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The News God > Blog > Education > How VAT on fees is affecting private schools in the UK
Education

How VAT on fees is affecting private schools in the UK

Alfred Abaah
Last updated: October 5, 2024 11:14 am
Alfred Abaah - News Editor
October 5, 2024
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How VAT on fees is affecting private schools in UK
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Independent School Council study revealed a 1.7% decline in UK students compared to 2023.

According to private schools, the impending addition of VAT to school fees is a major factor contributing to the decline in enrolment numbers this year, ahead of the falling national birthrate and the cost of living.

The Independent Schools Council (ISC) said a poll of 1,185 members in the United Kingdom disclosed that their rolls declined by 1.7% at the beginning of the academic year last month compared to 2023.

The ISC’s chief executive, Julie Robinson, stated: “This data couldn’t be clearer: parents are already removing their children from independent schools as a result of the government’s plans to charge parents VAT. This is just the tip of the iceberg and the knock-on effect on schools is significant, with many small schools already at risk of closure.”

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According to the ISC, if the decline were replicated across the 2,500 private schools in the United Kingdom, it implies that over 10,000 pupils would be added to state schools, leading to about £80m for the Department of Education (DfE) in England alone.

However, according to statistics, enrolment numbers in state schools have also been declining, mainly due to the falling birthrate in the United Kingdom in the past decade.

The Department of Education records show a 2.3% decline in the number of applications for primary school places this September and a 1.7% decline in the secondary level. The report also indicated a sharp decrease in some regions, with the London Council predicting a 4.3% decline in secondary school enrolment and, in some areas, a 10% decline in primary schools.

The ISC stated its equivalent year groups reported a 3.9% decline in reception classes and a 4.6% decline in year seven enrolments nationally.

The Institute for Fiscal Studies (IFS) predicts that the addition of VAT, which is expected to be released in January, will result in 3 to 7% of students moving from private schools to state schools in the long run.

An IFS research associate, Luke Sibieta, stated that the decline in the birthrate could lead to a decline in private school rolls even without the addition of the VAT on fees. Private school fees have risen sharply compared to inflation, including a 9% increase in 2023-24.

The Department of Education recently predicted that state pupil numbers in England would decline by 172,000, representing over 2%, by 2028. This implies that public schools have the capacity to absorb the outflow from private schools. According to the government, the £1.5bn from imposing VAT on private schools will be used to fund about 6,500 teachers in state schools.

The ISC stated it was considering legal action against the VAT policy; however, it awaits the government’s budget, which is set to be released next month.

Robinson stated, “We want to work with the government to mitigate some of the biggest challenges of this policy, including considering delaying the implementation of VAT and seriously reviewing its impact on youngsters with special educational needs and disabilities.”

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