Search

Labour Back Down from Revoking Charitable Status From Private Schools

private schools

Private schools will retain some of their tax advantages under a Labour government, as the party has changed course on its promise to strip them of charitable status. The party has clarified that it no longer sees the need to revoke the charitable status of private schools in order to implement its policy of imposing a 20% VAT on tuition fees and ending business rates relief in England.

Independent schools currently enjoy privileges such as the ability to claim gift aid on donations and being exempt from tax on annual profits, provided those profits are reinvested in education. 

Private Schools

This recent decision contradicts statements made in 2021 by Rachel Reeves, the shadow chancellor, who stated: “Here’s the truth: private schools are not charities. And so we will end that exemption and put that money straight into our state schools. That is what a Labour government will do.” However, party sources now contend that their original intention was to eliminate the VAT and business rates benefits, using charitable status as a shorthand for the policy.

A representative from the Labour Party stated “Our policy remains. We will remove the unfair tax breaks that private schools benefit from, to fund desperately needed teachers and mental health counselling in every secondary school.

“This doesn’t require removing charitable status, however driving high and rising standards for every child against the backdrop of a broken economy requires political choices. Labour isn’t afraid to make them.”

Originally, Labour’s policy calculations only factored in charging VAT on school fees and the cessation of the business rates exemption, without considering the impact on other tax privileges.

Julie Robinson, the CEO of the Independent Schools Council, said: “If Labour takes away the tax relief associated with charitable status for independent schools, the policy would create a two-tier system within the charity sector, setting a worrying precedent that any charity seen as not reflecting the political ideology of the day could be subject to additional taxes.

“We would love to work with Labour to build more effective ways to achieve our shared goal of improving education for all young people.”

Bridget Phillipson, the shadow education secretary, had discussed the idea of “scrapping charitable tax status for private schools to fund the most ambitious state school improvement plan in a generation”.

According to previous estimates by the Institute for Fiscal Studies, the implementation of VAT on school fees could generate approximately £1.5 billion in annual revenue, considering that the average tuition fees now stand at around £15,200 per year.

Responses

The Conservative party criticised this development, asserting that Keir Starmer was “clearly only interested in short-term policies designed to grab headlines”.

John Glen, the chief secretary to the Treasury, commented: “Labour has been forced to U-turn on one of their major policies – this time admitting that their schools tax hike just doesn’t work. They are just making it up as they go along.”

Final thought

Labour’s backtrack on the proposal to revoke charitable status from private schools is a shortsighted move. This decision not only contradicts their previous commitment to fairness in education but also raises questions about their ability to stand firm on important policy issues.

Private schools enjoy unjustified tax advantages, and the decision to let them retain their charitable status undermines the goal of funding state education adequately. The claim that their original intent was only to eliminate VAT and business rates benefits is a weak justification for this shift.

This decision reflects political expediency over confronting educational inequality. It’s a missed opportunity to challenge privilege and inequality in education, and it raises questions about Labour’s dedication to a fair education system.

In conclusion, Labour’s reversal on revoking charitable status from private schools is a regrettable retreat from a much-needed reform. It’s a step in the wrong direction, and it raises doubts about the party’s commitment to addressing the structural inequalities in the education system. This decision prioritises political convenience over the urgent need for an education reform that levels the playing field for all students.

Share

Related Topics

Latest

Video Features

Insights from greater:SATX on UK-Texas Trade Deal and Cybersecurity Collaboration

Energy & Net Zero Secretary, Claire Coutinho MP at International Women's Day Parliamentary Reception

Inspiring Breast Cancer Now Fundraiser for 2024 London Marathon

50:50 Parliament North of England Rally, #CallingAllWomen, Leeds

Subscribe to our newsletter for your free digital copy of the journal!

Receive our latest insights, future journals as soon as they are published and get invited to our exclusive events and webinars.

Newsletter Signups
?
?

We respect your privacy and will not share your email address with any third party. Your personal data will be collected and handled in accordance with our Privacy Policy.

Never miss an issue by subcribing to our newsletter!

Receive our latest insights and all future journals as soon as they are published and get invited to our exclusive events and webinars.

Newsletter Signups
?
?

We respect your privacy and will not share your email address with any third party. Your personal data will be collected and handled in accordance with our Privacy Policy.

Never miss an issue by subcribing to our newsletter!

Receive our latest insights and all future journals as soon as they are published and get invited to our exclusive events and webinars.

Newsletter Signups
?
?

We respect your privacy and will not share your email address with any third party. Your personal data will be collected and handled in accordance with our Privacy Policy.

Newsletter Signup

Receive our latest insights as soon as they are published and get invited to our exclusive events and webinars.

Newsletter Signups
?
?

We respect your privacy and will not share your email address with any third party. Your personal data will be collected and handled in accordance with our Privacy Policy.