Private schools warn bursaries under threat from Labour’s tax plan

Private school
Private school

Private schools have warned that bursaries for poorer pupils would be at risk under Labour’s plan to remove their charitable status.

Almost £500 million of means-tested bursaries and other forms of fee assistance were awarded by private schools to help more than 40,000 pupils whose parents are unable to pay the fees, according to the Independent Schools Council (ISC).

Barnaby Lenon, chairman of the ISC, which represents more than 1,300 private schools, warned that financial support for poorer families would be under threat if Labour ended tax breaks for private schools.

“Of course all schools faced with a new tax on parents would try to limit the impact by cutting costs,” he told The Telegraph. “How they do that will be up to them, but cutting bursaries for poorer pupils is one possible consequence.

“In the past 20 years independent schools have not only dramatically pushed up the amount of money spent on means-tested bursaries, they have increasingly focused it on the poorest pupils. All this progress is now threatened.”

Sir Keir Starmer has been accused of trying to appeal to the “hard Left” after recommitting to Jeremy Corbyn’s policy of scrapping the charitable status of private schools.

The policy would see private schools lose their VAT exemption, meaning parents could be asked to absorb a 20 per cent tax on fees.

Labour says plans would bring in £1.7bn a year

Labour claims its policy would bring in £1.7 billion a year which could be reinvested in state schools to employ more teachers, train staff and improve mental health support for children.

However, critics have said the policy would backfire and end up reducing funding for state school pupils because it would result in tens of thousands of pupils being priced out of the private sector, placing an additional burden on the state sector.

Rishi Sunak’s official spokesman defended private schools on Monday, saying they have “an important role to play in providing further opportunities for children across the country through targeted bursaries and by working with local state schools to share expertise, best practice and facilities”.

Lord Hague, the former Conservative Party leader, told Times Radio that Labour’s plan for private schools was “vindictive”.

“I went to a comprehensive school in South Yorkshire and didn’t go to a private school,” he said. “I’ve visited to give speeches to students. A lot of private schools seem to do a wonderful job not only in the level of education, but also in the access that they give people that they bring in from less well-off backgrounds, the bursaries and so on. I don’t know whether they can do more of that. But I think ending charitable status and putting VAT on them is just a vindictive policy.”

Value of private schools to the economy

Private schools contribute £16.5 billion to the economy and support as many jobs as Asda, Sainsbury’s and the Co-op supermarkets combined, research by Oxford Economics has found.

A report, commissioned by the ISC, found that private schools’ value to the economy has risen by a fifth since 2018. They also support more than 328,000 jobs.

The sector brings in £5.1 billion in tax revenue, the equivalent of around £181 per household and enough to fund the average salary of over 150,000 nurses, according to the ISC.

The saving to the taxpayer by providing places for pupils who would otherwise be placing a burden on the state sector is an estimated £4.4 billion, up by a quarter since 2018. This is enough to fund the annual state pension of more than 630,000 retired people, the ISC said.

Fee support may have to be cut

Heather Hanbury, the headmistress of Lady Eleanor Holles School, a girls’ day school in Hampton, southwest London where almost one in 10 pupils are on bursaries, said her school could be forced to cut fee support if Labour’s policy was imposed.

“We may find ourselves having to reduce that [the number of bursaries] in future years,” she said. “Part of the fees parents pay us support bursaries, but we fundraise for them as well and the biggest donations come from parents. If we are asking them to pay additional fees that would be lost.”

She warned that the school could lose a “significant number” of pupils if it was forced to increase fees under Labour’s plan. Support the school gives to local state schools and colleges such as Feltham College could also be cut back, she said.

Mrs Hanbury, who is president of the Girls’ School Association, rejected the argument from Bridget Phillipson, the shadow education secretary, that the charitable status offered to private schools in England is a “tax break for the very wealthiest parents in our society”.

“All of our parents pay full taxes like everyone else, paying for an education service that they do not use and instead adding more money from their taxed pot of income to send their child to a private school and saving the state sector an enormous amount of money.”

She said that parents who send their daughters to her school, where fees cost up to  £7,572 per term, are “working hard” to support their children and are making a choice to “spend their disposable income on something that they value very highly”.

“This is not a school full of rich parents,” she said. “We do have doctors and lawyers and City workers and so on but they are by no means the majority of our parents.”