Finance Bill Committee: New Clause 7

What happened: On 11 December 2024, the House of Commons voted on New Clause 7 during the Committee stage of the Finance Bill. The clause, tabled by the opposition, sought to modify the government's approach to the removal of VAT exemption on private school fees, one of the flagship tax measures introduced following the October 2024 Budget. The amendment was defeated by 313 votes to 104.

Why it matters: The underlying policy at stake is the removal of the longstanding VAT exemption on private school fees, which takes effect from 1 January 2025. The government projects this will raise approximately 460 million pounds in additional revenue in 2024-25, with that funding directed towards state education, including a 2.3 billion pound increase to the core schools budget. Critics argued the change would harm pupils with special educational needs and disabilities who attend independent schools without education, health and care plans, damage small and faith schools with thin financial margins, and disrupt community partnerships between independent and state schools. Supporters argued it removes a tax relief that disproportionately benefits a small and relatively affluent portion of the population, and redirects resources to benefit all children.

The politics: The vote divided sharply along party lines. All 276 Labour MPs and 31 Labour and Co-operative MPs who voted sided with the government against the amendment. The Conservatives provided 96 of the 104 Aye votes, with Reform UK contributing 4 and a handful of independents and smaller unionist parties making up the remainder. The Greens voted with the government. There were no significant cross-party rebellions. The debate forms part of the broader legislative passage of the Finance Bill, which subsequently passed its Third Reading in March 2025 by 339 votes to 172, confirming the government's stable majority on Budget measures throughout the bill's progress.