Labour to hit private schools with £150m in rises, analysis suggests

Keir Starmer’s private school tax shock: Labour wants to hit them with £150m in business rate rises as well as VAT, analysis suggests

• Starmer wants to charge the schools VAT and scrap relief on business rates
• Labour said it wants the money to fund better state education
• Analysis suggests that charitable private schools across benefit by £144m a year due to the business rate relief 

Private schools face a £150million rise in business rates under Labour’s plans to strip them of their charitable status.

In a tax double whammy, Sir Keir Starmer wants to scrap the 80 per cent relief independent schools receive on business rates – as well as charging them VAT.

Labour says it wants to use the money to fund better state education but the party was accused last night of launching a ‘vengeful attack’ that would ultimately burden the state with more costs.

Analysis by the Private Education Policy Forum (PEPF), published earlier this year, suggests that charitable private schools across England and Wales benefit by £144million a year because of the business rates relief.

In a tax double whammy, Sir Keir Starmer wants to scrap the 80 per cent relief independent schools receive on business rates – as well as charging them VAT

Labour’s plans to change the rules would especially hit private schools in London, with the PEPF estimating that private schools in the Royal Borough of Kensington and Chelsea alone receive taxation relief worth £3.2million.

Last night Tory grandee Sir John Redwood lashed out at the Opposition proposals, saying: ‘I think it is a further vengeful attack upon schools that pursue excellence and offer a lot of support to state schools in their locality.

‘The politics of jealousy doesn’t normally win and this is self-defeating jealousy because it would burden the state with more costs.’

A Tory source said: ‘Labour always want to kick out the ladders they themselves climbed from other people.’

But Labour’s shadow education secretary Bridget Phillipson hit back, accusing the Government of trying to ‘defend the indefensible’. She added: ‘It cannot be right that private schools benefit from these tax breaks.

Tory grandee Sir John Redwood (pictured) lashed out at the Opposition proposals, saying: ‘I think it is a further vengeful attack upon schools that pursue excellence and offer a lot of support to state schools in their locality’

‘It is staggering that Rishi Sunak is defending the indefensible when so many of our state schools are struggling.

‘Labour wants every child to have a brilliant state education, which is why we will end tax breaks for private schools and use the money to recruit thousands more teachers, provide professional mental health support for every child, and ensure young people leave education ready for work and ready for life.’

The latest row comes after the Daily Mail highlighted Labour’s plans to retain Jeremy Corbyn’s policy of scrapping private schools’ charitable status, which exempts them from VAT on fees.

Labour says the policy saves independent schools £1.5billion a year.

Schools which claim charitable status are expected to help children from a wider variety of backgrounds – through bursaries or sharing their facilities with state schools.

But Labour says the revenue raised from scrapping their tax breaks could be used for 6,500 new teachers and to give every child access to a mental health counsellor at school and professional careers advice.

However, heads say it would impact the one third of pupils at their schools who receive fee assistance through bursaries – amounting to a total of £480million across the sector.

Under current rules, state schools are liable to pay business rates but local authorities receive funding to meet the full cost for schools, the Government said. As well as charitable private schools, academies, voluntary-aided schools and foundation schools – and most special schools – also receive rates relief.

On Wednesday Rishi Sunak accused Sir Keir of attacking the ‘hard-working aspiration’ of millions of people with his plans. The Prime Minister told Sir Keir: ‘This is a country that believes in opportunity.’

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