Damian Hinds

As always, it is a great pleasure to see you in the Chair, Mr Vickers. I thank and commend Mr Beckinsale and the other 114,948 petitioners, including 611 in my constituency of East Hampshire, for bringing this very important subject to Westminster Hall today. After all that we have heard today, we might ask, “Why? Why would the Government do this?” The measure is a revenue-raiser, but in the grand scheme of things it is not the most enormous revenue-raiser. It is already causing all sorts of disruption in children’s education, and there is more disruption ahead. So why are the Government doing it? I think the answer is fairly straightforward. The Government were genuinely in the market for tax rises, especially tax rises that did not break the rules they had set for themselves on income tax, on VAT and—I say this with a cough—national insurance contributions; and when they looked down the list, this one looked quite popular. It is certainly popular with Labour members and it is very popular with the left wing of the Labour party. I think the Government thought the measure could be sold quite easily to the British public. They could link it to definable things—to the provision of breakfast clubs, mental health support or recruiting 6,500 teachers. None of those things is new, though. There are already breakfast clubs in thousands of schools supported by state funding. As far as I can tell, this Government’s programme for mental health support continues the previous Government’s programme for mental health support, and recruiting 6,500 teachers to the state sector is a material slowdown compared with the number of teachers recruited in the previous five years. The Government will have calculated that many schools will absorb the increase; they think that some families might be priced out, but that the number will be relatively minor, and that it will be massively outweighed by the revenue anyway. They also think—we have heard this line so many times from a Government spokesperson—there are so many places that are free and empty in the state sector that pupils can be easily absorbed. Many Opposition Members think that taxing education is just wrong in principle—we value diversity and believe in the sanctity of parental choice—but from a Labour point of view, given everything I have just listed, it is so far, so good. I think the Government have made five crucial errors. The first is the belief that schools might be able to absorb such a tax increase. Economists know—the one thing we know about the Chancellor is that she is an economist, very definitely; periodically she reminds us—that when we get an increase in an indirect ad valorem tax, that does not get absorbed fully by the producer. It gets shared between the seller and the buyer. With a tax increase of this degree—20% added to the price of a service—that is clearly going to be very difficult for any organisation, but organisations such as schools just do not have those kinds of margins to fall back on to be able to absorb such an increase. To the extent that they can absorb the increase, they can do so only by cutting their service to families, which therefore increases the displacement effect of children from the private sector to the state.