‘Raid on Private School Taxes by Labor based on faulty calculations’

Private schools that have built new swimming pools, sports halls, music and drama studios, laboratories or lecture halls could reclaim VAT they incurred on major construction or renovation projects under the HMRC’s Capital Goods Scheme, it said.

Researchers noted that Labour’s calculation also fails to account for the likelihood that some children would have to move to the public sector if VAT were imposed.

A recent survey of parents by the Independent Schools Council found that private schools could lose at least a fifth of their pupils if a 20 per cent VAT was added to school fees.

The researchers’ best-case scenario showed that VAT on school fees would raise £1bn a year, or £600m less than Labor has claimed.

According to the worst-case scenario analysis, in which 25 percent of students drop out of private schools, any income from charging VAT on school fees would be wiped out by the burden of those students on the government sector.

‘Labour claims are far too optimistic’

Tom Richmond, director of EDSK and a former ministerial adviser to the Department for Education, said: “Claims of £1.6bn a year raised from adding VAT to private school fees seem far too optimistic, especially when there are more than a small number of students eventually leave private schools and instead move to the state sector.

He said: “Adding VAT to school fees is also likely to have the least impact on the most expensive private schools and the wealthiest parents. This could reduce the level of public support a government can expect from such a move.

A Labor source said: “Labour does not acknowledge the figures in this report, which rest on flawed assumptions and raise more questions than they answer.”

They said Labor would not accept that the number of students leaving the sector would be “close to the numbers quoted in this report”.

“The report also assumes that money not spent on private schools is also not spent on other VAT-taxable goods and services: that just shows that this is not a serious investigation,” they added.

“Labour’s position and policy remains clear: we will invest in our public schools by ending the tax breaks enjoyed by private schools.”

Gillian Keegan, the education minister, said: “This report highlights that once again we have more of the same from Labour, who base key policy decisions on outdated and incorrect assumptions.”