The report supports the VAT policy for private schools written by a close friend of the minister
Labour’s plan to charge VAT on private school fees has come under fire after it emerged that a key report endorsing the policy was endorsed by a close friend of a government minister.
Mr Matthew Pennycook, who is a minister at the Department of Housing and Communities, is reported to have been the leading man behind the marriage of Luke Sibieta, who wrote the Institute for Fiscal Studies (IFS) paper supporting Labour’s VAT proposal.
The report, which found that the Labor VAT policy would have little impact on public schools and could raise up to £1.5 billion for the Exchequer, is often cited by Sir Keir Starmer and other ministers to defend the move. VAT on private school fees, and the end of the business rates exemption for private schools, is expected to come into effect in January 2025.
Mr Sibieta, a researcher at IFS with nearly 20 years of experience, suggested that the policy could force about 20,000 to 40,000 students, or 3% to 7% of private schools, into the public sector. His report also revealed a benefit of between £1.3 billion and £1.5 billion in public funds due to the removal of taxpayers.
However, critics question the close relationship between Mr Sibieta and Mr Pennycook, whose department will be involved in implementing the tax policy. Mr Pennycook and Mr Sibieta reportedly lived together, and Mr Pennycook was the best man at Mr Sibieta’s wedding.
Opponents of the VAT proposal, including the Independent Schools Council (ISC), have warned that the number of students leaving private schools could be much higher than Mr Sibieta’s estimates, which could lead to the scheme bringing in far less revenue than expected. ISC figures show private school enrollments have already fallen by 10,000 pupils by September 2024, suggesting Labour’s forecast may be overly optimistic.
Julie Robinson, chief executive of the ISC, said: “The data could not be clearer: parents are already pulling their children out of private schools because of the government’s plans to charge parents VAT. This is just the tip of the iceberg, and many small schools are already at risk of closure. “
Mr Sibieta defended his analysis, pointing to demographic factors such as the declining birth rate that could affect enrollment in private schools. He emphasized that it was too early to make firm conclusions and that the full impact of the policy may not be clear for another two years.
The Conservative Party is expected to use the Debate Day debate to call for the VAT policy to be delayed until 2028 in areas where public schools are already close. Damian Hinds, the shadow education secretary, said the policy could lead to a housing crisis in school sites, saying it would “reduce choice, increase class sizes, and distract teachers and students.”
As the debate over VAT policy heats up, the Government is facing calls from academic unions and tax organizations to delay its implementation until at least September 2025. The IFS has defended the impartiality of its work, with its spokesman saying: “The IFS is a political organisation. independent research organization committed to the highest standards of material analysis. “
Despite these assurances, revelations about the closeness between Mr Sibieta and Mr Pennycook have raised concerns about the impartiality of the report supporting Labour’s tax plans, which could have a major impact on private and state education in the UK.
