Cambridge Students Respond to Labour’s Plans to End Private School Tax Breaks

Labour’s proposed policy to add 20% value-added tax to private school fees has been a major party talking point and headline ahead of the UK’s general election on 4 July. Currently, about 30% of Cambridge students were privately educated, but it is debatable how much the potential VAT introduction on private schools would affect university admissions.

Harrow School and chapel by Christopher Hilton, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons

With less than a week to go before the 4 July election, of the many issues on the table, the Labour Party’s plan to apply VAT or value-added tax to private schools has garnered some of the most headline attention, with conservative publications like The Telegraph decrying “Labour’s VAT raid on private schools.”

Right now, private schools are exempt from VAT under the Finance Act of 1972, meaning that these schools do not have to charge parents the standard 20% tax on school fees. If Labour wins the election, under the new policy, private schools will lose their exempt status and student fees will increase accordingly. The extra revenue from the tax would amount to about £1.6 billion per year, which Labour plans to use to fund state schools and benefit students from disadvantaged backgrounds.

This policy is nothing new: it’s been proposed in Labour election manifestos since Jeremy Corbyn, and has gained support from liberals and conservatives. In an op-ed by The Times in 2017, former Conservative education secretary Michael Gove argued, “Private school fees are VAT exempt. That tax advantage allows the wealthiest in this country, indeed the very wealthiest in the globe, to buy a prestige service that secures their children a permanent positional edge in society at an effective 20% discount. How can this be justified?”

Opponents to the VAT introduction have claimed that adding the tax will bring about a sudden forced exodus of private school students to state schools, swelling state school class sizes and potentially forcing smaller private schools to close down. The National Education Union (NEU), the UK’s largest teachers’ union, has suggested that a decline in student numbers in private schools might put teachers’ jobs in peril, and has issued five preliminary demands to protect jobs should the policy go into effect.

Although the policy is set to affect education for under-18s, universities may see changes in their upcoming class makeups, particularly at Oxford and Cambridge where a sizable contingent of their student bodies come, predictably, from private schools. Cambridge averages around 30% privately educated students in a given year, with 28.2% coming from private schools in 2023, as opposed to 31.4% at Oxford. (Some Russell Group universities have even higher numbers, with 39.1% private school students at Durham University and 36% at St Andrews.

“Large increases in fees in recent years have already priced out much of the lower end of the private education market meaning that most families who still privately educate their children can afford the price increases”

Charlotte Bond at Clare College, Cambridge, is the former Access and Outreach Officer for the Union of Clare Students (UCS). She told TCS that the introduction of VAT on private school fees likely won’t have a huge impact on Cambridge admissions, since “1) Large increases in fees in recent years have already priced out much of the lower end of the private education market meaning that most families who still privately educate their children can afford the price increases, and 2) Cambridge, for better or worse, is increasingly moving away from considering school type when conducting outreach and thinking about admissions, instead thinking more about individual circumstances, which can be seen in the recent decision to scrap state-school targets.”

She further explained, “I do acknowledge that there will most likely be some migration of middle class families from lower-end private schools to the state sector, but it is likely that these children will attend grammar or high performing state schools in wealthy areas, which will likely produce similar academic results, and are not really the primary focus of the university’s outreach efforts. From my experience of volunteering in access and outreach, the university usually attempts to target schools whose students are most in need of support.”

Even before this year’s pre-election dialogue about the potential VAT introduction, grammar schools have frequently been a popular choice for wealthier families who don’t have a private school immediately accessible or who disagree with private schools ideologically but still have the money to ensure that their students get the tutoring they might need for grammar school entrance exams.

Students from the Cambridge University Labour Club similarly emphasise the differences between the levels of education that different types of schools offer their students. According to Rudi Ellis-Jones, CULC’s Secretary and the LGBTQ+ Officer for National Labour Students, “Private schools allow parental income, not drive or intelligence, to define a child’s life prospects. By design, they are inherently elitist and allow wealthier children to receive a higher level of education. By allowing charitable status and VAT exemption, we are allowing these profit-making institutions to thrive and prosper. To remove the exemption, and to invest the revenue gained from higher (fairer) taxation into the state schools that most need the funding, would make things fairer. Privately educated children would not be forced to change schools as the likelihood is that if they can afford £20,480 per year in fees (non-boarding), then they can afford to take on some extra cost. Those on scholarships would likely be unaffected.”

“Charity, by definition, is to help those in need. It is not designed to support those who can afford over £20,000 in school fees every year.”

He continued, “We can already see that privately educated students do disproportionately better; in 2023, 28.2% of Cambridge students were privately educated, when only 5.9% of the UK is privately educated. Ultimately, the removal of a ‘charitable status’ for the wealthiest 5% really shouldn’t be a controversial move. Charity, by definition, is to help those in need. It is not designed to support those who can afford over £20,000 in school fees every year.”

Most private schools in the UK currently have a charitable status, which, besides exempting them from VAT, allows them to claim “gift aid” tax breaks on donations on the grounds that they provide charitable services to the local region. For example, private schools can allow community groups to use their facilities or open some classes or activities to local state school students, although the lead-up to the election has seen significant debate over whether private schools should really be considered charities. The Labour Party manifesto promises to end private schools’ VAT exemption and business rate relief but would not remove these schools’ charitable status.

Meanwhile, Anoushka Kale, Chair of the Cambridge University Liberal Association, has reiterated the Liberal Democrats’ stated stance against VAT on private schools. She told TCS, “Liberal Democrat leadership oppose the Labour party’s position on charging private schools VAT status, which should be reserved for commercial businesses. Our party believes that this policy is not the solution to addressing educational inequalities, and that taxing education is principally wrong. Sir Ed Davey, our party leader, has reiterated our party's belief in the right for private schools to exist. Good-quality education is a fundamental right for all, which CULA and the party strongly advocate for, and therefore we call for better support for the state system.”

Lib Dem leader Ed Davey has stated that he “never thought in principle that VAT should be applied to education.” Davey, like Rishi Sunak and Keir Starmer, was privately educated. Current Conservative prime minister Sunak has also opposed Labour’s plans, claiming in a debate on 4 June that “people who work hard and aspire to provide [private] education for their kids should have their freedom.” The Cambridge University Conservative Association did not respond to TCS’s request for a comment.

Keane Handley, Class Officer for the Cambridge Labour Club, argues that children lack access to quality education not because their parents did not work hard enough but because systemic issues perpetuate inequality between state and private schools. He told TCS, “Our state schools should be so good that parents don’t want to send their children to private schools. It is a political choice to leave schools crumbling and ceilings in danger of collapsing on 93% of this country’s children. This policy is an attack on nothing other than inequality itself, as Labour seeks to make a political choice of its own in beginning to address the plethora of issues in our schools—issues that are the perfect metaphor of how the Conservative government has exacerbated inequality in this country.”

“We cannot continue with this two-tier education system that sees opportunity pushed further and further away from the working class in this country, a path that has also contributed to record levels of child poverty in one of the richest countries in the world.”

He continued, “It is those on lower incomes who are struggling to make ends meet, whose children are being taught in schools that are crumbling, understaffed and under-resourced, and are so often disgracefully told ‘if you can’t afford things, get a better job.’ Therefore, it is understandable that any outrage over this policy rings hollow. We cannot continue with this two-tier education system that sees opportunity pushed further and further away from the working class in this country, a path that has also contributed to record levels of child poverty in one of the richest countries in the world.”