Why we should beware the unintended consequences of VAT on school fees

We have already seen some adverse effects of this policy, which takes effect from 1 January next year, and lawyers today warn of more to come.

The change has been blamed, at least in part, for the closures of Kilgraston School in Perthshire and Cedars School in Greenock, where children’s education will now be disrupted. The parents of some will, no doubt reluctantly, turn to the state sector because they simply can no longer afford the increase in fees.

Of course, better-off parents will be able to absorb the extra cost. More expensive fees will only make private schools beyond the reach of people who currently can only just manage to make the payments. The introduction of VAT only exacerbates inequalities.

And the unintended consequences of this move only begin here.

Partners at the Scottish law firm Lindsays warn: “This is a policy intervention which will have a very long and very unpredictable tail”.

These include further school closures, fluctuations in house prices, changes to catchment zones, and the impact on capacity in the state sector.

A recent report by the Institute for Fiscal Studies estimates the introduction of VAT on school fees will raise around £1.6 billion.

But the increased need for state schools to buy more land and build additional facilities, combined with independent schools taking advantage of being able to reclaim VAT on new projects, could cancel out any gains for the Treasury. The lawyers state: “It is highly unlikely that the net increase to the public purse from the levying of the VAT will be significant and reported analysis suggests there may be a net decrease.”

Perhaps this is of little consequence to those whose support for this policy is driven purely by ideology.

And Scottish ministers must start to address the plunging standards in education - after 17 years of disastrous stewardship by the SNP and the inappropriately named “curriculum for excellence” - that lead so many parents to seek alternatives to the state sector.