

But the NASUWT teaching union said while it shares the government’s ambition to “break down the barriers to opportunity”, it called for a more “reasonable timeframe” in order to avoid “excessive disruption for teachers, pupils and parents.”

The Association of School and College Leaders, which called for a comprehensive impact assessment to be conducted, said the implementation of the policy should be delayed until September 2025 at the earliest.

Last month, The Independent reported parents are already deciding against sending their children to private schools as a result of the controversial VAT policy.

Headteachers of smaller, specialist private schools say they have little room in already-squeezed budgets to make cuts, leaving few alternatives but to hike fees by 20 per cent – and parents are turning down places as a result.

Research, shared with this publication by education consultants Anglo Schools International Services, revealed smaller independent schools already struggling financially had seen 27 per cent of parents offered places for the upcoming academic years for their children chose not to accept them by the end of July – compared with a usual figure of 10 to 15 per cent – with most blaming “VAT shock”.

A government spokesperson said: “Ending tax breaks on private schools will come into force on 1 January as planned. There has been no change in deadlines for schools or parents.”