Over 65,000 pupils could have been forced out of private schools by spiralling fees triggered by Labour’s education tax, a leading think tank claims.
The prestigious Adam Smith Institute (ASI) says more than one in ten of the total UK private school population of 650,000 may have left as parents continue to struggle.
The shocking figure is three times higher than the government’s original estimate of just 17,000 leaving the sector.
‘We already know more than 25,000 children were displaced by last September. That number is likely to have risen sharply since then and could now easily be more than one in ten private school pupils nationwide,’ the institute’s Joanna Marchong told the Mail on Sunday.
‘VAT receipts are already on course to be wiped out by the cost of educating displaced pupils, even before counting lost income tax, NICs and VAT from parents working fewer hours to absorb the fee shock,’ she added.
The ASI had forecast on the policy’s launch that it could cost the government money if more than ten per cent left the sector.
An extra 65,000 pupils would cost the government more than £500 million a year to educate if they joined state schools.
Together with the economic cost to the Treasury, the institute says the government would fail to raise the £1.5 billion it originally pledged from the policy.
A week ago, Thetford Grammar School in Norfolk announced its forthcoming closure with an expected loss of more than £2 million to the local economy
Last year, protesters gathered outside the High Court with placards to protest against the new tax
Marchong said: ‘If this trend continues nationwide, the fiscal damage could quickly outweigh any short-term revenue gains.’
The ASI warning comes in the wake of a hard-hitting report that revealed more than £60 million had already been wiped off the Scottish economy because of the tax raid.
The report for the Scottish Council of Independent Schools (SCIS) forecast the policy could cost nearly £200 million in Scotland alone if pupil numbers continued to fall and warned ‘the damage done to the economy in Scotland’ is ‘an indication of what could follow in the rest of the UK’.
New figures released by the ISC this month are expected to confirm that pupils are haemorrhaging from private schools across the UK.
The Independent Schools Council confirmed to the Mail on Sunday that 115 mainstream schools have now closed since Labour came to power including 16 subsumed during mergers. During the same period, just 20 new mainstream private schools opened.
Only a week ago historic Thetford Grammar School in Norfolk announced its forthcoming closure with an expected loss of more than £2 million to the local economy.
Meanwhile the government is also footing the spiralling fee bill for children in private special schools which are unaffected by the VAT policy because the local authorities who currently pay for 98% of pupils in them can claim back VAT.
Local authorities are forced to pay the fees, at an average of £63,000 a child, under Education Health and Care Plans (EHCPs) because they are unable to provide adequate state provision. Openings of private special schools have soared because of the huge sums private investors can make.
However, including openings of special schools which are not affected by the VAT policy in its calculations, a Department for Education spokesperson claimed: ‘More private schools have opened than closed in 2025.
‘Ending tax breaks for private schools will raise more than £1.8 billion a year by 2029/30 to help fund public services and a better education for the 94% of children who go to state schools.
‘Record numbers of families getting their first-choice state school place – the manufactured crisis of pressure on the state system has simply failed to materialise’.
A spokesman for the Education not Taxation campaign group said: ‘We urge the government to better understand the impact of its own policy and better still withdraw this tax.’
