The Telegraph declared the policy a “tax raid” that the public would not support. The Daily Mail suggested it would “raise no cash” anyway, while Chancellor Jeremy Hunt blasted the plans as “ideological” and accused Labour of “giving with one hand and taking away with another”. In June, the Guardian revealed that officials from the body representing independent schools had been privately dismissive of “chippy” Phillipson. They said she “doesn’t know diddly” and should “appreciate the great good our sector does”.
However, a report from the Institute for Fiscal Studies (IFS) on tax, private-school fees and state-school spending released today (11 July) suggests she could be right about the benefits of the tax. The analysis disproved the biggest criticisms – such as that private schools would be left stripped of funding, parents would be prevented from sending their children to private schools, and that state schools would face increased pressure.
The think tank reported that ending tax breaks for private schools could raise as much as £1.5bn for the state sector, a 2 per cent increase in funding for state schools. Josh Hillman, director of education at the Nuffield Foundation, called this a “small but potentially worthwhile sum”. The report also concludes that “change[s] in private school attendance levels will be small”, as opposed to the exodus predicted by some. It estimates that just 3 per cent of private-school pupils would move to the state sector. As a result, any rise in fees would have a negligible impact on the number of children leaving the private sector – meaning there would be little extra pressure placed on state schools.
As the IFS explains: “If the main aim of removing tax exemptions from private schools is to raise revenue, then this is likely to be achievable. If the aim is to encourage more pupils into the state sector and reduce inequalities by school attended, then this policy package is likely to have only minor impacts.”
This is the perfect conclusion for Labour. It allows Phillipson and the shadow chancellor Rachel Reeves to say that removing private schools’ privilege is not a “tax on aspiration”, because of how most parents are still likely to send their children to them. As the research makes clear, the proportion of schoolchildren that attend private schools in the UK has remained at 6-7 per cent for at least the last 20 years – despite a 20 per cent real-terms increase in average private school fees since 2010 and a 55 per cent rise since 2003. “Unsurprisingly, private school attendance is largely concentrated at the very top of the income distribution,” the report adds.
Phillipson may well be feeling smug. While Labour has been cautious about committing to tax rises and public spending, it now has a tax and spending policy that enhances social mobility and is independently backed. The party is also freed from accusations that it is penalising aspiration and interfering with parents’ right to choose. Labour has demonstrated that it can produce fully costed, redistributive policies – in spite of internal critics complaining about Keir Starmer’s caution.