Private school tax raid could force 25pc into state sector

LABOUR’S private school tax raid could cost the taxpayer £1.6 billion a year as it forces a quarter of pupils into the state sector, a new report has found.

Sir Keir Starmer’s party has made introducing VAT on independent school fees a flagship policy, claiming it would generate £1.7billion to spend on state education.

But an analysis by the Adam Smith Institute (ASI) think tank, warned that the policy was based on flawed assumptions and could cost the public purse billions across a single parliament.

Sir Keir has already unveiled seven policies that would be funded by the £1.3billion that the Institute for Fiscal Studies (IFS) has estimated Labour’s tax raid would raise annually.

In its report, titled Short Term Thinking, the ASI said the £1.3billion figure, as well as projections that only three to seven per cent of children would move to the state sector, failed to take into account higher inflation, fiscal drag and rising mortgages and house prices.

Modelling by the ASI showed that Labour’s policy would raise nothing if between 10 and 15 per cent of private school pupils migrated to the state sector. If this rose to 25 per cent – as previously predicted by the Baines Cutler consultancy – the policy would have a net negative cost of £1.6 billion a year.

The report by Maxwell Marlow, the ASI’S director of research, noted that independent schools spend more than 70 per cent of fee income on staff costs and an exodus of five per cent of children would be likely to lead to 5,150 redundant teachers, compared with 2,300 vacancies in state schools.

It went on to cite adverse effects in Greece when a similar policy was introduced in 2015, leading to the closure of smaller independent schools and acute shortages of teachers and school places in the state sector.

Bim Afolami, the Treasury minister, said: “Once again, Labour’s sums don’t add up because Sir Keir Starmer does not have a plan. This is another unfunded spending promise.”

Greg Hands, a trade minister, said: “Labour’s ill-conceived, back-of-a-fagpacket tax on independent school parents risks damaging not only independent schools but the whole education sector.”

“A Labour spokesman said: “Labour will invest in delivering a brilliant state education for all our children, funded by ending tax breaks for private schools. Independent schools do not have to pass this change on to parents, and a high-profile independent school has already said they will not be doing so.”