Labour still plans to implement VAT on private schools but drops other charity-related benefits

SIR Keir Starmer, the leader of the Labour Party, has reversed a significant promise to strip private schools of their charitable status. While Labour will still impose VAT on these schools, it no longer believes that removing other charity-linked benefits is necessary.

Private schools enjoy various perks as charities

As charitable organizations, independent schools receive several advantages, including tax exemption on annual profits and relief from business rates. Labour's VAT exemption removal for all educational institutions, which aims to raise funds, is separate from these benefits. Shadow Education Secretary Bridget Phillipson recently advocated for the removal of private schools' charitable status.

Labour drops policy after considering the impact on schools

However, Labour sources have confirmed that the party has abandoned this policy after realizing that the double blow of VAT and the removal of charitable status was too extreme. They emphasize that their intention has never been to attack private schools and believe that implementing VAT is enough to support the policies they have announced.

Imposing VAT on private schools may significantly increase fees

The introduction of VAT on private schools could potentially add up to 20% to parents' fees. Labour estimates that this move could generate £1.7 billion in annual revenue, which they intend to invest in state schools.

Labour committed to making private schools pay business rates

In addition to VAT, Labour has also pledged to require private schools to pay business rates. The funds raised from these measures are designated for improving standards and opportunities for the majority of children attending state schools.

Former PM Gordon Brown supports the policy change

Former Prime Minister Gordon Brown expressed his endorsement of Labour's policy shift and revealed that the idea was considered during his time in government. Brown argued that there should be a compelling reason for private schools to be exempt from VAT, as most other things are subject to this tax.

Tory criticizes Labour's u-turn, accusing them of inconsistency

Tory Chief Secretary to the Treasury John Glen criticized Labour for their frequent policy u-turns, accusing them of lacking coherence and pursuing short-term measures for the sake of headlines. Glen asserts that Labour's schools tax hike is flawed and that they are constantly changing their positions.