Rachel Reeves has been accused of misleading the electorate (Image: Getty)
Rachel Reeves has been accused of lying to voters over a major policy put forward by Labour at the General Election.
The party is ending the VAT exemption on private school fees in order to raise money for state education.
But it has now been reported that billions of pounds raised from the tax will not be ring-fenced to improve state schools.
This means the cash could theoretically be spent on any of the Government’s policies.
The Chancellor told broadcasters last weekend that “every single penny” of the £1.5billion gained each year from applying 20% VAT to independent school fees would go towards state education.
Labour wants to tax private school fees so more can be spent on state education (Image: Getty)
In an interview with ITV last weekend, the Chancellor said: “Every single penny of that money will go into our state schools to ensure that every child gets the best start in life.”
Education Secretary Bridget Phillipson also said last week: “Ending the VAT break enjoyed by private schools will provide much-needed investment in our state schools”.
When The Telegraph asked about the above statements, a Treasury source told the newspaper: “The money is not directly hypothecated in the same way other taxes are.
“The physical pounds and pence are not directly ring-fenced [for state schools].”
A Treasury source has said: ‘The physical pounds and pence are not directly ringfenced’ (Image: Getty)
They added: “It’s not physically funnelled from ‘A’ to ‘B’ but in value terms the principle is still there.
“The Chancellor has been clear that value is going to be going directly towards the education priorities.”
The Conservatives accused Labour of “dishonesty” and “falsehoods”.
Neil O’Brien MP, Tory shadow education minister, added: “This is yet more dishonesty from Rachel Reeves.
“Any money they raise from this education tax raid will just disappear into the black hole she has created with her catastrophic Budget. They are trashing state education and playing politics with children’s futures.”
YouGov reported in August 2024 that 49% of adults believed private schools should not be allowed to be registered as charities at all and should lose their tax exemptions.
In total, 14% thought private schools should be allowed to remain as charities and keep tax exemptions.
A HM Treasury spokesman said: “The total value of what is raised by the measure will support the Government’s education priorities, as committed in the manifesto.
“It will raise around £1.8billion a year by 2029 to help deliver 6,500 new teachers and raise school standards.”
