Labour’s Private School Tax Proposal Likely to Face Legal Hurdles
Sir Keir Starmer’s flagship policy to impose VAT on private schools may contravene human rights legislation, according to top legal experts. The Labour leader’s plan, which aims to bolster funding for state education, could potentially fall foul of European Court of Human Rights (ECHR) law, raising serious questions about its viability.
Lord Pannick, one of Britain’s most eminent constitutional and human rights lawyers, has lent his support to legal advice suggesting that subjecting private schools to VAT would likely breach ECHR law. In an exclusive interview with The Telegraph, Lord Pannick stated, “It would be strongly arguable that for a new government to impose VAT on independent schools would breach the right to education. That is because all other educational services will remain exempt from VAT and the charging of VAT on independent schools alone is designed to impede private education, and will have that effect.”
The distinguished KC and crossbench peer emphasised that the Labour policy risks contravening two articles in the ECHR that safeguard the right to education. This assessment is rooted in legal advice dating back to the early 1980s, when the country’s most senior legal minds cautioned that plans to eliminate tax exemptions for private schools or abolish the institutions altogether would likely violate international human rights law to which the United Kingdom is a signatory.
The contentious issue of taxing private schools is not a novel concept within the Labour Party. Previous leaders have floated similar ideas as part of broader plans to integrate these institutions into the state sector. Under the leadership of Michael Foot, the Labour manifesto of 1983 went so far as to pledge to “charge VAT on the fees paid to [private] schools”.
However, the policy to abolish private schools was ultimately abandoned following interventions by senior lawyers. They argued that such a move could conflict with the ECHR and specifically highlighted the risk associated with imposing VAT on these institutions.
While Sir Keir Starmer has ruled out the wholesale abolition of private schools, his current proposal seeks to compel these institutions to pay business rates and 20 per cent VAT on tuition fees. This approach, while less drastic than previous iterations, still raises significant legal concerns.
An unearthed legal opinion from 1987, jointly authored by the late Lord Lester and Lord Pannick, both prominent human rights lawyers, concluded that a government “could not lawfully prohibit fee-paying, independent education or remove the benefits of charitable status or impose VAT in respect of such education” while remaining a member of the ECHR. Lord Pannick has since confirmed that he believes this argument remains valid today.
The legal opinion was further bolstered by a foreword written in 1991 by Lord Scarman, who served as a Law Lord in the precursor to the Supreme Court. He suggested that the opinion would “encourage a challenge which could be mounted by taking the argument to the [ECHR]… if ever a government should seek to abolish or discriminate against [private schools]”.
Historical context suggests that previous Labour proposals to impose VAT on private schools under the leadership of Neil Kinnock and Michael Foot may have been abandoned following an earlier legal warning in 1982. Lord Lester, writing in The Times in 2019, recalled, “In 1982 [Lord] David Pannick and I advised the school governing bodies that Labour’s plan would violate the European Convention on Human Rights and its first protocol. Our opinion was published. No one disputed our advice and the policy was dropped.”
Interestingly, the policy failed to appear in Labour’s subsequent manifesto for the June 1987 election under Neil Kinnock’s leadership. The legal opinion in question was issued in April of that same year. However, Lord Kinnock told The Telegraph that he did not recall any such proposals and was unaware of the legal opinion.
It is worth noting that this legal advice was issued prior to the passage of the Human Rights Act 1998 by the New Labour government, which enshrined the rights contained in the ECHR into UK law. This legislative development adds another layer of complexity to the current debate.
The revelations surrounding the potential legal challenges to Labour’s private school tax policy raise questions about Sir Keir Starmer’s willingness to engage in a protracted legal battle over this controversial issue. This is particularly pertinent given that Labour had previously considered abolishing private schools altogether under Jeremy Corbyn’s leadership.
Sir Keir, who opinion polls suggest is poised to enter Downing Street with a substantial majority, has long been a staunch supporter of the ECHR. He has criticised Prime Minister Rishi Sunak for suggesting that the UK might withdraw from the court if it were to rule against the government’s Rwanda plan for asylum seekers.
In a speech delivered in December, Sir Keir emphasised the importance of the ECHR, describing it as an “achievement, not just of this nation, but of Winston Churchill and the Conservative Party that brought peace and protection to the world”. This stance appears to be at odds with the potential legal implications of his party’s education policy.
Legal experts believe that Sir Keir’s headline education policy is likely to contravene two key articles in the ECHR. These are Article 2 of the First Protocol to the convention and Article 14, which protect the right to education and guard against attempts to remove or impede the right to access a broad range of schools.
Jeremy Hyam KC, a human rights lawyer, offered his perspective on the matter: “It is clearly arguable that if the state imposes VAT and removes [the] charitable status of private schools without proper analysis of the likely effects on the sustainability and economic viability of such schools, the effects may be so destructive of the ability of such schools to continue to exist that it is a disproportionate and unlawful interference with the right of plurality of educational choice protected under the ECHR.”
Lord Pannick’s involvement in this debate is particularly noteworthy given his track record in high-profile legal cases. The Government sought his expertise in drafting the bill to support its plan to deport channel migrants to Rwanda last year. However, reports suggest that he warned the chances of securing the flights would be severely limited.
In 2020, Lord Pannick represented Shamima Begum in the Supreme Court’s judicial review brought against then Home Secretary Sajid Javid, who had banned her from returning to the UK for legal proceedings regarding the removal of her British citizenship. The KC also successfully represented Gina Miller in her case against the Government over whether the Prime Minister first needed approval from Parliament before triggering the UK’s exit from the European Union.
More recently, former Prime Minister Boris Johnson called upon Lord Pannick at the height of the Partygate scandal in March 2023. The KC was asked to advise on Johnson’s assessment by the House of Commons Privileges Committee regarding whether he knowingly misled MPs.
The potential legal challenges to Labour’s private school tax policy have drawn criticism from the current government. Gillian Keegan, the Secretary of State for Education, said: “Labour have already admitted their ideologically motivated tax on education will arbitrarily lead to larger class sizes and now it has emerged they have been warned their policy is discriminatory and breaches human rights law. Make no mistake, taxing education is unprecedented in this country. No one who cares about our children’s education would ever put politics before pupils, but it is clear that for Labour no price is too high in their pursuit of the pernicious politics of envy.”
In response to these concerns, a Labour Party spokesman defended the policy: “We do not agree with this assessment, and we are confident that our plans are compatible with the European Convention on Human Rights. Labour will invest in delivering a brilliant state education for children in every state school by recruiting over 6,500 new teachers, funded by ending tax breaks for private schools. Independent schools have raised fees above inflation for well over a decade and do not have to pass Labour’s proposed change on to parents.”
As the debate continues, it remains to be seen how Sir Keir Starmer and the Labour Party will navigate the potential legal challenges to their private school tax policy. The outcome of this controversy could have far-reaching implications for the UK’s education system, the future of private schools, and the broader landscape of human rights law in the country.