Labour’s private school VAT raid will stunt social mobility

Following the announcement of Rachel Reeves’ spending cuts on Monday, the Treasury confirmed that VAT will be applied to private school fees from January 2025. Although the debate on whether to charge this tax on private schools has raged for months, this is still earlier than most of the sector expected. ‘Anti-forestalling’ measures will be introduced so that any advance payments for the January term are, from this week, also taxed. This means parents can no longer avoid the extra 20 per cent by paying fees upfront. Perhaps most importantly, Treasury documents have also confirmed that ministers expect the new tax to drive some private school parents to the state sector: the first time Labour has acknowledged this in writing. 

This admission by Labour is crucial: it is the biggest argument against the policy, and fundamentally undermines the narrative that taxing private schools is an easy win for social mobility.