Private school in Reeves's constituency to close after Labour's tax raid

Telegraph

25-03-2025

A long-established private school in Rachel Reeves 's constituency has announced plans to close this summer because of serious financial difficulties.
Fulneck School, founded more than 250 years ago in Pudsey, West Yorkshire, said it had made the 'difficult decision' to shut ahead of a legal battle over the Government's VAT raid on private schools.
The co-educational boarding school was established in 1753 and its notable alumni include Herbert Asquith, the First World War prime minister, and actress Diana Rigg.
In a statement on its website, Fulneck announced that it was with 'deep sadness' that it will close on July 8 this year.
While it did not directly make reference to recent government policies affecting private schools, the school said a drop in pupil numbers has been 'combined with a rise in costs beyond our control, which has made the school financially unviable'.
It comes after private schools were hit with 20 per cent VAT on their fees for the first time on Jan 1 this year.
Around a dozen schools have directly blamed the tax raid for forcing them to close since the policy was first seriously touted by Labour in October 2023.
Fulneck School said in a statement: 'Despite the dedicated efforts of the school and the Fulneck trustees to sustain pupil numbers, a continued decline in enrolment, combined with rising operational costs, has made it increasingly challenging to maintain financial viability.
'Following a comprehensive strategic review and the exploration of all possible alternatives, the trustees have made the difficult decision to plan for the school's closure.
'We understand that this announcement will be distressing for our pupils, parents, staff and the wider school community.'
Pupil numbers at the school for three- to 18-year-olds have fallen from 366 in 2017 to 295 at the latest inspection last year.
The private day and boarding school has also racked up significant operating losses over the past few years despite more than £1.5 million in capital funding provided since 2020 by the Moravian Church, its parent company.
The school, which charges up to £40,095 a year for senior boarders, made an operating loss of almost £271,500 in 2022-23 and of nearly £410,000 the year before, according to its latest financial accounts.
A spokesman for the school said it was 'committed to ensuring that the school year finishes as planned, with all teaching continuing until the end of the school year and pupils completing public and internal examinations as intended'.
'We are also committed to ensure a smooth transition for all affected and will offer support to our pupils, parents and staff throughout this process,' they added.
Most of the schools that have collapsed to date and blamed VAT had amassed serious financial losses or suffered from dwindling pupil rolls over the past years, making them vulnerable to political changes.
However, the sector is bracing for potential further closures when the latest phase of the Government's tax raid comes into force next month.
More than 1,000 private schools in England with charitable status are set to lose their 80 per cent business rates relief from April 1.
The private school sector has also pointed to looming business cost rises after the Chancellor, who is the MP for Leeds West and Pudsey, announced last year that employers' National Insurance contributions will increase from April 6.
Ms Reeves, who is gearing up for her Spring Statement on Wednesday, faces a legal battle over the Government's tax raid on private schools, with a judicial review hearing scheduled to take place next week between April 1 and 3.
The Independent Schools Council, which represents more than 1,400 private schools across the UK, will argue that the policy is discriminatory towards certain pupils.
Even if successful, the legal challenge will not be able to halt the VAT policy in its tracks or reverse it.
However, victory in the High Court would rubber-stamp private schools' concerns that the policy is unfair and could apply pressure on ministers to grant further exemptions.
At the same time, the Government is expected to face a back-and-forth in Parliament over its plans to strip private schools of their business rates relief after the House of Lords voted against the move last week.
Peers voted by 232 votes to 141 to back a Conservative amendment that axed this key clause from the Non-Domestic (Multipliers and Private Schools) Bill.
The Government has insisted that around 50 mainstream private schools in England shut in a typical year, alongside smaller specialist schools and others across the UK.
The Treasury hopes the tax policy, plus plans to remove business rates relief, will raise more than £1.8 billion each year by the end of the decade.
Labour has pledged to spend the money on measures to improve standards in state schools, including by recruiting 6,500 new teachers by the end of this Parliament.