Private schools 'could fall apart' if hit by double tax

Private school parents could face a further fee hike if a national insurance increase is announced in the Budget in what has been called an “extra tax” on top of the government’s controversial new VAT policy.

- TARA COBHAM

With one warning that “there is only so far that the system can be squeezed before it starts to fall apart”, independent school leaders fear the sector will be hit twice – first, by Labour’s removal of private schools’ 20 per cent VAT exemption, which will start in January, and now, by a potential rise in employers’ national insurance contributions, which the chancellor has not ruled out ahead of her first Budget tomorrow.

Headteachers of smaller, specialist private schools say they have little room in already-squeezed budgets to make cuts, leaving them little option but to hike fees to cover VAT charges. They fear they may need to raise fees even higher if employers’ national insurance contributions are raised.

Rachel Reeves is set to increase national insurance to help fund the NHS and balance the government’s books, reports suggest. The current national insurance rate paid by employers is 13.8 per cent, with the chancellor expected to increase this by between 1 and 2 per cent.

David Woodgate, chief executive of the Independent Schools Bursars Association (ISBA), has described any national insurance hike as an “extra tax” on private schools and, in turn, parents with children who attend them.

Mr Woodgate told The Independent: “Any rise in national insurance employer contributions would have to be funded by independent schools, which would not qualify for any funding offered to state schools to cover the rise. This would be an extra tax that schools would have no choice but to pass on to parents and also risks being an additional in-year tax, further stretching budgets set before the general election was even called.”