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The new education secretary has previously backed introducing sweeping taxes on private schools.
In 2019, Lucy Powell, who has been appointed by Andy Burnham to replace Bridget Phillipson, said Labour should “ensure” that private schools with charitable status no longer received any tax breaks.
Ms Powell, the shadow education secretary under Jeremy Corbyn, wrote on PoliticsHome: “The tax system benefits private schools, unfairly which is untenable when state school budgets have been cut by the government for the first time in decades.
“That’s why it’s right that Labour is looking at how to ensure private schools do not benefit from charitable status.”
The policy would impose taxes worth an estimated £3bn on independent schools, adding substantial costs to a sector that is already struggling after the Government introduced VAT on school fees and removed business rates relief.
More than 100 independent schools have closed since then, according to the Independent Schools Council, including 15 that were merged with other institutions. Ms Powell is not planning to impose further taxes on private schools, it is understood.
Tax advantages worth up to £3bn
Currently, private schools with charitable status do not pay corporation tax – equivalent to 25 per cent on profits – or stamp duty on property or land purchases, which ranges from 2 per cent to 12 per cent, depending on the price paid.
They can also claim gift aid on donations, increasing their value by 25 per cent. The tax advantages may be worth up to £3bn, according to estimates published in Critical Studies in Education in 2020.
Ms Powell, the deputy Labour leader, has not said whether she still supports removing these tax benefits from private schools with charitable status.
On Monday, she said she was “absolutely thrilled” to become Education Secretary, adding: “For me there’s no more important job for any government than making sure young people have the best education, the best opportunities and the best future they can. Lots to do, and I look forward to getting started.”
Ms Powell, the MP for Manchester Central, defeated Ms Phillipson, who was widely seen as No 10’s preferred candidate, last year in the race to succeed Angela Rayner as Labour’s deputy leader.
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Labour’s tax raids have significantly affected independent schools in the past two years, with the number of pupils falling by 33,000 since 2024, according to the annual schools census released by the Department for Education last month.
The Government’s VAT policy is predicted to raise £1.8bn a year by 2029 and is intended to fund state school spending.
Sources said Ms Powell’s comments were made prior to the VAT raid and no longer applied now that the policy has been introduced.
A spokesman for the Department for Education said: “We’re proud that ending tax breaks for private schools is delivering billions of pounds to improve education for the 94 per cent of children in state schools.
“Private schools are independent, fee-charging institutions, and with that independence comes responsibility for their own finances. It is not the job of taxpayers to fund that tax advantage.”
