Non-Domestic Rating (Multipliers and Private Schools) Bill Report Stage: Third Reading

Parliament voted on 15 January 2025 to pass the Non-Domestic Rating (Multipliers and Private Schools) Bill at its Third Reading, the final stage before a bill moves to the House of Lords. The vote passed by 341 ayes to 171 noes. The bill does two things: it removes the charitable business rates relief that private schools in England have historically enjoyed, and it gives effect to the government's policy of applying VAT to private school fees. Together these measures form a significant change to how independent schools are taxed.

The practical effect is that private schools will face higher operating costs from two directions simultaneously. Removing business rates relief means schools will pay the same local property taxes as ordinary commercial businesses. Adding VAT at the standard 20 per cent rate to fees means families will either pay more or schools will absorb some of the cost by reducing fees, staffing or other spending. The government argues that revenue generated will fund additional teachers and resources in the state sector. Critics argue the policy will push some families out of private education and into state schools, increasing pressure on state provision rather than relieving it.

The vote divided almost entirely along party lines. All 301 voting Labour MPs and all 35 Labour and Co-operative MPs voted in favour, joined by all three voting Green MPs, the SDLP member, and two independents. All 98 voting Conservative MPs, all 63 voting Liberal Democrats, all five voting Reform UK members, and one DUP member voted against. The Liberal Democrat opposition is notable given the party's general positioning to the left of the Conservatives on many issues; the party has argued the policy is poorly designed rather than wrong in principle. There were no recorded Labour rebels.