Use £150m from VAT hike on private schools for ASN pupils, ministers urged

The Scottish Government has been urged to use an estimated £150 million raised from a VAT hike on private school fees to increase additional support needs funding in state schools.

The Scottish Children’s Services Coalition (SCSC) said the number of ASN pupils has nearly doubled since 2013, prompting its call for increased investment.

SCSC, an alliance of providers of specialist care and education, estimated the UK Government’s pledge to impose VAT on fees at a rate of 20% could potentially boost Scottish Government education spend by £150 million.

Labour’s commitment was reiterated in this week’s King’s Speech and is due to go ahead in 2025, with tax relief scrapped and the business rate imposed.

The SNP has already said it will support Labour’s plans to bring in VAT for private schools, which were first proposed in 2021.

But concerns have been raised over the future of an estimated 9,000 pupils with ASN in the private sector, if additional VAT fees are introduced, who may be forced to leave their schools, as well as the potential impact on local authorities required to increase funding to accommodate them.

Between 2013 and 2023, the number of pupils identified with ASN in state schools nearly doubled, from 131,593 to 259,036. This includes children with mental ill health, autism and dyslexia.

The SCSC said ASN children account for more than a third of all pupils (36.7%), while the number of publicly funded ASN teachers has fallen by 11.9% in the same time period, from 3,290 to 2,898, a decrease of 392 teachers, according to the Scottish Government’s annual teacher census.

A spokesperson for the SCSC said: “We would urge that any additional funding that comes through adding VAT to private school fees is used to support those with ASN in our state schools, giving those who need it the care and support that they need, and supporting closing the educational attainment gap.

“However, we would urge caution when it comes to adding VAT on fees for those with ASN, as this will have a potential major impact.

“Many of these will be forced to leave school, with their learning disrupted and further exacerbating pressures on an already over-stretched state sector, which is having difficulty coping, and brings further costs to local authorities.

“Clarification is needed from the Scottish Government as to how it intends to address the issue of adding VAT to fees for those with pupils with ASN.”

A Scottish Government spokesperson said: “While it is for local councils to determine the most appropriate educational provision, the Scottish Government is committed to improving outcomes for young people with additional support needs.

“Spending on additional support for learning reached a record high of £926 million in the latest available figures [2022-23] to help address growing demand in this area.

“Through our continued investment of £15 million per year, the number of full-time equivalent additional pupils support staff has also increased by 725 (4.4%), bringing the total number of support staff in Scotland in 2023 to 17,330.

“We will engage constructively with the UK Government to consider these proposals and fully understand their effect.”