Leadership

Tax, Private School Fees and State School Spending

Removing tax exemptions from private schools would raise about £1.6 billion a year in extra tax revenue

This IFS report compares private school fees and state school spending. It also examines Labour’s proposals to remove tax exemptions from private schools.

The Labour party has proposed a package of policies to remove tax exemptions from private schools. Most importantly in revenue terms, it has proposed levying VAT on private school fees. The revenue raised would then be used to increase state school spending and would be targeted at pupils from disadvantaged backgrounds. This report analyses the likely effects of these proposals on tax revenues and school spending.

Whilst only about 6–7% of pupils across the UK go to private schools, there has long been significant public debate on the role and effects of private schools on the UK economy and society. Evidence shows that pupils attending private schools benefit from significant advantages in later-life earnings.

However, the level of fees means that most pupils attending private schools come from families at the top of both the income and wealth distributions. This leads to concerns about inequalities between pupils and the effects on social mobility.

There are, however, many factors that determine choice of private schooling. Such decisions can reflect the quality of local state schools, parental values, experiences of private (or state) schooling themselves, or a desire for a different form of education.

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