Reeves: State schools to receive 'every penny' of £1.7bn raised by ending private school VAT break

Chancellor Rachel Reeves said scrapping private school tax exemptions would give children "the very best start in life" as ITV News' Harry Horton reports

The government's move to scrap the existing VAT break on private school fees is expected to raise £1.5 billion next year, with the Chancellor promising to funnel "every penny" into state schools.

According to the Treasury, thousands of state schools will receive the financial boost, with the changes netting an extra £1.7 billion a year by 2029-30.

The changes, which come into force on Wednesday January 1, will end the existing exemption for independent schools, which currently do not have to charge 20% VAT on fees.

Chancellor Rachel Reeves said: "I recognise a lot of parents work hard to be able to send their children to private schools but all parents are aspirational for their children, incluidng the 94% of children in our state schools."

She added: "Every single penny of that money will go into our state schools to ensure every child gets the best start in life, and that is so often through being able to recruit and retain the best teachers."

The government has also pledged an extra £2.3 billion for the core schools budget, which the Treasury said will be funneled into hiring 6,500 new teachers and "improving the Special Educational Needs and Disabilities system".

Critics of the ending the VAT break for private schools have raised concerns the move could increase pressures on the state sector - and the impact moving schools could have on children whose parents cannot afford higher fees.

Rachel Reeves said she did not expect to see large numbers of pupils moving from independent to state schools.

She said: "In the last 25 years, private school fees have gone up by 75%, and yet the numbers at private schools have remained static.

"So that's why the Office of Budget Responsibility and the Institute of Fiscal Studies think the number of children changing schools is likely to be quite low."

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Conservative leader Kemi Badenoch has previously said that her party would reverse the decision and re-instate a VAT break on fees.

She said: "The bottom line is that it is a tax on aspiration.

"Taxing education is wrong, it is against our principles, so yes that is the sort of thing that I can very easily say we would not do that.”

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