Exclusive:Scottish private school principal launches scathing attack over VAT 'education tax'

The principal of a prestigious Scottish independent school has launched a scathing attack on Labour’s decision to introduce VAT on fees.

Lisa Kerr, who started as the head of George Watson’s College in September, said she had been left “dismayed” at the lack of engagement over what she branded “a new education tax”.

In a pre-recorded video message issued directly to parents by the Edinburgh school yesterday, Ms Kerr criticised what she described as a “casual disregard” for the tens of thousands of affected children.

George Watson's College in Colinton. Picture: Lisa Ferguson

Following the decision announced by Sir Keir Starmer’s government, the standard 20 per cent VAT rate will be added to private school fees from January 1.

Sector leaders have warned the move could result in a rise in fees that will force out thousands of youngsters, leading to an influx at local state schools.

It comes after George Watson’s, which has more than 2,000 pupils and 500 staff, announced a nine per cent rise in school fees in May.

Ms Kerr said: “Earlier in my career, I spent more than a decade representing organisations to government and regulators and I worked on several key pieces of legislation. And I can honestly say I’ve never seen a piece of public policy implemented with such a lack of engagement with those who will be affected by it.

"In this case, I am really dismayed by the casual disregard for the tens of thousands of children, not just in our sector, but in the state sector too, who will be negatively impacted. And this is despite huge and ongoing efforts by our sector bodies and our school and our parents to engage with those who are now in government and to share independent data and case studies.

"This tax will not raise the quoted sums and will result in our already-stretched state schools having to educate more children.”

Ms Kerr said the focus at George Watson’s, which counts Olympic champion Sir Chris Hoy and Tory politician Malcolm Rifkind among its alumni, would be to "mitigate” the impact on the school and its pupils, as it plans a new fee strategy.

“We can’t stand still, we must continue to innovate,” she said. “Reshaping our school for the new post-VAT era will be exceptionally challenging work, but our purpose in maintaining and driving forward nearly 300 years of educational legacy and the amazing 2,500 pupils on our campus every day, well that is more than enough inspiration for what we need to do.”

The comments were made just days after two single-sex private schools in Edinburgh – Stewart’s Melville College and The Mary Erskine School – announced they were to merge, in a move they said would ensure parents were spared “substantial” fee rises.

The UK government’s guidance for private schools, released on Thursday, has confirmed the VAT changes will be introduced from the date of the Budget on October 30.

This means that although VAT is only due on payments which relate to terms starting after January 1, if a school receives payments from October 30 for the spring term next year, VAT will be payable on the date of payment, not when the term starts.

Experts said the change would put “increased pressure” on schools to ensure they were VAT compliant, particularly special schools that are less likely to have a well-resourced financial department.

It might also cause schools to be “less generous” to parents struggling with an increase in their fees as a result of the tax who might normally be given leeway to make late payments, a private schools insider warned.

Jonathan Main, tax adviser and partner at MHA consultancy, said the HMRC documents released on Thursday showed it was “beyond doubt” that VAT would come in from January 1.

Parents may face increased pressure to meet private school fee deadlines as documents from HMRC reveal a new “urgent” payment date for Labour’s promised VAT policy.​

Mr Main said schools were falling into two camps: those which are preparing as much as possible and those which are hoping VAT will be delayed.

​A UK government spokesperson said: “In July, the Chancellor announced that as of January 1, 2025 private school fees will be subject to VAT.

!We want to ensure all children have the best chance in life to succeed. Ending tax breaks on private schools will help to raise the revenue needed to fund our education priorities for next year.”