Private school tax raid to ‘flood’ state classrooms, government figures suggest

Labour’s private school tax raid could “flood” state schools, the Government’s own figures suggest. 

The party’s costings for its VAT plans assume that any exodus of pupils from private schools to the state sector would be offset by a dramatic demographic change. 

Labour has relied on research conducted by the Institute for Fiscal Studies (IFS) last year, which found that overall pupil numbers in England will fall by 700,000 by the end of the decade. 

The IFS concluded that “the state sector could easily accommodate extra pupils” as a result of the fall in pupil headcount, which was predicted to fall on average by 100,000 a year from 2025. 

But the latest official figures, released by the Department for Education (DfE), reveal the total number of pupils will rise by almost 25,000 by the start of next year when compared with 2023. In total, there will be 260,000 more pupils in English schools by 2028 than previously predicted, after the DfE revised up its projections last week. 

While the DfE’s forecasts only go up to 2028, it means there would have to be a sudden drop of around 525,000 pupils in the two years to 2030 to meet Labour’s projections. 

It has raised fresh fears the Government’s controversial VAT policy could overwhelm classrooms and place additional pressure on stretched state schools. 

Damian Hinds, the shadow education secretary, warned the revised numbers would mean fewer places for pupils squeezed out of private schools by the tax levy. “This just goes to show Labour’s education tax will flood pupils into the state sector, when the capacity to accommodate them is just simply not there,” he said. 

“Time and time again Labour have covered their ears and ignored the warnings that this policy simply does not add up. Even with data from the education department itself confirming this, Labour are still pressing ahead fuelled solely by misguided ideology.” 

Mr Hinds suggested the Government could be forced to hike taxes to ease the burden on state schools, despite the party repeatedly ruling out increases. 

“It means the only way they’ll be able to make up the shortfall is by raising taxes, leaving pupils, teachers, schools and ultimately taxpayers paying the price. The Conservatives will hold them to account,” he said. 

The Government is facing renewed pressure to spell out how it will implement its plans to start charging 20 per cent VAT on private schools after it emerged the controversial policy could come as soon as January 2025.

Bridget Phillipson, the Education Secretary, did not rule out the possibility when asked about the reports on Monday, saying: “We’ve been clear about our position for some time. We want to move as quickly as we can.”

Last week, The Telegraph revealed state schools in some parts of the country are already being overwhelmed with queries from private school parents who cannot afford fee hikes prompted by the plans. 

Schools in Surrey received almost 600 queries from private school parents in the space of two weeks last month.

In London, one council has discussed introducing “bulge” classes in some state schools – a measure to add an extra class to a year group often taught in a prefabricated building or Portakabin.

Another has identified two academy schools which could be increased in size to accommodate an influx of pupils and another school which could reverse its decision to decrease the intake by 300 pupils.

Labour has denied suggestions the policy will see a mass exodus of private school pupils flooding the state sector. Ministers have pointed to IFS analysis suggesting it could see up to 40,000 pupils switch to state schools in the short term.

The IFS said the new national pupil forecasts meant that overall student numbers would likely fall at a slower rate than it had assumed in its 2023 purport.

It insisted its projections for the number of private school pupils fleeing the sector as well as the tax revenues the policy can be expected to bring were unchanged by the new national pupil forecasts.

Labour hopes its VAT raid on private schools will raise around £1.6bn, which the party has pledged to spend on improving standards in state schools. It includes plans to recruit 6,500 new teachers, 8,500 mental health specialists for schools and 1,000 careers advisers.

But any move that increases pressure on state schools risks triggering a revolt from teaching unions.

One union boss previously urged Sir Keir Starmer to “think through the consequences” for state schools, and another did not rule out strike action if there were changes to teachers’ working conditions.

A government spokesman said: “Education matters and is at the heart of our mission to break down barriers to opportunity so every child gets the best start in life.

“Ending tax breaks on private schools will raise revenue that will be invested back into essential public services, including helping to deliver on our pledge to recruit 6,500 teachers.”