Labour’s tax raid on private schools could end up costing the taxpayer £1.6 billion a year as a result of pupils being forced into the state sector, a report has warned.
Sir Keir Starmer has promised to introduce VAT on independent school fees if Labour wins the election.
They have claimed the tax would generate £1.7 billion to put towards state schools. The Institute for Fiscal Studies (IFS) has predicted the policy will raise £1.3 billion each year.
But analysis from free-market think tank the Adam Smith Institute (ASI) has warned that the policy could cost more than it makes.
Labour’s tax raid on private schools could end up costing the taxpayer £1.6 billion a year as a result of pupils being forced into the state sector, a report has warned
PA
The report says the IFS’s figure does not account for higher inflation, fiscal drag and rising mortgages.
It dismisses the IFS’s prediction that just three to seven per cent of children would move to state education as a result of the policy.
The ASI’s figures suggest that Labour’s plan would raise no money if just 10 to 15 per cent of pupils switched to the state sector.
If this increases to 25 per cent, a figure previously predicted by Baines Cutler, the policy would cost £1.6 billion a year.
Economic Secretary to the Treasury, Bim Afolami, dubbed the tax raid “another unfunded spending promise”.
He told the Telegraph: “Once again, Labour’s sums don’t add up because Sir Keir Starmer does not have a plan.
“This is another unfunded spending promise that will cost money, meaning higher taxes on working people and more borrowing to fill the gap.”
Trade minister Greg Hands added: “Labour’s ill-conceived, back of a fag packet tax on independent school parents risks damaging not only independent schools but the whole education sector.
“It’s the politics of envy, killing aspiration and failing to prepare for the likely consequences of pupils being priced out and moving to the state sector, which likely won’t be able to take the extra numbers. It is a bad policy at every level.”
Economic Secretary to the Treasury, Bim Afolami, dubbed the tax raid “another unfunded spending promise”
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Tory MP for Worcester Robin Walker, who sits as the chairman of the education select committee, told the Telegraph the report shows the “severe risk” to the employment of thousands fo teachers.
He dubbed the policy “hopelessly optimistic”.
The ASI report warned that independent schools spend more than 70 per cent of their fee income on staff costs, warning that if just five per cent of children leave it would lead to 5,150 redundant teachers.
