Senedd votes to end tax relief for private schools

Chris Haines, ICNN Senedd reporter

The Senedd has voted to scrap charitable business rates relief for private schools.

From April, private schools in Wales will no longer be eligible for charitable relief but an exception will be introduced for independent special schools.

Of the 83 independent schools in Wales, 17 receive charitable relief at an annual cost to the public purse of about £1.3m – equivalent to £210 for each of the estimated 6,200 pupils.

Welsh ministers said it would be impossible to “disentangle” the impact from the Labour UK Government’s separate decision to introduce VAT on private school fees.

The Institute for Fiscal Studies estimated the proportion of pupils who may move from private to state-funded schools as a result of the UK changes at 3% to 7%.

‘Triple whammy’

Similarly, private schools that are charities in England will also no longer be eligible to receive charitable relief of up to 80% off business rates bills from April 1.

Urging Senedd members to back the Welsh regulations on March 4, Mark Drakeford said: “The policy aim is to make additional funding available for local services in Wales, by withdrawing a tax reduction for private education that is paid for by public funds.”

Natasha Asghar, the Conservatives’ shadow education secretary, accused the Labour Welsh Government of “another attack” on private schools.

She told the Senedd: “Not content with enforcing VAT on private independent schools, and implementing a hugely damaging national insurance hike, Labour now wants to take away the 80% business rate relief for charity-run private schools.

“Independent schools are being punished by Labour’s triple whammy on higher taxes.”

‘Crippling pressures’

Ms Asghar raised a report that found 23% of parents were considering moving their children from private to state schools, which would equate to 140,000 pupils in Wales and England.

She said: “After 26 years of Labour mismanagement, we have the worst educational outcomes of anywhere else in the UK and this decision will only add to the already crippling pressures facing our schools.

“Removing charitable status from independent schools may seem like a quick fix, but it risks creating more problems than it actually solves.

“It could lead to fewer options for parents, increased costs for families, and, more importantly, it risks shifting the focus away from the real issue, which is improving education for all children regardless of their background.”

Plaid Cymru’s Heledd Fychan welcomed the regulations, calling for details of how much consequential funding Wales will receive from the VAT changes and when.

‘Few and privileged’

Prof Drakeford said the Welsh Government expects only one independent school to be exempt because it provides education to children with additional learning needs.

He did not address the question on consequential funding.

The first minister-turned-finance secretary told the Senedd: “Of course, I was not surprised to hear the contribution from the Welsh Conservatives.

“They would rather my constituents in Ely and Riverside pay the £1.6m that goes in charitable rate relief to schools whose parents are well able to pay the fees out of their own pockets, that’s what you would prefer … to support the few and the privileged.

“And I absolutely resent … that it is somehow a problem to have more young people receiving state education in Wales.”

The Senedd approved the regulations, 42-16, with the Tory group voting against.