Independent Faith Schools: VAT

Ashley Fox Excerpts

Thursday 26th February 2026 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I beg to move,

That this House has considered the impact of VAT on independent faith schools.

It is a pleasure to serve under your chairship, Sir Alec. I hope that this debate will go well. I welcome the Minister to her place and look forward to engaging with her. I have given her a copy of my speaking notes; the last two pages are my asks. I also thank the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom), who is here as the Liberal Democrat spokesperson, and the hon. Member for Beaconsfield (Joy Morrissey), who I think has been elevated to the role of Opposition spokesperson for this debate.

It is a real pleasure to raise the issue. It is certainly not the first time that we have discussed this move by the Government, which was announced when they came into power. I note that in the Public Gallery we have Dr Garrie-John Barnes, the new chief executive officer of the Christian Schools Trust; Steve Beegoo, the head of education at Christian Concern; and three people who are staff and parents at a small Christian school in Reading that is having to close because of the VAT and business rates relief policies. They are among the instigators for this debate, which I have secured on their behalf and on behalf of many others—I will outline who they are as I make progress through my speech.

For the record, my private secretary is also here: the lady in the corner of the Public Gallery. She writes all my speeches. I think people say, “My goodness, she’s overworked,” and she probably is, but there you are. She is not often here, but she is here for this debate and I thank her.

Although my sons and grandchildren all went through the publicly funded school system and have excelled in their own right, I have met many people who have made the difficult decision to pay towards their children’s education, not because they can afford to do so, but because their personal faith is at odds with the many moves away from the moral values and ethics that they cherish. That is their motivation, and that is why we are having this debate. I thank the Backbench Business Committee for giving me and other hon. Members the chance to contribute to it.

The idea that independent schools are for the ultra-wealthy is simply not true. I secured this debate for my Strangford constituents who attend the Bangor independent Christian school in the neighbouring constituency of North Down; for international students who attend Rockport, outside Belfast; for those who attend Holywood Steiner school; and for those who attend Jewish schools or Muslim schools. I do not need to agree with the theology to agree that pupils’ parents should have a school choice that reflects treasured, essential values.

I have been in touch with the Independent Schools Council, which represents about 1,400 schools across the United Kingdom of Great Britain and Northern Ireland. Those 1,400 schools represent roughly 80% of all UK pupils who attend fee-paying schools. According to the ISC’s most recent annual census, 663 of the schools among its membership have a religious affiliation or ethos, meaning that 47% of the schools that the ISC represents are faith schools. That reinforces my belief that we need to ensure that the Government look past the view that this is about rich parents, and that they understand the bigger faith picture. I hope to focus on that faith picture, as I hope other hon. Members will.

Overall, about 370,000 pupils attend an independent school in England with an identified religious ethos. That equates to some 60% of pupils at independent schools. It is not a small figure, and I say respectfully that it cannot be ignored. We need to address the issue. Although the majority of those schools are of Christian denomination, the independent sector also provides essential provision to minority faiths.

I talked to the hon. Member for Birmingham Perry Barr (Ayoub Khan) today. He wanted to be here, but he has an event at 5 o’clock and it would have been too tight to attend this debate and then get to Birmingham. I think he is somewhere in Birmingham today.

About 20,000 pupils attend Islamic faith schools. The importance of faith schools is clear. All schools must follow the Equality Act 2010 and welcome every pupil, but issues around curriculum, diet and religious holidays can make it difficult for more religiously observant pupils to be accommodated in mainstream schools. Many independent faith schools therefore provide access to education in a religious context that is not always possible in the state sector. That can be Muslim, Jewish or Christian.

Fees in many independent faith schools are less than the state pays per pupil—circa £8,000—and in some cases community fundraising efforts support those who are less able to pay for education. For example, the average annual fee for Islamic schools in the ISC is about £3,000 per year. Chinuch UK is an organisation that represents some 20,000 Haredi Orthodox Jewish pupils attending 65 schools across the United Kingdom. On average, those schools typically ask for a voluntary contribution of less than £100 per week. The Christian Schools Trust represents 25 schools charging between £3,000 and £8,000 per year in fees, often with high levels of bursary provision. That gives us a bit of background, factually and financially.

The ISC has been tracking the impact of VAT on the sector as a whole. Although it may take a few years for us to see the full impact, it is clear that there has been an initial impact. Opposition to the VAT on independent schools, particularly independent faith schools, has been an aggravating factor for the parents back home in my constituency whose children attend the independent faith school in Bangor. They are not rich people. They are working people who scrimp and save to put money aside so that they can ensure that they will be in a position to provide the faith education that they wish for their children.

