Sahdow education secretary Bridget Phillipson discussing Labour's breakfast plan (Image: Getty)

       Labour’s “disastrous” policy of VAT on private schools could end up costing taxpayers more than ￡1 billion, campaigners have warned.

       Nearly three in 10 children (26%) would have to be removed from their independent school in the event that VAT was imposed, an analysis by Taxpayers’ Alliance (TPA) suggested.

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       This would amount to an additional 144,103 children potentially entering the state school system at a cost of ￡7,690 per pupil.

       The TPA warned this would mean a ￡1.1 billion cost to the Treasury as a result of the policy.

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       John O’Connell, chief executive of the TPA, said: “VAT on private schools is a clear cut case of a policy gimmick that will do grievous harm to families with potentially pathetic results for revenues.

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       “Politicians may talk of a level-playing field, but taxpayers won’t be fooled by proposals that simply punish ambition without even achieving its own objectives.

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       “Labour should abandon this disastrous policy.”

       The TPA has called on Labour to rule out imposing VAT on private schools in the next parliament.

       Under Labour’s estimates, the policy would raise ￡1.7 billion.

       But the analysis by the TPA suggests that In this scenario, 65% of revenue would be lost because of an increase in children entering state schools.

       The Conservatives believe the policy would raise ￡950 million but over 123% of revenue would be lost, meaning an annual cost of around ￡150 million to taxpayers.

       This means under Labour's projections there would still be some money left over after increase in spending on state schools. But under Conservative projections, money would be lost.

       In a debate last year, shadow secretary of state for education Bridget Phillipson said that if the Labour Party were in government it would take away the current exemption from VAT and business rates for independent schools.

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       Helen Hayes, shadow minister for education, in February, argued that the government did not believe “the scaremongering that there will be an exodus of pupils into the state sector”,

       She argued that the government did not believe “the scaremongering that there will be an exodus of pupils into the state sector.

       She added that independent school pupils moving to state school would not impose significant costs on the government because “our state schools would be able to cope with an increase in their numbers”.

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       A Labour Party spokesman said: "Labour will invest in 6,500 teachers, funded by ending tax breaks for private schools, and break down barriers to opportunity for every child.

       "Labour’s plan to end tax private schools' tax breaks has been verified by the respected Institute for Fiscal Studies, which expects the policy to raise up to ￡1.5 billion.

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

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