Labour planning to raid business rates if it wins General Election
Battle lines are being drawn for a snap General Election with Labour seemingly setting its sights on raiding business rates as part of its wealth distribution programme.
Shadow Chancellor John McDonnell has never hidden his left of left leanings but a leaked document seen by the media suggests that he plans to scrap discounted business rates for private schools. This would be in addition to charging VAT on fees if Labour got into power.
The policy is estimated to potentially bring in £1.64 billion a year, according to the Daily Telegraph which claims to have seen the shadow Treasury memo, all part of plans drawn up as Labour’s “preparing for government” strategy.
The VAT exemption for private school fees was first aired by Labour in its 2017 manifesto to pay for free school meals for all state school primary pupils. By ending the historic business rates exemption enjoyed by independent schools under their charity status, this takes that proposal a step further.
Labour said it doesn’t comment on leaks but privately some Labour supporters admit they believe private schools help “hoard wealth, power and opportunity” for the privileged few and they were proud of the policy position.
Under current rules, private schools have charitable status which means that they get tax breaks, but there have been growing calls for fee-paying schools to lose this status.
In comparison, state schools are liable for business rates, which are effectively paid for by the taxpayer. Academies – not under local council control – typically have charitable status and are also eligible for discounted rates, with the rest paid out of their state funding.
Council-run schools have their business rates funded by the local authority.
Not surprisingly headteachers of fee-paying schools are criticising the policy, claiming it is based on assumptions and “dodgy maths” – the irony of that statement won’t be lost on the Shadow Chancellor I’m sure.
Whether this is just politics of envy, a deliberate move to truly end private education as we know it or more simply an appeal to the voting masses who can only dream of spending £12-30k a year sending little Frederick to St Bartholomew’s remains to be seen.
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