Although the data cannot be broken down to measure the impact of VAT on faith schools specifically, case studies make it clear that the impact has been felt strongly. On pupil movement from the independent sector to the state sector, the Treasury impact assessment of VAT states that

“a greater degree of impact may be felt by faith school pupils if they cannot be placed in an alternative school with the same religious denomination.”

I say respectfully to the Government that their policy has, in a way, discriminated against those from independent schools who might have, and probably do have, a religious denomination that they wish to adhere to and stay with.

The result has been that since the general election in July 2024, 110 independent schools have closed, of which 10 have been involved in mergers. There has been an impact on about 9,500 students, including almost 2,500 with special educational needs and disabilities. New independent schools that have opened are predominantly SEND schools, while those closing are mostly mainstream schools. Overall, we are seeing a net loss of mainstream provision. Whereas some of the new independent schools setting up are specifically looking after children with special educational needs, a great many others have been disaffected and have nowhere for their faith and educational and religious viewpoint to be retained.

In the schools that remain open, there has been a drop of 25,000, or 5.2%, in the number of students since 2023, according to the ISC’s September pupil numbers survey. The September 2025 pupil numbers survey showed a fall in pupil numbers of 17,000, or 3.6%, in the past academic year alone. Those stats show the unfortunate impact of what is happening, which is that having to pay VAT is putting many independent faith schools at a disadvantage. It is also notable that the September pupil numbers survey continued to show a larger fall in intake years, with reception and year 7 numbers down closer to 5% in the last academic year.

Although there might be some debate about the extent of the impact of VAT on pupil numbers, the fall is out of step with the normal trend of our pupil surveys and confirms the decline shown by the Department for Education’s figures and by the ISC census published in spring 2025. It is a trend that has happened directly because of VAT on independent schools. It puts them at a disadvantage, leaves them disaffected and confirms the decline. That cannot be ignored. What was portrayed as a tax on the rich has instead turned out to be a tax on those with a strong faith.

No one would expect me, as the chair of the all-party parliamentary group for international freedom of religion or belief, to highlight the shortfall in religious freedom in other countries without highlighting a decision in this country, the United Kingdom of Great Britain and Northern Ireland, that is having an educational impact on those of a strong faith, whether that faith is Christian, Muslim or Jewish. My job as chair of the APPG is to highlight that in a way that I hope will come over strongly and show what the effect has been.

The decision to apply VAT to independent school fees was projected to raise some £1.5 billion annually. Although raising revenue is important—nobody denies that it is critical for the Government to raise revenue to pay the bills and pay for public services—we must ensure that the policy is proportionate and does not unintentionally harm those it was never meant to target. I do not doubt that the Government did not set out with the intention to effect the changes that are clearly happening in independent faith-based schools.

This debate is not and has never been about elite institutions charging some £30,000 a year for fees. I am talking about parents and young people such as those in my constituency who travel to the Bangor independent Christian school. They are not rich. They scrimp and save. They do not take holidays; they put their money aside so that the child can have an education at a faith-based school that can hopefully be of benefit to them.

This debate is about low-fee independent faith schools, many of which charge under £4,000 annually and which serve modest income families in Jewish, Muslim and Christian communities. For those families, faith-based education is not a luxury but a deep necessity. In many areas, there is no equivalent provision in the state sector that reflects their religious ethos. Alongside other hon. Members—including you, Sir Alec, based on comments that you have made in the Chamber—I want to protect that religious ethos on my constituents’ behalf.

The Independent Schools Council has proposed a simple and fair solution, which is my ask for the Minister. She will find it on pages 6 and 7 of my speaking notes. I am very conscious that we are asking for something that the Minister may not be able to confirm that she can do. My request is that she ask the responsible Treasury Minister to look at the comments and the solutions that have been put forward, which I believe may be helpful. I always try to be constructive, as you know, Sir Alec—I set out what I am trying to do in any debate to which I contribute in this House—and I ask for that in return.

The Independent Schools Council has proposed a simple and fair solution: introduce a VAT registration threshold for independent schools charging below the state-funding benchmark of £7,690 per pupil. If that could be considered, it would be a step in the right direction, as it would enable small independent faith schools to move forward in a positive fashion. The proposal is not a novel concept: the VAT system already includes thresholds to protect smaller entities from disproportionate burdens, and over half of UK businesses operate below the VAT registration threshold. Those are examples of this working, and of how it can be done. Again, I ask the Minister to refer this solution to the correct person in the correct Department to ensure that it can be done.

