Will Labour's private school tax plan 'destroy the state sector'? Obviously not, experts insist

A few years ago, Labour pledged to abolish private schools.

Such plans – drawn up under Jeremy Corbyn’s leadership – are a distant memory. Yet the party is once again under fire for its position on fee-paying schools.

Keir Starmer has promised to end tax breaks for the independent school sector in the UK, scrapping VAT exemptions on school fees.

Compared to the abolition promises of the Corbyn era, the plan is a modest one. But it has sections of the Conservative-leaning media up in arms.

• The problem with UK’s film industry? It’s easier to win an Oscar if you went to private school

The Daily Mail’s front page on Tuesday (28 May) claimed the scheme will “force nearly half of fee-paying pupils into the state system“. The Telegraph has profiled a school it bizarrely deemed the first casualty of the policy, cautioning readers about the inevitable collapse of the independent sector.  

But such claims – that the beleaguered state system will bear the brunt of a private pupil exodus – are overstated, experts have said.

“Some of the commentary suggests really large volumes of students being pulled out. I really don’t think we’ll be seeing that,” said Louis Hodge, associate director for school system and performance at the Education Policy Institute.

“Independent school fees have been increasing steadily for a decade, with very little impact on how many kids go to the schools. We would expect some movement, but it will probably be minimal.”

The plan isn’t going to “destroy the state system”, Hodge added. Rather, it will generate a “relatively decent” pot of money that can be invested back into education.

“It would be good to target that funding towards the really disadvantaged students in the state school cohort, not just use it in a generalised way,” he said.

The Institute for Fiscal Studies estimate that Labour’s policy would prompt 3-5% of students in private education to leave, far fewer than the Daily Mail’s figure of 40%.

The state system would likely have capacity to absorb them. Indeed, local authority data shows there are already hundreds of thousands of spare places in England’s schools, with Schools Week estimating that there will be around 713,000 spare primary places in September next year. At a secondary level, there will be 313,000 spare places.

Big Issue is demanding an end to extreme poverty. Will you ask your MP to join us?

Josh, a deputy headteacher from South London, said he would welcome some movement from the private to the state sector, as better-off parents would be invested in the quality of state education.

“As more and more children from upper middle class or middle class families start going to state schools, hopefully there will be a greater vested interest in improving those schools from people in power,” he said.

“I find it pretty scandalous that the people with their hand and the tillers of power, the people in government – their children don’t go to state schools. Yet they are responsible for running our deeply underfunded state system.”

How will Labour reform private schools?

The UK has about 2,600 private schools, serving roughly 7% of the country’s pupils.

This minority come to dominate top jobs in government, the judiciary, civil service and media, taking up roughly 39% of high-ranking roles.

Critics have described the institutions of “engines of inequality.” According to a 2022 Institute for Fiscal studies report, something “has to be done” to address this disparity.

“There is an extreme gap – around three to one – between the two sectors in the average resources devoted per pupil to schooling,” it explained.

Currently, independent schools benefit from a series of tax breaks, including a VAT exemption. Starmer has promised to scrap these exemptions, a policy which would add around 20% to school fees.

It’s not a particularly radical policy – indeed, six years ago, Michael Gove wrote a Times column questioning the fairness of the exemption.

“Private school fees are VAT exempt. That tax advantage allows the wealthiest in this country, indeed the very wealthiest in the globe, to buy a prestige service that secures their children a permanent positional edge in society at an effective 20% discount. How can this be justified?” he asked.

But despite the relatively modest aspirations, it’s a step in the right direction, said Josh.

“Baby steps. I don’t think Labour could have run on a policy of ‘let’s abolish private schools’ – look how much they’ve been attacked for this policy alone,” he told the Big Issue.

“But it’s an important step. It signals intent to reform these institutions, which are essentially incubators of a ruling elite, and of an unjust status quo.”

The Institute for Fiscal Studies has said the policy will generate roughly £1.5bn a year, which Labour has promised to use to hire 6,500 more teachers.

This money should be targeted to the pupils who need it more, said Hodge.

“It’s important to remember, there are big differences in the 93% of children in the state system, they are not one homogenous group,” he said. “The persistently disadvantaged students in this bloc, that’s where we really, really need investment.”

Early years education is a good start, he added, as “disadvantage between students start younger and younger”.

Just 57% of English pupils eligible for free school meals reached a good level of development at the end of Reception in 2019, a Nuffield Foundation report revealed, compared with 74% of their better-off peers.

School can help lift people out of such entrenched inequality, acting as a leveler. Unfortunately, insufficient investment means that inequalities stubbornly persist throughout a person’s schooling.

According to the same study, fewer than half of disadvantaged children reach expected levels of attainment at the end of primary school, versus nearly 70% of their better-off peers. And of those who do achieve at the expected level, just 40% of disadvantaged pupils go on to earn good GCSEs in English and maths versus 60% of the better-off students.

“Disadvantage gaps between pupils start younger and younger. It’s something that urgently needs to be tackled,” Hodge said.  

However, inequality can also be tackled at the other end of education.

“More private school and affluent students end up at really good universities. We should be thinking about university admission policies, whether they reflect the backgrounds that students are coming from,” he added.

“Could universities be doing more to reach certain communities, and more financially disadvantaged families?”