As unpalatable as it was to the independent sector, the introduction of VAT on school fees was a popular policy with the general public, who considered it fair game.
This was despite a (slightly maddening) acceptance from focus groups pre-election that state schools would probably not see any more money from the policy.
And, as was warned, private schools have indeed closed, leading to many individual stories of heartache and disruption as children, teachers and parents face the reality of their school shutting abruptly.
VAT on private schools
The outcry from this has, outside of the sector itself, been muted. Why is this?
It’s not helped that statistics paint a confusing picture. Technically, more private schools have opened than closed. But these are usually smaller schools that cater for pupils with special educational needs, which are not subject to VAT, or whose charges are covered by local authorities.
More broadly though, the situation speaks to the (sad) reality that when it comes to education, the majority of the public are indifferent.
For example, in June 2024, Public First polling found that schools ranked only seventh in a list of spending priorities (at 15 per cent of respondents) compared with the top priority, the NHS, on 68 per cent.
As a political issue, education ranks far behind the economy, the cost of living and, increasingly, I suspect, defence.
Clearly, then, appeals to emotion are unlikely to undo this policy.
Reality of school closures
Yet for those of us in the sector, the reality of schools closing that have sometimes supported their communities for centuries, not only through education, but also employment, local business and trade as well as safeguarding heritage buildings and community assets, is a very real one.
This speaks to what seems to be a fundamental shift in the nature of our sector, as we lose long-established schools with distinguished histories.
This is important because it implies that even if there was public recognition that the Labour policy has been a failure, it might not do much to change minds.
We must wait and see whether the new prime minister, chancellor or education secretary have any appetite to do anything about VAT on fees, but I would urge the new Cabinet to reflect on Einstein’s dictum that the surest sign of madness is doing the same thing and expecting a different outcome.
And even if another party were to overturn Labour’s policy for either ideological or pragmatic reasons, would the damage already done be reversible?
Or would independent education remain a political football for future elections and governments to toy with? Would living with uncertainty really stabilise a shaken market?
Moving forward
There are only two ways I can see to avoid these scenarios.
We either need a broad cross-party consensus that taxing education is wrong (or that its costs outweigh any potential benefits).
Alternatively, we must return to the European Union, in which Article 132 of the EU VAT Directive exempts education from the tax. Neither route seems likely for now.
So, what should the independent sector do? There are at least three possible approaches.
The first is to do nothing. It may well be that our fate is not in our own hands. It might be hubris to believe that we can control the political agenda or significantly influence public opinion with the limited resources available to our sector representatives.
More realistic, perhaps, is a much longer-term effort to build on the already strong reputation of many schools locally in the hope that this will influence policymakers and the public.
A second approach would be to fight against VAT and demand the tax’s withdrawal as either a failed experiment or in principle.
The Conservatives, Reform and Liberal Democrats are likely to support such a strategy whether or not they would follow through with abolition if they came into government.
It would certainly appeal to those still struggling with the effects of VAT and has the advantage of being right. It might also help protect other sectors vulnerable to a tax on education, such as nurseries and universities.
Resolving the issue of VAT
The third option is perhaps the most unpalatable: to accept that it is legitimate to tax school fees.
There is a sales tax (or VAT) on independent school fees in New Zealand, although the government also provides central funds to support those schools. Would this be a model for a future deal?
Parents pay VAT on fees, but the state recognises that it has a responsibility for all pupils, including those in independent schools, and draws up a financial settlement to compensate.
The money could even be ring-fenced to target national educational priorities, supporting effective partnerships that tackle disadvantage.
Whatever the future holds, the independent sector must continue to work to ensure it is seen as contributing to our educational commonwealth, not disrupting or undermining it.
There are many ways to advance such a narrative and build such a reality. They all require us to resolve the issue of VAT.
Simon Hyde is CEO of The Heads’ Conference
Ìý
