Private schools, pupils and parents lose High Court bid to stop Labour introducing VAT on school fees
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Private school families have been dealt a devastating blow after they lost a High Court challenge to Labour’s VAT on fees.
The judicial review claim, heard earlier this year, aimed to have the 20 per cent tax declared 'incompatible' with human rights law.
However, in a decision handed down this morning, judges rejected all claims, despite agreeing with some of the arguments.
The controversial tax, pledged in Labour’s manifesto, came into force in January this year.
Three groups of families – most of whom are anonymous – joined private schools in bringing a legal challenge against the policy.
Their lawyers argued the tax is a breach of children’s right to an education under the European Convention on Human Rights (ECHR).
The various families also said it was ‘discriminatory’ – either because their child has special educational needs (SEN), has a preference for a religious education, or because they need an all-girls environment.
In their judgement this morning, Dame Victoria Sharp, Lord Justice Newey and Mr Justice Chamberlain agreed that the tax interfered with SEN children's human rights.
However, Parliament ultimately had the right make the decision, they concluded.
They said Parliament had a 'broad margin of discretion in deciding how to balance the interests of those adversely affected by the policy against the interests of others who may gain from public provision funded by the money it will raise'.
They added that 'the challenged legislation falls within that broad margin’.
They also pointed out, more generally, that the EHCR does not 'impose any general obligation on the state not to hinder access to private education.'
At the opening of the court case in April, families of children with SEN from all over the country protested outside.
They said they have been forced to choose the private sector due to the state provision for SEN being so poor – but cannot afford the extra cost of the VAT.
During the case, lawyers argued that even a report by the National Audit Office (NAO) had said SEN provision in the state sector was ‘not delivering for children’ and ‘unsustainable’.
And they pointed out Education Secretary Bridget Phillipson appeared to agree, saying in October that the report highlighted a ‘broken’ system.
Government lawyers sparked outrage by trying to claim the NAO evidence was ‘inadmissible’.
Sir Lindsay Hoyle, the Speaker of the House of Commons, was criticised at the time for backing the Government’s position.
In today’s judgement, judges agreed the evidence amounted to ‘proceedings in Parliament’ and therefore inadmissible.
However, the judges said it 'does not affect the outcome' of the case because most of the key facts in that report were now 'agreed' by both parties.
During one of the hearings, it was also revealed Labour had considered making an exemption for SEN children, but then decided it would not raise enough revenue.
In written submissions, Sir James Eadie KC, representing the Government, said: ‘Having considered 17,502 consultation responses, the Government rejected the exemptions… because they were incompatible with the principles underpinning the policy, namely being revenue diminishing, unfair, unworkable and/or administratively onerous.’
He said the ‘central objectives’ in implementing the tax included ‘raising additional tax revenue annually by 2029-2030 to invest in public services, including the state education system, and enhancing the fairness of the tax system overall.’
And he added that the Office for Budget Responsibility (OBR) projected the measure will yield exchequer revenue of £1.5billion in 2025/26, rising to £1.7 billion per year by 2029/30.
There is already an exemption in place for SEN children who have an education, health and care plan (EHCP), which entitles them to a higher level of state-backed support.
However, only a small proportion are able to get an EHCP, leaving the vast majority of SEN families having to pay the tax.
In their decision today, the judges said they accepted that a 'significant number of the pupils with SEN but no EHCP who are displaced from private schools into the state sector will receive materially worse provision for their SEN than they do now.'
They added: 'In some cases, that provision is likely to be inadequate, at least in the immediate future’.
Among the other claimants are Jewish pupils at specialist religious private schools who fear anti-Semitic attacks if they go into the state sector.
There is also a girl who had to attend a single-sex private school – the only all-girls school in her area – due to ‘harassment’ by boys at her co-educational state school.
And there are also claimants using Christian private schools because they cannot obtain the same religious education in the state system.
One is Stephen White, who has chosen not to be anonymous, and whose eldest four children are at Bradford Christian School, a private Christian school in West Yorkshire.
In April, he helped stage a protest outside the High Court to mark the opening of the case, joined by dozens of other parents from around the country not involved in the case.
This morning, the Christian Legal Centre, which supported his case, vowed to appeal the decision.
Meanwhile, the Independent Schools Council (ISC), which represents most private schools, said it would decide whether to appeal in considering its 'next steps'.
ISC chief executive Julie Robinson said: 'The ISC is carefully considering the court’s judgment and next steps. Our focus remains on supporting schools, families and children.
'We will continue to work to ensure the Government is held to account over the negative impact this tax on education is having across independent and state schools.'
