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Opposition leader Sir Keir Starmer on Wednesday called on Rishi Sunak to end the “scandal” of granting independent schools charitable status that makes them eligible for tax relief.
The Labour party has pledged to remove the VAT exemption on private school fees, which it estimates could raise £1.7bn, if it wins at the next general election. Speaking at prime minister’s questions, Starmer asked the prime minister why his former school, Winchester College, received “taxpayers’ money” and accused him of being pressured by “lobbyists”.
The clash has fuelled the debate over whether the tax breaks offered to private institutions are in need of reform. In the past decade, fee increases at private, or independent, schools at above the rate of inflation have led to a widening gulf between the spending power in independent and state education.
According to the Institute for Fiscal Studies, a think-tank, the difference between spending in state schools and the average amount raised in independent school fees has more than doubled, from £3,100 to £6,500 annually in the decade to 2021, per pupil.
Starmer said: “Winchester College has a rowing club, a rifle club, an extensive art collection, they charge over £45,000 a year in fees. Why did he hand them nearly £6mn of taxpayers’ money this year in what his levelling up secretary [Michael Gove] calls egregious state support?
“It is simple, he can carry on being pushed around by the lobbyists, giving away £1.7bn to private schools every year or we can put that money to good use. End the Tory scandal.”
Sunak replied that the government was “improving school standards for every pupil in this country” and described Starmer’s criticisms of his private education as an attack on “hardworking aspiration of millions of people in this country”.
Downing Street affirmed its support for both private and state schools. “Private schools . . . play an important role in providing opportunities for children around the country and we’re providing even more funding for state schools,” it said.
Labour party strategists believe Sunak’s wealth is unpopular with some voters, along with the perception that he is “out of touch”, underlined by his defence of private education. According to pollsters YouGov, 47 per cent of Britons support imposing VAT on school fees.
Luke Sibieta, a researcher at the IFS, said that private school fees had on average increased by about 23 per cent in real terms between 2010 and 2020, while enrolment numbers had remained around the same, suggesting the sector could absorb an increase in fees.
“That’s no guarantee . . . but based on what we know about private schooling there’s probably good reason to expect that the effect on demand would be quite small,” he said of Labour’s proposals.
He said the projected £1.7bn raised by VAT relief would equate to about 3-4 per cent of the annual schools budget — not transformative but “money that state schools would be pleased to have”.
Julie Robinson, chief executive of the Independent Schools Council, which represents the sector, said it did not agree that “punitive taxes measures against state schools” would offer the substantial funding boost promised by Labour.
The “assumption that parents would swallow an extra 20 per cent” in costs did not seem realistic, she said.
Most schools had a “few hundred pupils” and did not have “lavish” facilities”, she added. “We’re not in the economic position that they have fat to cut . . . They have to be sensitive to parental earnings, otherwise they would have closed.”
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