School Fees: VAT

Lord Lexden Excerpts

Monday 13th October 2025 Lords Chamber

Asked by

[Lord Lexden]

To ask His Majesty’s Government how much money has been raised from the imposition of value added tax on school fees.

[Lord Lexden (Con)]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare my interest as a former general secretary of the Independent Schools Council and the current president of one of its constituent bodies.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, at the Budget last year, the Government set out that ending the VAT exemption for private schools would raise £460 million in 2024-25 and £1.7 billion per year by 2029-30. The Government remain confident in these costings, which are certified by the independent Office for Budget Responsibility. The OBR will recertify these costings at the forthcoming Budget in November. The money raised by this measure is helping to raise standards for the 94% of pupils who attend state schools.

[Lord Lexden (Con)]

My Lords, have the Government noted a recent detailed survey by the Independent Schools Council which shows that their appalling education tax is producing an exodus from independent schools eight times larger than Ministers predicted? Does it not follow that the Government will have to fund many extra places in the state sector for pupils driven from independent schools, while simultaneously the proceeds from their tax raid on those schools plummet? Is it not the case that the Government stand no chance of extracting the £1.8 billion that they hoped to receive from independent schools to fund an enormous range of improvements, including, most surprisingly, the largest investment in affordable housing in a generation, according to the Prime Minister in June?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question—I think the short answer is no. We estimated that the introduction of VAT was likely to lead to around 35,000 more pupils in the state sector over the course of this Parliament. This is fewer than 0.5% of all pupils currently in the state sector and will take place gradually over this Parliament. This assessment was certified by the OBR at the time, and we remain extremely confident in it. Pupil movements so far are absolutely in line with this estimate and are in line with trends over the past 20 years. They represent, as I say, a very small proportion of the private school population. It should be noted that not all pupil movements are the result of this policy; they can happen for a large variety of reasons and will reflect wider demographic trends.