David Walker, director, Boarding Schools' Association (BSA), said: ‘There are no winners here.
'It is unlikely VAT will raise the expected funds, given the drop in pupil numbers is already far higher than predicted, with boarding schools seeing a 4 per cent drop in pupil numbers over the last year.
'This means children and communities are suffering due to disrupted education or school closures.
'It is a particularly sad day for students with needs that cannot be met in the mainstream system.
'We urge the government to stop its assault on independent education, before more children are caught in the crosshairs.’
A spokesman for parent group Education Not Taxation said: ‘While we are disappointed in the overall outcome of the challenge, we are grateful that the Court recognised that imposing VAT on school fees will have a disproportionately prejudicial effect on pupils with SEN but no EHCP, and therefore that the Government’s measure discriminates against them.
‘As the Court found, the Government’s education tax violates the human rights of these vulnerable children.
'Labour have consistently demanded respect for the European Convention of Human Rights and we expect them to think hard about what these senior judges have said – does their concern for human rights not extend to these rights for children as well?
'We urge the Government to reconsider its education tax.
'We look forward to meeting with ministers soon to reiterate the harms this is causing children and families and to discuss next steps.'
Ana Boulter, 49, a TV presenter whose 13-year-old daughter has dyslexia and autism and attends Stamford School in Lincolnshire, called on rebel Labour MPs to fight the tax.
In a video for YouTube, said: 'If we see this consistent dehumanisation of the vulnerable in society we are going to end this Parliament in a very sorry state.'
It comes after the Prime Minister was criticised yesterday for appearing to suggest the money raised from the tax would now be spent on housing, not teachers.
The Government has always maintained the tax is necessary to raise money for state schools – including providing 6,500 new teachers.
However, in an X post after Wednesday’s Spending Review, Sir Keir appeared to suggest housing will now be the beneficiary.
He wrote: ‘In the budget last year, my government made the tough but fair decision to apply VAT to private schools.
‘The Tories opposed it. Reform opposed it.
‘Today, because of that choice, we have announced the largest investment in affordable housing in a generation.’
Replying, Tory leader Kemi Badenoch said: ‘You said “every penny” would go into state schools... but now it’s housing?’
In October 2024, the OBR estimated the new tax would lead to 35,000 fewer pupils in private schools.
A Government spokesman said: 'We welcome the court’s decision, which confirms that the legislation is compatible with the Government’s human rights obligations.
'Ending tax breaks for private schools will raise £1.8 billion a year, helping to support public services including the 94 per cent of pupils who attend state schools.'
'The fees are crushing' - families devastated at challenge failing
Families of SEN children have spoken of their devastation at having to continue to pay VAT on private school fees after the challenge to Labour's tax raid failed.
One mother, Marie, who asked for her surname not to be printed, said the extra £8,000 a year she is paying due to the tax is ‘crushing’.
She and her husband have a son, 17, with SEN and a daughter, 15 - both coming up to crucial exam years.
They live in Gateshead, having moved to a smaller house from a more expensive area to fund private school fees after their son was failed by the state sector.
She said: 'We never thought we would go down the independent school route until our son was diagnosed with a severe visual disability.
'His state school did their best to help but staff had not been trained, and going forward, the resources were not there to provide what was necessary to support his essentially unrecognised disability.
'We moved our son at the end of Year 4 to an independent school because his learning was being affected.
'I had to draw money out of my pension and we moved to an area with cheaper housing.
'Despite the fact our daughter was happy where she was we moved her too.
'I had to look for a higher paid job and travel further for work so logistics meant we had to have them both in the same place with wrap around care.'
She said they are not stereotypically wealthy, driving 10-year old cars and living in a small house.
She said: 'It makes my blood boil to hear politicians accusing us of moving our so-called little Tarquin to the independent sector because we wanted him to ride ponies and have his grapes peeled.
'The reality is we did not move him to have the "best" - we moved him to get the basics.
'When we arrived at the independent school... the smaller class sizes of around 20 children allowed my son, and the other children they identified with a similar visual impairment, to get the attention they all needed.
'I have fought tooth and nail to get my son the education he needs.
'If we had chosen to spend our money on a bigger house, holidays or newer cars, nobody would bat an eye.
'But because we have been forced to spend it on education, we are vilified.'
Referencing the judgement, she said: 'The extra eight grand a year is really crushing us, but we are lucky our son is coming to the end of his school days.
'There is no way we could do this now if he was any younger.
'We will cling on by our fingertips until the kids have either left or are out of exam years.'
Marie was not involved in the case as a claimant.
