Recent analysis conducted by The Telegraph reveals that a growing number of middle-class families are struggling to afford the steep fees of Britain’s elite private schools. This issue is only expected to worsen if Labour’s proposed tax policy comes into effect.
Luke Sibieta, a research fellow at the Institute for Fiscal Studies (IFS), has expressed concern over the potential consequences of Labour’s tax policy. He believes that the unaffordability of private schools due to increased fees will lead to parents withdrawing their children from these institutions at an early age, as they will no longer see it as a worthwhile investment.
The recently published IFS report argues that a 15% effective VAT rate could result in a decline of private school attendance by approximately 20,000 to 40,000 pupils, which translates to a 3% to 7% drop overall. According to the report, these figures are reasonable estimates based on the potential financial burden imposed on families.
The report also acknowledges the possibility of tax avoidance by schools seeking alternative measures to mitigate the impact of the tax changes. Schools may opt to rely more on gifts and donations or increase the prices of non-VATable goods and services in order to offset the additional costs. The report suggests that Labour’s policy creates opportunities for further avoidance.
In response to the report, Julie Robinson, chief executive of the Independent Schools Council, anticipates an even higher number of students leaving private schools if Labour takes power. She disputes the IFS’s projections, claiming that they are uncertain and based on limited evidence. According to Robinson, the actual exodus from independent schools will be much greater.
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