UK to tax private schools in 1.5 billion euro boost to public education

People pose for a photograph on the banks of the River Thames with The Palace of Westminster and Elizabeth Tower (more commonly known by the name of the bell in the clocktower, ‘Big Ben’) seen behind, in London on October 26, 2022. New UK Prime Minister Rishi Sunak on Wednesday U-turned on contentious Conservative leadership campaign pledges in July to permit fracking in England, reverting to the Tories’ 2019 manifesto, which imposed a moratorium. (Photo by Niklas HALLE’N / AFP)

London, United Kingdom — The UK will end a tax exemption for private schools on Wednesday, the center-left Labour government has announced, in a move set to raise over £1.5 billion ($1.9 billion) for public education.

After years of worsening educational inequalities, from January 1, private schools will have to pay 20 percent value added tax on tuition fees, which will be used to fund thousands of new teachers and improve standards in state schools.

“It’s time things are done differently”, finance minister Rachel Reeves said in a statement on Sunday.

READ: UK faces strained finances after election

The funding will “go towards our state schools where 94 percent of this country’s children are educated”, she said.

The policy was promised by Labour in its election campaign and officially laid out in its inaugural budget in October.

It hopes the move will bring in £1.5 billion for the 2025/2026 school year and rise to £1.7 billion a year by 2029/2030, which will be used to fund 6,500 new teachers in the public sector.

Tuition fees in private schools already average £18,000 a year, according to the Independent Schools Council, which represents private schools.

That figure is set to rise, with the government estimating that tuition fees will increase by around 10 percent, with schools taking on part of the additional cost.

“High and rising standards cannot just be for families who can afford them,” said education secretary Bridget Phillipson.

Opponents of the reform say state school enrollment will explode if the private sector is lost, increasing the cost to the government.

But studies contradict this.

The Institute for Fiscal Studies calculated that the number of children in state schools will actually fall by 2030 due to a projected population decline.

Several research centers also point out that the disparity between private and state schools widened sharply under the 14-year Conservative rule.

The Labour government won a landslide election in July promising to boost economic growth and improve public services.