Majority of private schools will raise fees if Labour bring in VAT raid
Investor who founded Dukes Education has built up the biggest group of private schools in the UK
PRIVATE school leaders at nearly every institution are planning to increase fees under Labour’s VAT raid, The Telegraph can reveal.
A poll of 350 independent school leaders, the first of its kind since Labour announced its plans to impose the tax on fees, found that 95 per cent expect to increase prices as a result of the policy.
Parents and school leaders fear swathes of families will be priced out of private education if Labour follows through with its plans to introduce the 20 per cent tax. Average annual fees for a UK day school of £16,656 per year would rise to nearly £20,000 if VAT was added in full. Labour claims the policy, which would require new legislation, will raise about £1.6 billion to invest in the state sector. Of schools surveyed who said they will increase fees, 76 per cent said their prices would have to rise by more than 10 per cent. The poll, conducted by Censuswide, also found that almost three quarters of private schools fear they would be forced to close in the next five years if a Labour government introduced VAT.
Faith schools, family-run schools and special schools around the country are among those who told The Telegraph they face closure.
School leaders warned they would not be able to absorb the VAT, and they believe that many parents will be priced out if it was added to fees. David Woodgate, chief executive of the Independent Schools’ Bursars Association, said: “There is a lot of concern because of the degree of uncertainty: schools can’t budget based on headlines, and we are yet to see a detailed plan from Labour.”
The poll also revealed that almost four in five schools said it is likely they will have to reduce scholarships and bursaries if a Labour government imposed VAT on private education.
Aatif Hassan, the founder of Dukes Education, the largest private education group in the UK, branded Labour’s plans “lazy politics” and said it would drive “more inequality”.
A Labour Party 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.”
THINKING of sending your child to a top private school? There’s an increasingly high chance that it will be run by Aatif Hassan.
The 44-year-old investor who founded Dukes Education nine years ago has quietly built up the biggest group of private schools in the UK.
We meet at Broomfield House School in Kew, west London, one of the 18 London prep schools in exclusive postcodes which form a cornerstone of his 49-school portfolio. Perks enjoyed by pupils include lunch cooked by a fine dining chef, lessons in how to prompt generative artificial intelligence and the chance to play on a bespoke climbing wall at lunch.
Dukes owns six schools in England, including Cardiff Sixth Form College, which achieved the highest A level results of any UK private school last year. The portfolio also extends to international institutions in Switzerland, Portugal and Spain.
You would be forgiven for thinking that Mr Hassan, who dresses in sharp suits with pocket squares, was born into the world of elite education.
Flick through his diary and his engagements would likely range from hobnobbing with Her Majesty Queen Camilla, given his trusteeship of The Queen’s Reading Room book club.
But, when probed, he reveals his own early years of education began at a failing state school where he was written off by teachers, while his decision to invest in schools has been motivated by personal tragedy.
Mr Hassan was born in London but spent some of his earliest years in Lahore, Pakistan, the home country of his parents. When he was six, his mother died and, back in London, he went to a state school which he doesn’t remember much about, describing those years as a “blank period” in his life because of his mother’s death.
He then started at a state secondary comprehensive in Uxbridge, now shut down, which he says was voted in a newspaper’s top 10 worst state schools in London. As a child with ADHD, he says he struggled to understand the teachers and was labelled as having “naughty boy syndrome” before he was asked to leave for poor behaviour.
“I can still experience how frustrated I felt as a 12 year old, sitting at the back of classrooms, and thinking I just don’t understand anything,” he says. Looking back, he feels “very lucky” to have been asked to leave. His father, an accountant, who he says had almost gone bankrupt after his mother died, then decided to “bet the farm” entirely on sending him to private school.
He attended St James School, in Ashford, Surrey, where he was able to discover he had talents outside of the exam hall. “I worked out I could run. I worked out I could throw an oval ball.” He became an Army Cadet and until his mid-30s volunteered working with cadets in private schools and from underprivileged backgrounds.
It was while working with those young people that he realised he had started to enjoy the things he was doing outside of work more than what he was doing at work. By this time, he had started his career working at Pricewaterhousecoopers, followed by a management role at Close Brothers, the investment bank, and later a private equity firm where he was focused on health and social care investments.
While he enjoyed his work, he says he realised he was getting more emotionally out of his time with cadets. “I was really inspired, my eyes lit up,” he says.
Two tragedies occurred before he changed his career. His eldest son passed away, which he chooses not to discuss in any further detail.
“If you’ve been brought up with a stoic kind of mentality of, ‘resilience is meant to mean you don’t talk about things, you get up and you go again’, I’m one of those classic situations where I didn’t diagnose and really dive into what happened really.” Then he was involved in a triple fatality car accident, where four cars collided together in West London. He was the only person who survived.
“As I was taken to the hospital, I decided that, if I get another chance to survive this, I’m going to do something useful with my life.” He considered work in healthcare or at a charity but decided to pursue what he really loved, which was working with children in education. In 2013 he started Cavendish Education, which he still runs and which has grown into a group of 11 schools for children who are known to have “unique learning profiles” which can mean they have dyslexia or high-functioning autism.
He purchased the site of a failing school in Cambridge with a £5 million loan from Barclays Bank and pledged his London home as security. He started by doing every job in the school. He encouraged the children to do sport, at a time when those children’s sporting abilities had been disregarded. One of the pupils now works in a Michelin star restaurant, he says.
