Schools: Funding

Baroness Smith of Malvern Excerpts

Tuesday 25th November 2025 Lords Chamber

[Baroness Laing of Elderslie]

To ask His Majesty’s Government how they propose to fund any increase in the numbers of children attending state-funded schools as a result of the decrease in the numbers of children attending private schools.

[The Minister of State, Department for Education, and the Department for Work and Pensions (Baroness Smith of Malvern) (Lab)]

My Lords, private school pupil numbers remain firmly within historical patterns, with no evidence of excessive pressure on the state system. We are confident that the state sector can absorb any additional pupils. To deliver our commitment to the 94% of children who attend state schools, we are increasing school funding by £3.7 billion this year, taking total core school funding to £65.3 billion. By 2028-29, core school funding, including SEND investment, will reach £69.5 billion.

[Baroness Laing of Elderslie (Con)]

I thank the Minister for responding to my Question, but I am not quite sure about the Answer because, sadly, the facts do not support the Government’s rather spiteful ideology in this matter. The imposition of VAT on school fees means that thousands of hard-working parents who previously invested money in their children’s education, and therefore in the education system as a whole, now cannot afford to, so thousands of children have transferred from private schools to state schools. I am baffled by the statistics that the Minister mentioned, because we know that private schools are closing and that children are moving from private schools to state schools. Is it not the case that while the Government might well be raking in more money in VAT, local education authorities have to bear the cost of educating thousands more children? In spite of what the Minister has said, is it not the case that the Government are not investing in education but taking money out of the education system?

[Baroness Smith of Malvern (Lab)]

No, that is not true. The noble Baroness is keen on facts and concerned about the closure of private schools, as would anybody be if a school was closing. I hope she will be somewhat reassured by knowing that, while on average 74 private schools have closed per year over the last 20 years, in this last year 59 closed.

[Lord Mohammed of Tinsley (LD)]

My Lords, do His Majesty’s Government have in place a monitoring system to look at the numbers of young people with special educational needs accessing private schools? I am deeply worried that when state schools cannot provide that service, parents often then fall upon the private sector.

[Baroness Smith of Malvern (Lab)]

If a young person has an education, health and care plan that identifies a private school for them, their parents will not be impacted by VAT on private school fees. Equally, most children with special educational needs and disabilities are educated in the state system. It is in order to improve the outcomes of our state system that this Government are committed to reforming our SEND system to make sure that all pupils will be able to access the support that they need within it.

[Lord Watts (Lab)]

My Lords, is it not the case that the opposition party cried that this would have a damaging effect on state schools? From the facts that the Minister has just read out, it is clear that is not the case. Have the Opposition apologised or suggested that the extra money going to secondary schools in the state sector should be removed and given back to people who are in a better position to maintain their child’s education?

[Baroness Smith of Malvern (Lab)]

No, the Opposition have not apologised, and nor would I necessarily expect them to. That will not stop me continuing, as I think my noble friend has invited me, to identify the facts of the situation as opposed to the rhetoric from the noble Baroness opposite. I am sure that noble Lords will be interested to know that the number of pupils in private schools is still higher than it was in 2021-22 and before the pandemic. As I said, the latest school census data reveal that pupil numbers remain firmly within the historical patterns seen for over 20 years, while private schools have continued to open, even after the Government’s announcement about ending tax breaks: 79 schools have opened since July 2024. The average between 2014 and 2023 was 75 private schools opening each year. The average was 75 and the numbers in the last year were 79.

[The Earl of Effingham (Con)]

My Lords, the Chancellor said that every single penny of the money raised from this new VAT would be ring-fenced for state education, but the Prime Minister subsequently said that the decision to levy VAT on private school fees has allowed the Government to invest in housing. Will the Minister please confirm whether every pound of the money raised is going into better education for state-funded pupils?

[Baroness Smith of Malvern (Lab)]

The Treasury’s analysis of this policy suggested that it would be able to raise around £1.8 billion a year by the 2029-30 financial year. As I identified in my first Answer, in this year alone we are increasing the amount of money that is going into our core schools budget by £3.7 billion. I think that demonstrates that, yes, we are investing every pound of that £1.8 billion in the £3.7 billion by which we have increased the core schools budget. That is before we get on to talking about the pay increase that we have been able to provide for our teachers to keep them in our schools, the investment that we are making in special educational needs and disabilities, and the capital funding that will enable schools to have both the condition and the places necessary for the 94% of pupils who have their education in the state system.

[Baroness Deech (CB)]

Has the Minister witnessed what I and some of my acquaintances have witnessed, which is a failure of social engineering because very rich parents and many foreign parents can still afford private schools but a larger number of the middle class and the less well-off will be going to state schools, hence a much bigger chasm between the privately educated and the state educated?

[Baroness Smith of Malvern (Lab)]

I am not sure that is unusual. It has always been the case that in order to benefit from a private education, you need to be able to afford it. The vast majority of children in this country attend state schools. That is why this Government are focusing our investment and our reform on those schools. That is the way to solve the problem of children from whatever background not receiving the education that they deserve.

[Lord Forsyth of Drumlean (Con)]

My Lords, will the Minister please answer the question that my noble friend Lord Effingham asked? Is this money being ring-fenced or not? Ring-fenced means ring-fenced, not part of some general budget.

[Baroness Smith of Malvern (Lab)]

The point I was making was that the VAT on private schools is raising £1.8 billion a year, and in just one year we are investing £3.7 billion in the increase in the core schools budget. If the argument that noble Lords opposite are making is that this is a small amount of the increased investment that this Labour Government are putting into education, they are right, but it is nevertheless an important amount.

[Lord Lexden (Con)]

My Lords, how are the Government getting on with recruiting the 6,500 extra teachers for which their iniquitous, unprecedented education tax is designed to pay? Is it not the case that the total number of teachers is going down, not up?

[Baroness Smith of Malvern (Lab)]

No. The number of new teachers in secondary and special schools, where the demographic need particularly is, is increasing due to the investment that we have been able to put into both a 5.5% pay award for last year and a 4% pay award for this year. That means that we have already seen the workforce grow by 2,346 full-time equivalents in secondary and special schools, where they are needed most. We are also able to report in the latest census one of the lowest leaver rates since 2010. We are recruiting more teachers for the schools that teach the majority of our children, and I am proud that that is the decision we have taken.