Law firms have warned that private schools are being "forced" to anticipate redundancies in advance of Labour's planned 20% VAT on tuition fees.
Following Sir Keir Starmer's proposal to tax independent schools, parents will be thinking twice about sending their children to fee-paying schools, especially those in grammar school areas.
Nevertheless, given Labour's lead in the polls and the rapid approach of a general election, schools are likely to resort to drastic measures to cut spending if they are to cope with the decline in the student population.
One alternative being considered is to balance the books through redundancies, according to Emma Thompson, companion and head of education at Thackray Williams.
Our clients [independent schools] are already seeing a decline in student numbers, particularly in areas populated with grammar schools." stated Emma Thompson.
Labour's Private Schools Agenda
In anticipation of the next general election, the Labour Party has changed its original approach to the charitable status of private schools. Although the party no longer intends to abolish this status completely, it remains determined to make significant tax changes to these establishments.
More specifically, Labour plans to apply a 20% VAT rate to private school fees and to abolish the exemption from corporation tax in England. This measure is intended to significantly increase public revenue.
Based on Labour's calculations, these proposed tax changes could generate around £1.7 billion. Such a substantial sum demonstrates a strong desire to redistribute resources to those areas of public education which are in urgent need of support.
How will this affect tuition fees?
According to Labour's new proposals, tuition fees could soar by thousands of pounds a year. For instance, if tuition fees rise by 20%, an external student at Wellington College would have to pay £42,912 a year, a significant increase on the current £35,760, as reported by the Telegraph.
Similarly, Dulwich College boarding fees are set to rise by almost £10,000, from £48,324 to a staggering £57,989 per year.
Regardless of these potential increases, Sir Keir Starmer, leader of the Labour Party, has suggested that schools would not necessarily have to pass on these increased costs to parents through higher tuition fees.
However, on the positive side, many private schools offer substantial discounts to families who can afford to pay school fees several years in advance.
Often, schools offer discounts for siblings enrolled at the same school. Even if they are not publicly advertised, it is always a good idea to find out about any family discounts.
There are often scholarships available for students who excel academically, athletically or artistically. In addition, many independent schools offer bursaries to students from less privileged backgrounds.
Budget Cuts and Job Losses
Ms Thompson voiced concern that job losses seem likely given other economic stresses, as well as Sir Keir's proposed tax changes. Although organisational changes do not always lead to redundancies, the current financial climate suggests that they may be inevitable.
So far this month, employer contributions towards teachers' pensions have risen by 5%, from 23.7% to 28.7%. Taxpayers pay the pensions of teachers employed by state schools. However, private education remains unfunded.
The latest change to employer rates was in 2019, when they rose from 16.5% to 23.6%. Teachers' pensions were no longer used by 86 schools before the 2019 changes. However, the Independent Schools' Bursars Association reports that 346 schools, shockingly, have dropped out of the scheme since 2019.