He remortgaged his house again to buy the next site, where he established Bredon School in Tewkesbury, Gloucestershire, a special school with a farm where the children could “get their hands dirty” and “learn the importance of care and service”.
He also taught shooting, despite “everyone” thinking he was “barking mad” to be giving guns to children who were dyslexic or dyspraxic. “In our arrogance and bombastic approach, we said not only are we going to do it, we’re going to be national champions,” he says. “So, we built a shooting gallery to host the national championships and two years later, lo’ and behold, my children, who are considered to be the write-off of education, won the national championships.”
Dukes Education was started in 2015 and the first sites purchased were Hampstead Fine Arts College in North London and Rochester Independent College in Kent. He also started an education consultancy advising teenagers from around the world on how to get into Oxbridge, the Ivy League and competitive degrees in medicine and law. While Mr Hassan believes that Dukes will be able to ride out any disruption that faces the sector from a possible Labour government that would likely impose 20 per cent VAT on fees. However, he is strongly opposed to the policy.
“I’m frustrated, disappointed with the whole narrative around VAT and school fees,” he says. “I think it’s lazy politics. You know, the Institute for Fiscal Studies says it will bring in £1.6 billion [to invest every year in state schools]. I think that is pie in the sky.”
He believes that parents in less affluent locations will be the ones who decide not to send their children to private school in the future.
“They won’t impact wealthy locations, where we are today [at Broomfield]. You know, the demand is incredibly strong. And with the school we’re sitting in, the school is full and has a waitlist. But it [Labour’s policy] just drives more inequality.”
Labour’s proposals have created “a phenomenal level of demand” from schools who want to join the Dukes group because they are worried they would struggle to survive, he says.
However, any additions to the group will be selected in “a measured way” as the organisation needs to be “careful to make sure we can look after the ones we have”.
Mr Hassan worries about the impact on children with special educational needs who do not have an Education Health and Care Plan, so they will not be exempt from the VAT levy.
“The biggest impact actually is state schools themselves,” he says. “We’re not sitting there thinking we’ve got loads of capacity in state schools and we seem to have forgotten, it costs tens of millions of pounds to build these things.”
Mr Hassan believes that a better policy would be to encourage private schools to do more to support state schools and pupils from poorer backgrounds. “Do I think independent schools should use their abilities, resources, in a greater way? Yes I do.”
Will Dukes raise its fees under a Labour government? He says it is very difficult to know without more detail about how the policy would work.
“I think it’s very difficult to come up with a game plan,” he says. “Our schools are in strong demand, we work with our parents, recognise that it’s a hugely important purchase, an expensive purchase, and something that you know, it’s a service we provide, and we should treat that privilege with respect, and work closely with them.”
Sitting in the plush staff quarters on the top floor of Broomfield House, which was acquired by Dukes in 2019, Mr Hassan admits that existing parents had concerns when Dukes took over the school from the York family, which had run the school since 1969.
“We’re dealing with parents’ most important commodity in their children,” he says. “They get most upset when a teacher changes, let alone when the organisation could change. And you can reassure them with words, but there’s nothing better than actions.”
Some parents say they have concerns about the motivation of investors who have funded Dukes’ rapid expansion.
Its largest shareholder is the Universities Superannuation Scheme (USS), the pension scheme for present and former university employees.
Other investors include Macquarie, the Australian bank, Nomura, the Japanese bank and KKR, the US private equity firm. Mr Hassan says that KKR’S investment is “permanent capital”, so the firm is not invested with a view to making a quick return in three to five years. Mr Hassan is a “significant minority shareholder”.
He says he has told his staff that he is “here forever” with no intentions of selling his interest in the business. “I’ve been very fortunate that basically that long-term approach has been attractive to permanent capital partners, who allow me to control the organisation and do what I do and an organisation like USS, education money back into education, and they’re trying to create growth returns for their pension. It’s a wonderful fortuitous circle that goes around.”
Former parents at one Dukes school say they were concerned about some long-serving staff departures after it took over. Surely part of the financial motivation of creating a group of schools is to consolidate staff and administrative functions?
“We really believe in the people,” Mr Hassan says. “And we’ve spent a lot of time and effort in running the people, rather than trying to centralise paperclips and marketing, and things like that. I spend very little time, if any time, on trying to look at what I can centralise, because I actually don’t think that there is economic rationality, but actually it doesn’t make much business sense.”
Dukes reported a £230 million turnover last year and an operating profit of £34 million.
There are no plans to slow down the company’s expansion.
Mr Hassan sees an opportunity to expand with more “niche” schools. “I often think, if I was a child today, what would I want? I would want a sports school. Or if I’m a musician, I would want a music school. So I’m really interested in expanding more niches.”
If he had the power to change more about education policy, he would scrap exams at the age of seven and eleven. “The exam systems of 7+, 11+ are just daft, just totally bonkers.” He believes that education should instil a “sense of fun and creativity and curiosity”, as well as a “real sense of service”.
Mr Hassan typically spends two day a week travelling in Europe, and makes time to teach in Dukes’ schools on Friday mornings. “We forget how important brand Britain is for education. It’s one of our greatest exports.”
A jet-setting professional lifestyle doesn’t stop him from having breakfast with his father every Sunday morning, however, who keeps him grounded.
He says his father is less interested in the success of the business than other areas of his life. “He asks me how much money have I given to charity. He’s still the most inspirational person I have ever met,” Mr Hassan says.
“He is my moral compass.”