Labour U-turns on plan to scrap charitable status of private schools

Published

7 months ago

September 27, 2023

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Labour has U-turned on its plans to remove the charitable status of private schools.

Shadow chancellor Rachel Reeves announced in 2021 that her party was ideologically opposed to fee-charging schools avoiding tax by operating as charities.

However, it has now emerged that, while Labour still plans to force independent schools to pay VAT, it will no longer remove their charitable status.

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Labour is claiming that politicians talking about the charitable status was only ever a shorthand for changing the taxes schools paid.

A party spokesperson said: “Our policy remains. We will remove the unfair tax breaks that private schools benefit from, to fund desperately needed teachers and mental health counselling in every secondary school.

“This doesn’t require removing charitable status, however, driving high and rising standards for every child against the backdrop of a broken economy requires political choices. Labour isn’t afraid to make them.”

Sky News understands that the change was made to Labour policy as removing the charitable status of schools would require complex legal procedures, while applying VAT is a fairly simple process.

Labour’s plan to put VAT – equivalent to 20% – on school fees has sparked outrage from some in the Conservative Party who believe it will prevent parents from sending their offspring to schools which charge tens of thousands of pounds a year to educate them.

Speaking in 2021, Ms Reeves said: “Right now, private schools enjoy charitable status which makes them exempt from both business rates and from VAT at a cost to the taxpayer of £1.7bn every year.

“But… here’s the truth: Private schools are not charities.

“And so we will end that exemption and put that money straight into our state schools.

“That is what a Labour government will do.”

Sam Coates

Deputy political editor

@SamCoatesSky

Labour has changed its policy on private schools.

It will continue to charge business rates and VAT, raising up to £1.5bn. This will fund 6,500 new teachers, mental health support workers and early speech and language training.

However, it will no longer be removing charitable status.

Asked why, the source did not say – saying they “didn’t want to get into the weeds of charitable status” and declined to say when the decision was made.

There’s a clear political logic though. This allows the measure to be done in a finance bill – i.e. quickly. Removing charitable status from schools is a highly complex affair.

The independent school sector says they started seeing the rhetoric change on this policy almost a year ago, after the November budget, when it was raised by Jeremy Hunt.

The sector is worried at the remaining uncertainties – will private schools be able to claim gift aid, tax exemptions on annual profits, for example.

“This is the worst of all worlds for schools. They must keep their charitable obligations without the benefits. This is a lot of stick, not a lot of carrot,” said one source.

Charitable status qualifies schools for an 80% relief on business rates.

Julie Robinson, chief executive of the Independent Schools Council, remained critical of the policy.

She said: “If Labour takes away the tax relief associated with charitable status for independent schools, the policy would create a two-tier system within the charity sector, setting a worrying precedent that any charity seen as not reflecting the political ideology of the day could be subject to additional taxes.

“We would love to work with Labour to build more effective ways to achieve our shared goal of improving education for all young people.”

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Labour’s policy costings only ever took into account charging VAT on school fees and ending the business rates exemption, rather than the other tax breaks.

But shadow education secretary Bridget Phillipson had spoken of “scrapping charitable tax status for private schools to fund the most ambitious state school improvement plan in a generation”.

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Bitfinex database breach ‘seems fake,’ says CTO

Published

9 hours ago

May 5, 2024

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<div>Bitfinex database breach 'seems fake,' says CTO</div>

Bitfinex CTO Paolo Ardoino explained that if the hacking group was telling the truth, they would have asked for a ransom, but he “couldn’t find any request.”

Politics

Labour taking ‘Tory crown jewel’ feels like a momentum shift

Published

12 hours ago

May 5, 2024

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Labour taking 'Tory crown jewel' feels like a momentum shift

It was a wafer-thin victory, but a huge win.

The symbolism of Labour taking the West Midlands mayor, a jewel in the Tory crown, could be felt in the room as Labour activists gathered in Birmingham to celebrate the win with their new mayor Richard Parker and Labour leader Sir Keir Starmer.

There are moments on election journeys when the momentum shifts – and this win felt like one of them.

“We humbly asked [the voters] to put their trust and confidence in a changed Labour Party and they did. And that is a significant piece of political history that we’ve made here today,” said Sir Keir at his victory rally.

“So the message out of these elections, the last now the last stop before we go into that general election, is that the country wants change.

“I hope the prime minister is listening and gives the opportunity to the country to vote as a whole in a general election as soon as possible.”

This win gave them the boost that was missing when they won the Blackpool South by-election on a massive 26-point swing, but then failed to pick up the hundreds of council seats they were chasing.

This win, on just 1,508 votes or 0.25 per cent of the vote, was a body blow for a Conservative party that believed they could just about cling on. Ben Houchen, the Tees Valley mayor, is now the last Tory standing.

For Labour, then a moment to bookmark.

Just as Boris Johnson’s Hartlepool by-election win in 2021 was a low point for Sir Keir – he told me this week that he considered resigning over the loss because he thought it showed he was the barrier to Labour’s recovery – this too will feel devastating not just for Andy Street but for the PM too.

Labour has beaten him in a street fight. He’s bloodied with Sir Keir now emboldened.

“This was the one result we really needed,” said one senior Labour figure. “It’s been our top focus for the past week and symbolically a very important win.”

And Labour needed the boost, because, as Professor Michael Thrasher pointed out in his Sky News’ national vote share projection calculated from the local election results, Sir Keir was not picking up the sort of vote share that Tony Blair was winning in the run-up to the 1997 Labour landslide.

His latest calculation of a 35% vote share for Labour and 26% for the Tories, put Sir Keir winning a general election but short of a majority.

What the West Midlands mayoral win did for Sir Keir was to give him a clear narrative that he is coming for the Tories and will do what he needs to take them down.

It raises inevitable questions about what is next for Rishi Sunak. The prime minister had nowhere to go today, not one win to celebrate. The worst performance in council elections in 40 years, was already pretty much as bad as it gets before the loss of Andy Street. The former Conservative mayor was magnanimous towards the prime minister, saying the loss was his alone.

But colleagues will not be so generous. One former cabinet minister said this loss was “devastating”. “We’re done and there’s no appetite to move against him,” said the senior MP. Many Tories tell me they are now resigned to defeat and believe Mr Sunak and his team needed to own it, rather than the rest of the party.

The coming days might be bumpy, the mood will be stony. But Tories tell me not much will actually change for them.

For Sir Keir, he now needs to sell not the changed Labour Party, but his vision for changing the country. The West Mids mayor’s win was dazzling, but it could have so easily gone the other way. And as Mr Sunak fights to survive, Labour still has to fight hard to win.