Only around 270 independent schools—roughly 10% of them—would qualify under the ISC’s proposal, but it would make a difference, as it would enable smaller schools to survive and come out on the other side. About 54,000 pupils would benefit, and the VAT revenue loss is estimated to be £32 million, which is just 2% of the projected £1.5 billion that the Department will get from putting VAT on independent school fees. However, if even a small percentage of those pupils transfer to the state sector, the cost to the Treasury rises sharply. That is a negative side to the policy. If there are no independent faith schools, pupils will have to go into the mainstream, and if they do that, the cost factor rises. If all those pupils were absorbed into the state sector, it would cost more than £415 million annually, even before accounting for infrastructure expansion.

In fiscal terms, the exemption is modest; in social terms, it is significant. This threshold would protect low-income families, preserve community-based education, maintain educational diversity and avoid putting unnecessary pressure on the state system. Those are some benefits that could be derived from moving towards the VAT registration threshold of £7,690 per pupil, under which a percentage of independent faith schools would qualify and 54,000 pupils would benefit. It would also not put the same pressure on the educational system as doing nothing would. In my opinion, and that of some of the experts and some of those in the Gallery, implementation would be straightforward. School fee information is publicly available, Ofsted already inspects fee policies and anti-avoidance safeguards are in place.

This is not about special treatment or asking for something that nobody else should get; it would enable people to have their faith, whether they be Christian, Muslim or Jewish, and to have their children educated in the school they wish, without it costing them the earth. It is about proportionality and fairness.

[Sir Ashley Fox (Bridgwater) (Con)]

I appreciate the solution that the hon. Gentleman is presenting for faith-based schools, but does he accept that any tax on education is wrong in principle? Would he support my party’s policy of reversing the burden of VAT for all independent schools?

[Jim Shannon]

This debate is quite clearly on VAT on independent faith-based schools, but I do support that principle and have voted accordingly in the Chamber, as has been recorded. I am today putting forward the case for independent faith-based schools and asking for them to be considered differently, but I accept what the hon. Gentleman says.

This issue is about proportionality, fairness and protecting vulnerable communities from unintended harm. The Government may not have accepted or understood the harm that this would cause, but there is a way of preventing it. I put that suggestion to the Minister. I believe that we can meet our fiscal objectives without undermining access to faith-based education for families of modest means.

Those are the people I know, the people from my constituency who send their children to independent, faith-based schools. They are the ones who have asked me to bring forward this debate. People here in the Public Gallery represent some 1,400 schools across the United Kingdom. We speak for people with a Christian faith, a Muslim faith and a Jewish faith—I make that quite clear. I urge the Minister and the Government to consider a targeted VAT threshold, to reflect economic realism—that is what we want to try to do—and social responsibility.

I am pleased that the Minister is in her place; this is the second time this week that she has come to Westminster Hall. I look to her respectfully and graciously to enable those conversations within the Cabinet, and to right the wrong that has been done.

--- Later in debate ---

[Olivia Bailey]

The hon. Gentleman made his case well in his speech earlier, and he makes it again now. The Government have carefully considered the options that he has put forward today. I have heard all of his points and they have been noted by my officials.

Private schools have steadily increased average fees by 75% in real terms since 2000, and that has not affected pupil numbers. Fee increases can also reflect wider cost pressures beyond VAT and business rates.

The Government are closely monitoring the impact of VAT policy on the private school sector. We remain confident in the estimates made when this policy was introduced, which said that the number of private school closures was expected to remain relatively low and influenced by various factors, not just by the VAT policy. On average, 74 private schools, including independent special schools, have closed per year over the past 20 years. However, only 60 private schools closed in academic year 2024-25, which is the school year that the VAT changes were introduced. That means that school closures announced thus far remain firmly within historical patterns and sit comfortably within our expectations. Indeed, even after the VAT policy came into effect, private schools continued to open in England. In the same time period—between 1 September 2024 and 31 August 2025—106 private schools registered and opened.

We are confident that the state sector can accommodate any additional pupils, including any pupils transferring from private state schools.

[Sir Ashley Fox]

The justification for this tax given in the Labour party manifesto was to raise revenue to employ more teachers in the state sector, yet we now know that in November 2025, there were 1,400 fewer teachers than 12 months previously. Can the Minister tell us where the money has gone?

[Olivia Bailey]

I will. I am just coming on to that, if you will bear with me. I am grateful for that. [Interruption.] Did I do something wrong, Sir Alec? I apologise.