Fees blow as judges reject Labour tax challenge - albeit concede it's discriminatory

Families who pay for private schools lost their bid to overturn Labour's fees tax yesterday – but judges still labeled the policy 'discriminatory'.

The High Court ruling stated the 20 per cent VAT would be 'disproportionately prejudicial' on children with special needs.

But it also held Parliament could still exercise the right to make such a decision. Yesterday, the Boarding Schools Association called it a 'sad day' for vulnerable children, and went on: 'There are no winners here.' At least one of the claimants is expected to appeal.

Paul Conrathe, of solicitors SinclairsLaw which acted for a group of parents of special educational needs children, Education Not Discrimination, said 'the Government should hang its head in shame'.

There was also outrage at the Government's insistence throughout the case that the tax would go towards state schools. This week it indicated that the funds will now cover housing.

VAT on school charges was levied on January 1, after being promised in Labour's election manifesto. The challenge to it was mounted by three sets of families and a number of private schools. They wanted the charge ruled 'incompatible' with human rights legislation.

Yesterday's ruling, by Dame Victoria Sharp, Lord Justice Newey and Mr Justice Chamberlain, concurred that the tax was 'discriminatory' towards children with special educational needs. It also intruded upon their right to education under the European Convention on Human Rights, they added.

‘If the imposition of VAT makes the fees unaffordable, there is a significant risk that the state school to which they transfer will not provide adequately for their needs,’ they added. ‘The measure will have a disproportionately prejudicial effect on them.’

But they held that Parliament had a 'broad margin of discretion in determining how to weigh the interests of those negatively affected against the interests of others who might benefit from public provision funded by money which it will raise'.

Fees are paid by many special educational needs parents because private schools have superior pastoral care. The Government stated the court had upheld its law was 'compatible with its human rights obligations'.