State schools to receive £1.7bn from scrapping of private school VAT break

'Every single penny of that money will go into our state schools'

From January 1, private schools will no longer be exempt from charging 20 per cent VAT on their fees.

The move to scrap the VAT break is expected to raise £1.5bn in 2025, whilst the Treasury predicts it will raise an extra £1.7bn a year by 2029-30.

Chancellor Rachel Reeves has vowed to funnel "every single penny" raised from the policy into state schools, to ensure "every child gets the best start in life," ITV reports.

She said: "I recognise a lot of parents work hard to be able to send their children to private schools but all parents are aspirational for their children, including the 94% of children in our state schools."

Reeves added: "Every single penny of that money will go into our state schools to ensure every child gets the best start in life, and that is so often through being able to recruit and retain the best teachers."

Labour has already announced an increase in the core schools budget worth £2.3bn next year.

Writing in the Mirror, the chancellor said this would "help us hire 6,500 new teachers, drive up standards and improve the Special Educational Needs and Disabilities System so that every child is given the backing to achieve and thrive."

Critics of the scrapping of the VAT break on independent school fees have argued it will lead to more pressure on the state sector as parents who can't afford the higher fees send their children to state schools instead.

However, Reeves said she did not expect to see an exodus of pupils moving out of independent schools into the state system.

She said: "In the last 25 years, private school fees have gone up by 75%, and yet the numbers at private schools have remained static.

"So that's why the Office of Budget Responsibility and the Institute of Fiscal Studies think the number of children changing schools is likely to be quite low."

Tory leader Kemi Badenoch has said the Conservatives would reverse the move if they returned to power, labelling the policy a "tax on aspiration."

"Taxing education is wrong, it is against our principles, so yes that is the sort of thing that I can very easily say we would not do that," she said.

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