(Bloomberg) -- The UK Labour Party reversed its policy of scrapping charitable status for private schools, meaning they will retain some of their current taxation perks, while still facing increased charges if the opposition comes to power.
Labour still intends to charge private schools business rates on their premises and 20% value added tax on their fees, piling extra costs on institutions that teach about 6.5% of British children.
“We will remove the unfair tax breaks that private schools benefit from, to fund desperately needed teachers and mental health counseling in every secondary school,” Labour said on Thursday in a statement. “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.”
The revelation — first reported in the i newspaper — marks a softening of party leader Keir Starmer’s stance, though it still means schools will face extra costs that they must either absorb themselves or pass on to parents in the event of a Labour victory at the next general election. With Labour enjoying a double-digit lead in national polls for months, that’s a real prospect.
Labour’s policy had led to the ruling Conservatives accusing them of stoking a class war. Some 592,000 out of the England’s 9.1 million school pupils are educated privately, according to government statistics.
But by now allowing them to retain charitable status, Labour would still let independent schools enjoy a tax break on profits — which must be reinvested in education — and reclaim gift aid on donations.
Both Starmer and Labour’s education spokeswoman, Bridget Phillipson, have indicated in the past that in government they would strip schools of charitable status.
In a debate in Parliament in January, Phillipson said Labour “agree” with the concept that “charitable status for most private schools is something that should come to an end.” And last year, Starmer said he would fund catch-up schooling by removing the status enjoyed by private schools.
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