VAT on Private Schools and the ECHR – Lawful or Unlawful?

Current plans to tax private education

The UK Government has announced plans to apply 20% VAT to private school fees starting in January 2025. The Labour Party sees the absence of VAT on private school fees as an unfair ‘loophole’ which independent schools currently benefit from. There is no proposal to tax private health schemes, although the same ‘loophole’ arguments could be used there in the future.

The question is, regardless of the economic arguments and realities of charging VAT on private school fees, can the government lawfully do this, or is it a breach of human rights law?

The ECHR and the right of access to education

The UK Government is bound by the European Convention on Human Rights (the ECHR), and enforcement, when necessary, comes by way of appeals to the European Court of Human Rights (the Court).

Article 2 of the ECHR enshrines the Human Right to Education for all signatories to the ECHR. Article 2 states:

No person shall be denied the right to education. In the exercise of any functions which it assumes in relation to education and to teaching, the State shall respect the right of parents to ensure such education and teaching in conformity with their own religious and philosophical convictions.

The right is succinctly expanded on in the leading textbook ‘Human Rights Law and Practice’ by Lester, Pannick and Herberg, as comprising 4 separate rights:

1. a right of access to such educational establishments as exist.
2. a right to an effective (but not the most effective possible) education.
3. a right to official recognition of academic qualifications; and
4. a right, when read with the freedom from discrimination guaranteed by art 14 of The Convention, not to be disadvantaged in the provision of education on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status, without reasonable objective justification.

In other words, the human right to education means in effect, a right of access to education; no state may lawfully take steps that will inhibit that access. The question for any appeal to the Court would be, does applying VAT to private school fees amount to the state inhibiting and/or restricting access to education, thereby acting in breach of the ECHR.

The Kjeldsen and Jordebov decisions 

The right to access education has been developed in two leading ECHR judgments. In the first, Kjeldsen, Busk, Madsen and Pedersen v Denmark (1976) (Kjeldsen)- the Court found that the Right to Education means a right for private and state education to co-exist. The Court held that Article 2 safeguards diversity in the access to and delivery of education on the grounds that this is essential for preserving ‘democratic society’ as conceived and enshrined in the original drafting of the ECHR.

In the second case, Jordebov v Sweden App. No. 11533/85 (Jordebov), the Court expanded on Kjeldsen by stating that Article 2 ‘…guarantees the right to start and run a private school’. The Court qualified this by saying that private education is a right with conditions, subject to regulation by the State to ensure a ‘democratic society’. Under the Jordebov case, any decision to charge VAT on private school fees will be open to challenge on the grounds of inhibiting the right to ‘start and run a private school’.

This is a conclusion reached by Lord Lester and Lord Pannick in the Joint Opinion (ISIS document No. 11) dated April 1987, in advice taken by the then Conservative Government. It concluded that taxing private schools would amount to inhibiting and preventing access and would therefore be in breach of ECHR Article 2. The opinion was affirmed by Lord Lester in 1997 in a letter to the Times expressing his surprise about the Labour Party’s plans to introduce VAT on independent school fees and he continued to be of the view that it would violate Article 2.

Conclusion 

The Kjeldsen and Jordebov decisions emphasise the importance of diversity and plurality in education, alongside uninhibited access to education, in the preservation of democratic society. Therefore, a move to impose VAT on private schools may well be open to human rights challenge and being overturned by the European Court. This may be especially the case in circumstances where economists and commentators are questioning whether imposing VAT on private school fees really does generate a net gain for the Treasury to invest in state education, and whether the reality of the decision is more aligned to social policy rather than economics.

Should you wish to speak to a member of our legal team about legal action, or on any matters concerning education law, please contact Max Hope or Simone Horrobin at this office.

Email [email protected], or call 01256 460830.

Written by Max Hope, Simone Horrobin and George English.