Ian Allsop casts his eye over how the VAT on fees policy has been communicated

For almost a year I have been observing the communications around the government’s introduction of VAT on independent school fees, and have decided to pen a few observations. Whatever the rights and wrongs of the policy, it has certainly got a lot of coverage in the mainstream press, with The Daily Telegraph in particular prominently featuring it on its pages.

A cynic might suggest that there’s been almost glee from sections of the media when reporting each new school closure, as it gives them further ammunition for an ideological attack on the Labour government – while at the same time slamming that same government for using VAT on fees as an ideological attack on privilege. And if the story can be bolstered by inserting the name of a famous ex-pupil of the school closing in the headline, so much the better.

Since the VAT policy was announced it feels as if the numbers of schools shutting down, or announcing they will, has increased significantly. The Independent Schools Council says that by the end of May it knew of 61 schools ceasing operations, with more announced since then.

Yet, according to government figures quoted in Hansard, 1,102 private schools closed between 11 May 2010 and 5 July 2024 – when the new government took over – an average of 78 a year. So, while the full effects of VAT on fees will be felt over a longer period, and we would expect those numbers to go up, the narrative around the recent closures needs to be looked at more closely.

The debate has been characterised by emotive language – Labour’s (vindictive) tax grab, raid or hike. Or policy, depending on how sensational the story. And in the context of a decline in pupil numbers – 11,000 year-on-year according to the latest ISC census data – there’s been a renaissance for the word ‘dwindle’. As well as references to a ‘dip’, ‘drop’, ‘plummet’, ‘fall’, ‘loss’, and ‘exodus’.

Overall, 582,477 pupils in England attended private schools when the census data was collected in January this year, down from 593,486 the year before – a drop of 1.9%. Responses to this downward trend show both sides of the argument. A government spokesman said the drop in pupils “remains firmly within historical patterns” and “shatters the myth” of a private school exodus, while private schools disagreed and said more pupils than expected were leaving the independent sector due to higher fees putting more pressure on parents.

The census data doesn’t give clear reasons why pupils have left private schools. It could include a shift in international pupils or a move to home-schooling which would not be reflected in the state school figures. And the change could also reflect broader demographic trends and changes in the state sector.

Whatever the real picture, and I suspect it’s a combination of many different factors, including VAT, I think the communications around the policy and its effects have been average at best from both sides.

Labour has never properly articulated why they were doing this, and the reasons for introducing it so quickly – in January, instead of the start of the 2025/26 academic year in September, which caught a lot of people by surprise. This in turn led to problems for HMRC, both in being able to formulate proper watertight guidance and in communicating what schools needed to be doing to be complaint.

And the way the independent school sector’s supporters in the media have framed some of the closures has not been entirely truthful. Not that this is a particularly new phenomenon of course.

None of the wider media narrative around closures is the fault of the schools involved. Most schools have been honest, when you read the statements they’ve actually made. When reading into the individual circumstances faced by various schools it’s clear that there’s more going on than just VAT – a combination of economic pressures including rises in employer National Insurance contributions and the National Minimum Wage, the loss of business rates relief plus increased Teachers’ Pension Scheme costs – but VAT is the one most often raised in a headline.

The following is a selection of reasons given by schools: declining birth rate, operational costs, ever declining pupil roll, significant external economic pressures, and Labour-imposed financial pressures.

One school says its financial situation became precarious not only due to VAT but due to ensuring it remained at the cutting edge in terms of staff development, health and safety, safeguarding and education policy. Another admits that the past five years have been difficult, beginning with Covid and then inflation.

A further school admitted serious financial difficulty and heading towards closure since 2019 – another said it had been unable sustain itself any longer after running a deficit for 10 years.

Bedstone College said that VAT had added further pressure, but was not the root cause of its closure. This lead to a Daily Mail headline stating: “School charging £33k pa to close after Labour’s VAT bombshell”.

While this is illustrative of the fact that however careful your communications are, about a closure or anything, you can’t always control the way it is reported; it demonstrates the importance of schools making the case for why parents should pay an increased amount to send their children to them.

I’m not denying that the VAT policy has already had, and will continue to have, a significant effect on independent schools. And as I have argued previously, it does feel ideologically driven by the government, rather than the panacea for the ills of state education. But the sector, and those who support it, need to be honest about what is happening. To perpetuate falsely the myth that VAT is the only bad guy in town is counter-productive.

Ian Allsop