Prestigious private schools reveal job cut plans ahead of VAT rise

Some of Scotland’s most prestigious private schools are preparing to make job cuts ahead of Labour’s VAT policy coming into effect in January, i can reveal.

Lomond School, a day and boarding school in Helensburgh, said it had started the “very difficult process” of cutting staff through the redundancy process.

St Aloysius’ College, a fee-paying Catholic school in Glasgow, said it was looking at possible “changes to staffing levels” – citing the financial pressure from the planned 20 per cent VAT bill on fees.

Chancellor Rachel Reeves announced in July that independent schools will start paying VAT from January 2025 to help fund thousands more teachers in the state sector.

i first revealed last week that redundancies were already under way in the independent school sector – part of a major cost-cutting drive in a bid to help absorb at least some of the looming tax bill.

The Association of School and College Leaders (ASCL) said some private schools were reducing staff, as well as freezing teacher salaries and pensions.

Michael Burrowes, head teacher at St Aloysius’ College, told i that his school was one of those facing “significant challenges due to economic pressures and potential regulatory changes such as the VAT on fees policy change”.

The school head said the schools was conducting a review of costs “to ensure efficient operations”, adding: “This includes overall staff numbers and how education and learning is delivered going forward.”

The prestigious Jesuit day school – which counts The Thick of It creator Armando Iannucci and Still Game sitcom star Sanjeev Kohli among its alumni – has told teachers and parents about the cost-cutting review.

Claire Chisholm, head teacher at Lomond School, the west of Scotland’s only co-educational day and boarding school, told i that job cuts were already taking place.

“The very difficult process of cost saving through redundancy has now taken place at Lomond School,” she said. “Savings made have been carefully balanced to ensure that the experience, education and care of our pupils is not compromised.”

It comes as two of Edinburgh’s big single-sex private schools, Stewart’s Melville College and The Mary Erskine School, said they were merging into one co-ed facility.

Anthony Simpson, the principal of the schools, said streamlining would cut costs and “help us to limit substantial fee rises”.

i understands that an attempt to mitigate the impact of the VAT bill played some role in the decision, although a review into the schools’ operations began 18 months ago.

Sir Keir Starmer said during the general election campaign that he did not expect closures at private schools.

The Prime Minister argued that they would “adapt” to the VAT policy, and did not have to “pass on the costs” to parents in increased fees.

Independent schools are raising fees between 12 and 15 per cent on average – absorbing only part of the bill, according to industry sources. Eton has announced that it would be passing on the full 20 per cent to parents.

Two private schools in Scotland, Cedars School in Greenock and Kilgraston School in Perthshire, have already folded since Labour announced that the tax change.

Despite long-standing financial difficulties, school leaders at both facilities cited VAT as a factor in their decision to shut.

Cedars School, unable to absorb the tax bill and faced with some parents pulling their children out, said the Labour policy was “the straw the straw that broke the camel’s back”.

The Scottish Council of Independent Schools (SCIS) warned of more closures and more job cuts in a recent submission to the Treasury. The representative body said staffing costs typically make up between 70 to 75 per cent of fee income.

“Schools will have to reduce their operating costs as a result of the VAT change, and their biggest outgoing is staffing – teachers plus support staff,” said SCIS chief executive Lorraine Davidson.

Graham Hutton, General Secretary of the School Leaders Scotland (SLS) union, also said the VAT change could lead to falling enrolment and more job losses.

“We’ve seen a significant increase in members in the independent sector who are worried about their jobs,” Mr Hutton told i.

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“From conversations with our members, there is little fat to trim in independent schools. Schools will have to pass on the VAT costs to parents.

“It’s inevitable that some pupils will leave the independent schools. That will lead to redundancies.”

The union leader also warned of the knock-on impact on the public sector having to accommodate a surge of new pupils.

“An influx of new pupils could have a negative impact on local authority budgets in the middle of a financial year. There may be some upset from families who may find the local state school of their choice is full.”

Education Secretary Bridget Phillipson has previously said private schools facing closure were already struggling with “big budget shortfalls”.

A Government spokesperson has said they did not expect the VAT policy “to have a significant impact on the number of pupils attending private schools overall”.

A Scottish Government spokesperson said the SNP-administration supported the Labour policy, but was worried that there was still “no confirmation” of the level of funding earmarked for state schools north of the border.