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English private schools focus on recruiting overseas as Labour VAT hit looms

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Private schools in England are seeking to attract more overseas students as they prepare for the prospect of Labour imposing a sales tax on their fees if it wins the next general election.

The drive is one of a number of ways independent school leaders are looking to shore up their finances and ensure a steady supply of students in the next academic year.

Some headteachers are examining where bursaries and scholarship offerings could be cut back, while others are allowing parents to pay fees several years in advance before the proposed policy kicks in.

Several schools said Labour’s promise to impose VAT on fees was driving their efforts to recruit more pupils from overseas, arguing that international students are less price sensitive than domestic students. This was because they are often wealthier or are willing to pay a premium for a British education.

The private school sector in England has over the past decade become more reliant on those from overseas who tend to board, as domestic demand for boarding has dwindled. Boarders tend to bring in more revenue than day-schoolers.

In recent years, they have also sought to recruit from a more diverse pool of countries, as the number of students coming from China and Russia — two key markets — dropped off during the Covid pandemic and at the start of the Ukraine war.

“It would be remiss of us to depend too much on the domestic market, so diversifying outside of the UK is a sensible option,” said Gareth Collier, principal of Cardiff Sixth Form College in Wales.

Collier said Labour’s pledge had pushed his 380-student school to ramp up its existing overseas recruitment drive in recent months.

He said the college’s parent company, Dukes Education, had also recently bought several schools in Europe, six in Spain and three in Portugal, “to help offset any VAT issues in the future”, given that VAT is not charged on private schools in the EU.

He described the prospect of increased fees as a result of the VAT proposals as a “low priority” and “minor annoyance” for most overseas parents but added it was causing “panic” for domestic fee-payers.

Labour leader Sir Keir Starmer announced in 2021 that if his party wins the election it would cut the VAT exemption for private schools and impose business rates, which the party estimates could raise up to £1.5bn to fund state schools.

Removing the tax exemption would add 20 per cent to the cost of education. But Richard Asquith, founder of VAT compliance company VATCalc, said he believed fees would only have to go up by about 15 per cent on average because schools would be able to claim back some of their capital expenditure through VAT deductions. 

Labour has maintained a double-digit lead in polling against the incumbent Conservatives ahead of a general election expected later this year.

Simon Tyrrell, co-proprietor of Wychwood, a boarding school in Oxfordshire, said its management was looking to increase overseas recruitment ahead of a possible Labour victory.

“Every school I know is looking at going internationally to drive a demand boost,” he said.

Headmaster Nick Pietrek is looking to bring in extra students from overseas © Stafford Grammar school

International student recruiters have observed a similar trend. Mark Brooks, an educational consultant who helps people apply from West Africa for dozens of British private schools, said all the institutions he worked with were looking to bring in more students from overseas to respond to Labour’s proposals.

“The marketing teams are working smarter and harder, they are travelling the world to recruit more students, as a way to have a buffer should the VAT on school fees be implemented,” he said. 

Nick Pietrek, headmaster of Stafford Grammar school in Staffordshire, which has about 1,000 students, said he was considering ways to bring in “a few extras” from overseas. Stafford currently only has two overseas pupils, but he wants to increase the number to between 10 and 20.

There has been a rise in visa applications to study at independent schools in the UK since the pandemic, including a 12 per cent rise in the four quarters to September 2023 compared with the same period a year before, according to Home Office data. 

However, some in the private education sector are sceptical that schools will be able to compensate for reduced domestic demand by pulling in more students from overseas. 

The Boarding Schools’ Association said there was evidence that international enrolments would actually decrease in the long term given that overseas students are not as willing to pay higher fees as many believe. 

“Contrary to popular opinion, few international parents are super-rich and, unlike most British parents, they can choose whether to send their children to the UK, the US, Canada or Australia,” it said.

Additional reporting by Laura Hughes

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