Portrait of Rachel Reeves
Politician · policy
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Rachel Reeves on Private Schools

VAT on fees proponent (strong)

TL;DR

Rachel Reeves champions imposing 20% VAT on private school fees to fund state education improvements.

Key Points

  • She stated in 2021 that private schools "are not charities" and a Labour government would end that exemption to fund state schools.

  • The policy is to charge 20% VAT on school fees to raise funds for state education, which the party expects to raise significant revenue by 2029-30.

  • The policy was intended to raise funds for state schools by targeting tax breaks, though the party later clarified this did not explicitly require removing charitable status.

Summary

Rachel Reeves, as the Shadow Chancellor, has taken a firm stance advocating for the imposition of 20% Value Added Tax (VAT) on the fees charged by private schools. This policy is explicitly framed as a measure to generate essential revenue, which she intends to directly channel into the state education system to fund resources like new teachers and mental health counselling in secondary schools. While the party initially signaled an intention to strip private schools of their charitable status entirely, the stated policy evolved to focus on removing tax breaks, specifically the VAT and business rates relief, without necessarily removing the charitable status itself.

This policy proposal represents a clear political choice aimed at shifting funding priorities, contrasting with previous party rhetoric where the removal of charitable status was mentioned alongside the VAT application. The move has generated debate regarding the potential financial impact on families reliant on private education, with critics suggesting it punishes aspirational parents while the wealthiest may avoid the levy through prepayments. The Chancellor's position is that applying the VAT is necessary to raise an estimated £1.8 billion annually by 2029-30 for state schools.

Key Quotes

“Here's the truth: private schools are not charities. And so we will end that exemption and put that money straight into our state schools. That is what a Labour government will do.”

“provide the highest quality of support and teaching”

Frequently Asked Questions

Rachel Reeves strongly supports applying 20% VAT to private school fees. She frames this as a necessary measure to raise revenue to improve teaching and support in the state sector. The funds are specifically earmarked for state school resources, such as hiring new teachers.

Yes, there was a change in emphasis regarding the approach to private schools. While the commitment to taxing fees remained, Labour backed down from the explicit pledge to strip all charitable status to achieve the VAT goal. She now states the VAT policy does not require removing charitable status.

Rachel Reeves has been vocal about removing what she terms 'unfair tax breaks' that private schools benefit from. She believes the revenue generated from adding VAT is crucial for improving standards in the state schools that educate the vast majority of children.