Historic Loretto School – the oldest school in Scotland – has revealed plans to cut staff numbers following the highly-controversial decision by the Labour government to introduce VAT on private school fees.

According to a report in the Daily Mail, the school is planning to cut teacher numbers, with up to eight jobs expected to be lost after a redundancy process.

The school, which was attended by former Labour Chancellor, Alistair Darling; and broadcaster, Andrew Marr, said the decision had been made because of rising costs caused by VAT on fees, a move which is putting parents off enrolling their children.

Staff were told last week when they returned from the Easter holidays that their jobs were at risk because of ‘significant financial challenges’ which were ‘outside the school’s control’.

The school near Edinburgh – which also has day pupils – has seen pupil numbers fall since Labour imposed its education tax on school fees in January, a school source told the Mail on Sunday.

It raised fees by 17% in January to up to £49,632 a year, absorbing 3% of the 20% VAT levy, with fees for the next academic year yet to be announced.

In a letter to parents seen by the Mail, head, Pete Richardson, and chair of the board of governors, Peter McCutcheon, told parents a staff review was underway ‘based on projected pupil enrolment which has been directly impacted by the VAT imposition’.

They told parents that they had been ‘navigating the complexities of running a school in the current financial climate’ and challenges including ‘increases in VAT, National Insurance, and the minimum wage’ had led to the decision to launch a staffing review.

One parent said: “We are all shocked that staff now face losing their jobs and it shows the impact and the ripple effect of this awful tax, not just on our children, on us, and on schools, but on staff and on wider communities who rely on schools as important employers.”