Here are 5 ways a Labour election victory will impact Scottish education, from VAT to universities

A series of changes are on the way despite education being devolved

Opinion polls show that Sir Keir Starmer’s Labour Party is all but guaranteed to form the next Westminster government following the general election in ten days’ time.

This will have wide-ranging ramifications for Scotland, despite the SNP remaining in Government at Holyrood, most likely until the next Scottish election in 2026, at least.

Hide Ad
Hide Ad

Sir Keir and his ministers will take charge of a range of powers reserved to the UK government, but the end of the Conservatives’ 14 year-reign will also have implications for devolved areas, including education. Ahead of the election, The Scotsman has taken a look at five key ways Scottish education could be impacted by a Labour victory.

VAT on private school fees

Value added tax (VAT) is one of the tax powers which remains reserved to Westminster, and any changes would be UK-wide. Private schools, which educate around 30,000 pupils in Scotland, do not pay VAT on their fees because of a legal exemption for organisations providing education.

Labour’s manifesto pledges to end this exemption, resulting in a requirement to pay an effective VAT rate of 15 per cent. It would be up to schools to determine whether fees are to rise as a result, and by how much, if so.

Then, parents would have to decide whether they could afford the increased fees, and if not, whether to withdraw their children and send them to state schools.

The Institute of Fiscal Studies (IFS) has estimated the policy will result in a reduction in private school attendance of between 3 per cent and 7 per cent. Others have claimed it could be as high as 20 per cent, impacting 6,000 pupils in Scotland.

The sector argues this will add to pressures on local state schools, which more than 700,000 young people attend in Scotland. The local authorities of Edinburgh, Glasgow and Perth & Kinross have the largest share of independent schools in Scotland.

However, polls suggest the majority of people support the ending of the VAT exemption.

Extra investment in education?

Labour’s manifesto suggests the Scottish Government will receive an additional £320 million in “Barnett consequentials” as a result of the spending it plans to make on public services in England.

Hide Ad
Hide Ad

South of the border, the party is planning to invest in 6,500 new teachers and more than 3,000 new nurseries, paid for using £1.5 billion from VAT on private school fees.

Scottish Labour leader Anas Sarwar has suggested Scotland would receive £150m directly as a result of the VAT change. He has also said it should be spent on things like state school teachers and free breakfasts for pupils.

However, it will be up to SNP ministers to decide how to spend the money, unless Labour plans on doing a budget deal with SNP leader John Swinney to deliver such policies.

Much of the public sector is crying out for additional investment, including schools, colleges and universities. All will hope for a share of the funding.

‘Turbo-charged’ Scotland Office

In recent years, the UK government has sought to find ways to invest directly in projects in Scotland, through initiatives such as City Deals and the Levelling Up agenda.

In addition to funding for the Scottish Government being promised via the Barnett formula, it was suggested recently by shadow Scottish secretary Ian Murray that Labour would aim to "turbo-charge" the Scotland Office.

Under the plans, the department would be responsible for handing out £150m of levelling up money to communities, with a particular focus on helping deprived areas, cutting poverty rates, creating jobs and stimulating economic growth.

This could increase tensions with the Scottish Government, but could also offer a further opportunity for financial support for specific projects in the education sectors, such as cash-strapped colleges.

Hide Ad
Hide Ad

A new model for funding universities?

Sir Keir has already abandoned a pledge to abolish tuition fees in England, saying he needed to prioritise tackling NHS waiting lists. However, the Labour leader has also been clear the university funding system has “got to change”.

The party’s manifesto says only “the current higher education funding settlement does not work for the taxpayer, universities, staff, or students”, and that “Labour will act to create a secure future for higher education and the opportunities it creates across the UK”.

Any actions Labour does take in Government will only directly impact universities in England. But it will come at a time of renewed debate over the future of Scotland’s system of higher education funding, including the continuation and affordability of “free tuition”. That debate will only intensify north of the border if England embarks on an overhaul of its model.

The return of international students?

Scottish universities have been dealing with a cut in Scottish Government funding for “free tuition”, but another significant pressure has been a huge downturn in the number of international students.

Intake on taught postgraduate courses fell by more than 20 per cent in the 2023/24 academic year across the sector, with one institution witnessing a drop of 79 per cent. This is costing universities more than £100m this year, with the damage expected to be even deeper next year. The fees paid by these students help subsidise the tuition of Scots, but have plummeted in the wake of tighter UK immigration rules, and an “unwelcoming” rhetoric from Conservative ministers in recent years.

Some Scottish university leaders have already spoken of their hopes this damaging trend can be arrested and ultimately reversed as a result of a change in the party occupying 10 Downing Street. However, they have also cautioned any “uplift” might not materialise until 2026/27.

Labour’s position on immigration has also perhaps not been as welcoming as some higher education leaders might have hoped. The party has signalled it will retain a ban on international students bringing their family members, which was introduced at the start of this year and has been blamed in part for the downturn.



Want to join the conversation? Please or to comment on this article.