The Institute for Fiscal Studies (IFS) has sounded a warning over Labour's plan to slap 20% Value Added Tax on private school fees. The move is designed to raise funds for state education, but the think tank fears it might not bring in as much cash as hoped – and could even put extra pressure on already-strained state schools.
According to the IFS analysis, many pupils attending private schools might switch to the state sector if fees rise due to VAT. This would reduce the revenue generated by the tax, while increasing demand for places and resources in state schools. The report estimates that Labour's policy could raise as little as £1.3 billion over five years – lower than the party's projection of £1.7 billion.
The IFS notes that state schools catering to pupils with special educational needs and disabilities (SEND) would be particularly affected, as they often require more resources and support. An influx from the private sector could put a strain on already-stretched budgets in these schools.
Bridget Phillipson, Labour's Shadow Education Secretary, remains committed to the policy, arguing that it is essential for investing in state education. She claims that ring-fenced funds would deliver 6,500 new teachers, reducing class sizes and improving outcomes for all pupils.
The IFS, however, highlights the complexity of the proposal, suggesting that a simple revenue projection may not account for how parents and schools respond to the changes. It advises policymakers to carefully manage the transition to avoid unintended negative consequences for both private and state education sectors.