Parents and private schools lose High Court case against VAT on fees
The judgment on Friday dismissed the arguments made by three separate groups that the new government policy discriminated against children with special educational needs, among others.
The ruling said the tax, which was part of Labour's general election manifesto, was proportionate in its aim to raise money for state schools.
The Independent Schools Council (ISC) said it was disappointed by the ruling which came after a three-day hearing in April.
At least one claimant said they would appeal and the ISC pledged to continue to hold the government to account over the tax.
The Treasury, Department for Education and HMRC were named in the application for a judicial review which claimed VAT on fees was discriminatory and a breach of human rights law.
Nearly 20 families and faith schools had joined forces with the ISC to challenge the policy, saying it was unfair to parents wanting a faith school or single-sex education, or those who had children with special educational needs but did not have an education health and care plan.
Schools and parents were surprised when the tax was introduced in January rather than at the start of the next academic year.
The government repeatedly said it would raise at least £1.6 billion a year which would be ploughed back into state schools, including paying for 6,500 more teachers. But Sir Keir Starmer was widely criticised on Thursday for saying on social media that the VAT windfall would fund new housing.
Both sides had appointed leading barristers. The barristers used by the government to argue their case had all attended private schools.
In their ruling, the judges said the policy may have a discriminatory effect on children with special needs who do not have a Education, Health and Care Plan (EHCP), a legally enforceable document setting out what support they require.
But to create an exemption, the judges added, would be unfair to the 1.1 million children with SEN in the state sector as less money would be raised to help them.
Referring to parents who brought the claim, the ruling said: 'Not every decision to impose tax gives rise to a deprivation or interference with the possessions of the person who will end up paying it. None of the parents in this case are obliged to continue to send their children to private schools, and it is therefore doubtful whether the challenged measure interferes with a 'possession' of theirs.'
Families had relied on an argument that the tax breached their right to education under the European Convention on Human Rights (ECHR) and was also discriminatory.
Parents bringing the claim included those wanting single-sex education, foreign language education such as French lycées and Christian, Muslim and Charedi Jewish families.
But the ruling said the convention did not require the state to facilitate one child's access to a private school, even if the parents' reason for preferring a private school is a religious one.
Education Not Taxation, a private school parent lobby group, had hoped the ruling would lead to the overturning of the VAT policy altogether, although the judicial review would have had no legal force.
It 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 education health and care plan (EHCP), and therefore that the government's measure discriminates against them.'
It claimed the court ruling supported its argument that VAT on education violated the human rights of vulnerable children, adding: '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 will continue to highlight the harms caused by taxing education.'
Sophie Kemp, head of public law at Kingsley Napley, representing the claimants, said: 'Both the government and the court recognised [it] had a discriminatory impact on children at religious schools as well as significant impact on children with SEN. The court felt that it was not able to interfere because of the leeway it must give to parliament. Unfortunately, this doesn't help the claimants, who must now weigh their options.'
Christian claimants, supported by the Christian Legal Centre, said they planned to appeal against the judgment.
Sir James Eadie, for the government, said during the hearing that raising funds was the primary objective of the policy and that parliament was aware that some people would no longer be able to afford private school fees once VAT was added.
He told the court: 'It is revenue raising for a purpose. To help fund the government's priorities for education and young people, including investing in state education.'
Julie Robinson, chief executive of the ISC, said: 'This is an unprecedented tax on education and it was right that its compatibility with human rights law was tested. We would like to thank the claimants who shared their stories on key issues: special educational needs and disabilities, faith schools, bilingual provision and girls-only education.
'The ISC is carefully considering the court's judgment and next steps. 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.'
In December last year, the chancellor, Rachel Reeves, said: '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.'
Starmer wrote on X this week: ''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.'
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