Labour’s private school tax raid ‘likely illegal’

Lord Pannick (left) and the late Lord Lester (right) are known for being leading human rights lawyers

Sir Keir Starmer’s planned VAT raid on private schools is likely to breach human rights law, The Telegraph can reveal.

The Labour leader risks falling foul of European Court of Human Rights (ECHR) law over his party’s flagship policy, one of Britain’s top constitutional and human rights lawyers has warned.

Lord Pannick, who has taken on some of the UK’s most high-profile court cases, backed legal advice warning that making private schools subject to VAT was likely to breach ECHR law.

He told The Telegraph: “It would be strongly arguable that for a new government to impose VAT on independent schools would breach the right to education.

“That is because all other educational services will remain exempt from VAT and the charging of VAT on independent schools alone is designed to impede private education, and will have that effect.”

The KC and crossbench peer said that the Labour policy risked breaching two articles in the ECHR which protect the right to education.

He referred to legal advice written in response to Labour policies as far back as the early 1980s, when the country’s most senior lawyers warned that plans to end tax exemptions for private schools or abolish the institutions altogether would likely breach international human rights law to which Britain is signed up.

Previous leaders of the party have floated the idea of taxing private schools as part of plans to integrate them into the state sector. Under former party leader Michael Foot, the Labour manifesto of 1983 pledged to “charge VAT on the fees paid to [private] schools”.

The policy to abolish the schools was eventually shot down by senior lawyers, who argued it could be at odds with the ECHR and spoke specifically about the risk of imposing VAT.

While Sir Keir has ruled out abolishing private schools, he plans to force the institutions to pay business rates and 20pc VAT on tuition fees.

In an unearthed legal opinion from 1987, seen by The Telegraph, the late Lord Lester and Lord Pannick, prominent human rights lawyers, concluded a government “could not lawfully prohibit fee-paying, independent education or remove the benefits of charitable status or impose VAT in respect of such education” while a member of the court.

A foreword to the opinion written in 1991 by Lord Scarman, who served as a Law Lord in the precursor to the Supreme Court, said it would “encourage a challenge which could be mounted by taking the argument to the [ECHR]… if ever a government should seek to abolish or discriminate against [private schools]”.

The opinion was jointly written by Lord Lester and Lord Pannick as advice for the Independent Schools Council (ISC) and later published in its journal. Lord Pannick confirmed his belief that the argument still stands today.

It has been suggested previous Labour proposals to impose VAT on private schools under Neil Kinnock and Michael Foot’s leadership of the party were dropped following an earlier legal warning in 1982.

Writing in The Times in 2019, Lord Lester said: “In 1982 [Lord] David Pannick and I advised the school governing bodies that Labour’s plan would violate the European Convention on Human Rights and its first protocol. Our opinion was published. No one disputed our advice and the policy was dropped.”

The policy failed to appear in Labour’s next manifesto at the June 1987 election under Neil Kinnock’s leadership. The legal opinion was given in April of that year.

Lord Kinnock, however, told The Telegraph he did not recall any such proposals and that he was unaware of the legal opinion.

The legal advice was issued before a New Labour government passed the Human Rights Act 1998 which enshrined into UK law the rights contained in the ECHR.

The revelations call into question whether Sir Keir is prepared to battle the courts over the controversial policy. Labour had previously said it would look into abolishing private schools under Jeremy Corbyn’s leadership.

Sir Keir, who opinion polls say is poised to enter Downing Street next week with a large majority, has long been an ardent supporter of ECHR and criticised Prime Minister Rishi Sunak for suggesting he would quit the court were it to rule against the Rwanda plan.

In a speech in December, Sir Keir said the ECHR was an “achievement, not just of this nation, but of Winston Churchill and the Conservative Party that brought peace and protection to the world”.

But it is believed Sir Keir’s headline education policy is likely to contravene two key articles in the ECHR. These are Article 2 of the First Protocol to the convention and Article 14, which protect the right to education and against attempts to remove or impede the right to access a broad range of schools.

Jeremy Hyam KC, a human rights lawyer, said: “It is clearly arguable that if the state imposes VAT and removes [the] charitable status of private schools without proper analysis of the likely effects on the sustainability and economic viability of such schools, the effects may be so destructive of the ability of such schools to continue to exist that it is a disproportionate and unlawful interference with the right of plurality of educational choice protected under the ECHR.”

Lord Pannick was asked by the Government to help draft the bill to support its plan to deport channel migrants to Rwanda last year, but reportedly warned its chances of securing the flights would be severely limited.

In 2020, Lord Pannick appeared on behalf of Shamima Begum in the Supreme Court’s judicial review brought against then home secretary Sajid Javid, who banned her from returning to the UK for legal proceedings regarding the removal of her British citizenship.

The KC also successfully represented Gina Miller in her case against the Government over whether the prime minister first needed approval from Parliament before triggering the UK’s exit from the European Union.

Boris Johnson, the former prime minister, called in Lord Pannick at the height of the Partygate scandal in March 2023 to advise on his assessment by the House of Commons Privileges Committee of whether he knowingly misled MPs.

Gillian Keegan, the secretary of state for education, said: “Labour have already admitted their ideologically motivated tax on education will arbitrarily lead to larger class sizes and now it has emerged they have been warned their policy is discriminatory and breaches human rights law.

“Make no mistake, taxing education is unprecedented in this country.

“No one who cares about our children’s education would ever put politics before pupils, but it is clear that for Labour no price is too high in their pursuit of the pernicious politics of envy.”

A Labour Party spokesman said: “We do not agree with this assessment, and we are confident that our plans are compatible with the European Convention on Human Rights.

“Labour will invest in delivering a brilliant state education for children in every state school by recruiting over 6,500 new teachers, funded by ending tax breaks for private schools.

“Independent schools have raised fees above inflation for well over a decade and do not have to pass Labour’s proposed change on to parents.”

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