The Government is reportedly formulating plans to manage a potential increase in demand for state school places, amid fears that private schools may face closures due to the introduction of VAT charges.
The Times reports that officials are preparing for the possibility that the Autumn Budget decision to apply VAT to private school fees could push some institutions into financial difficulty, as reported by .
Smaller schools with lower fees are believed to be most at risk, and government sources have told the publication that these schools are under close scrutiny. To counteract potential disruptions, a government source told The Times: "We have to plan for the worst. But there’s a limited amount we can do, so contingency plans are necessary."
Another source stated "some private schools are undoubtedly more at risk of closure than others."
They added, "The government routinely monitors the transfer of tens of thousands of pupils per year between the independent and state sector, but this year there is an obvious added challenge we need to prepare for," Private schools will be subject to 20 per cent VAT on fees from January 2025, following Chancellor Rachel Reeves' announcement in her Autumn Budget.
This move is expected to generate a net benefit for the Treasury of £1.3bn to £1.5bn annually. However, campaigners against the VAT measure have warned that some parents may struggle to absorb the fee increase, with many private schools likely to pass on the full costs.
HM Treasury estimates suggest that the policy could lead to a reduction of approximately 37,000 private school pupils, which is roughly six per cent of the sector, according to reports. The Independent Schools Council (ISC) stated that about 8,000 children were withdrawn from private schools before the new academic year following Labour’s election in July, with an additional 2,500 having left since then.
Julie Robinson, chief executive of the ISC, warned that the threat of closures is "very real."
However, a government spokesperson dismissed suggestions of widespread collapse as "completely misleading" to the paper. The spokesperson said: "It is routine planning for government departments to use data to inform the design and implementation of a new policy and, as would be expected, we regularly monitor places across the education system."
"We have been clear that the students who may switch schools as a result of these changes represent less than 0.1 per cent of pupils, and we are confident the state sector will be able to accommodate them," they added.
Meanwhile, the ISC, which represents 1,400 private schools, announced in November that it had decided to take legal action against the Government. In late December, the ISC revealed that six families, supported by the ISC, officially filed a judicial review claim to the High Court to challenge the introduction of VAT.
