Labour VAT raid on private schools will cost jobs, unions warn

Education unions have privately warned Labour that the party’s plan to impose VAT on private schools could cost teachers jobs, The Telegraph can reveal.

The unions have also conveyed concerns that the policy could have the unintended consequence of schools downgrading their pension offer to staff.

Labour has said that if it wins the general election it will add 20 per cent VAT to independent school fees and remove the relief they receive on business rates.

The party has said the move will bring in £1.7 billion which can be used to recruit 6,500 teachers for state schools and fund mental health counselling in every school.

However, The Telegraph understands that education unions have held private meetings with Labour in which they have flagged concerns about what the policy may mean for their members working in independent schools.

One union source said: “What we’re saying to Labour is the extent to which that policy begins to affect people’s jobs and may or may not cause redundancies is something that we’ll have to respond to once we know the impact.”

“It’s the job security bit. We’re not going to get involved in a philosophical debate [about private schools] but our members’ jobs are potentially on the line and we’re going to seek to protect them.”

Another concern relates to private schools remaining in the Teachers’ Pension Scheme. The TPS is the Government’s defined benefit pension scheme for state school teachers, but independent schools are also allowed to be members of the scheme.

However, more than 300 private schools have pulled out of the TPS since 2018, with more schools considering their future in the scheme amid expectations of a rise in employer contribution next April.

A second union source said: “Some independent school employers are horizon scanning, looking at the changing picture on pensions, looking at the uncertainty around employer costs there, looking at the cost of living crisis and how that’s impacting on their margins, looking at potential change of government.

“We’ve got some independent school employers who are already trying to anticipate where this all may land by significantly looking to alter teachers’ terms and conditions of service - so opting out for example of the Teachers’ Pension Scheme.

“Certainly we have conveyed to Labour our concerns around the impact of that. It’s up to Labour to make their decisions about their policy position, but they need to be cognisant of the implications of the policy which could result of course in some schools being no longer viable.”

The warnings are significant because although none of the main education unions are politically affiliated, their leadership and activists have often leant-Left.

But with Labour leading in the polls and favourites to form the next government, so far only the Association of School and College Leaders has publicly criticised the VAT policy.

Geoff Barton, ASCL’s general secretary, said the “majority” of independent schools would not be able to “automatically absorb” the fee increase.

“The combination of both pension pressures and the VAT issue means that without doubt there will be some independent schools which simply close,” he said.

“What we’re saying to Labour is could you just show us your workings on this, and have you done a due process of risk assessment to make sure that there are adequate places in the state sector if that does happen?”

Other unions have vowed to fight any job losses or changes to members’ pay and conditions resulting from the move. Patrick Roach, the general secretary of the NASUWT, said: “There is a debate to be had about a fairer tax system and we think that’s right.

“But we also think it’s important that no school is forced to close and that we don’t want to see yet more teachers leaving the profession at a time when we’ve already got a shortage of teachers.

“There’s no guarantee that these teachers will come into the state sector if their schools were forced to close.”

He added: “We’ll fight tenaciously on behalf of our members. We don’t want to see any of our members out of a job and we don’t want to see any of our members with worsened terms and conditions of service.”

Daniel Kebede, the general secretary of the National Education Union - which has 32,000 members in independent schools - said: “My number one priority as the leader of the NEU is to defend members’ jobs.”

Mr Kebede also warned schools thinking about withdrawing from the TPS that they will face strike action.

“If I get wind of any school trying to remove teachers out of TPS, I’ll be looking for a dispute with those employers,” he said.

Labour was contacted for comment.