A small rural private school is cutting fees by more than a third to prevent the school from 'dying out' under Labour's VAT plans.
Bedstone College in Shropshire is to cut fees for day pupils from £5,500 a term to £4,000 from January next year, when the government's levy on private schools comes into effect.
Headteacher Toby Mullins said the school had already made "cuts to the bone" and would now have to make "an enterprising stab in the dark" to remain competitive.
This means parents will have to pay £12,000 a year from January next year, compared to the current £16,500.
Mr Mullins said: "For us it will be an extinction event if we don't do something soon.
"We don't have wealthy parents. We have a lot of parents who are struggling to pay the fees - I know for sure because we've started getting preliminary reports from people saying they were worried they wouldn't be able to pay the fees anyway."
Bedstone College has approximately 140 day and boarding pupils aged from four to eighteen, but capacity is more than double that and numbers have declined in recent years.
Disaster plans
The small rural school had been working on a contingency plan for months in preparation for a possible Labour government, but was forced to take action this week after the government brought forward its VAT plans.
This measure has led to a rush among private schools to come up with cost-saving measures to prevent the full 20 percent levy from being passed on to parents.
But Mr Mullins said his school had already done that and there was little else to cut. He added: "We've been doing that for years. And frankly I think we've cut to the bone.
"My staff haven't had a pay rise in years. They are incredibly loyal and work for salaries that are far below the current salary in the regular sector."
He hopes that lowering tuition fees will help retain current parents and attract others who might be displaced from more expensive schools nearby, even if Bedstone College is "not particularly flashy or hugely well-funded".
Set in the heart of the Shropshire countryside, the school focuses on small classes, pastoral care and a 'safe, nurturing and peaceful environment where children can be themselves and develop'.
This comes as experts predict that some parents may move 'lower down the food chain' to cheaper private schools to avoid the battle for top places in grammar classes when VAT comes into effect.
'Shot in the dark'
The government admitted earlier this week that its VAT plans will price some parents out of the sector, with analysis by the Institute for Fiscal Studies suggesting that this could lead to as many as 40,000 pupils being excluded from private schools.
Mr Mullins said: "There will be many parents in this part of the world who are in a similar situation and they will be looking around for public schools in their area that they can send their children to, so my feeling was why don't we take the initiative and actually offer a cost-effective proposition? It's an entrepreneurial gamble in the dark.
"For people coming from outside, we would offer a much better product than they are getting now. Some schools around here are paying £7,000 a term, even the cheapest are £5,500 a term."
Bedstone College charges less than half the fees of larger nearby schools such as Shrewsbury School, where fees are almost £34,000 a year for day students and a whopping £50,000 for international boarders.
Mr Mullins' school charges up to £39,000 for overseas boarders, who make up about 30 per cent of the pupil population. While the fees for these pupils could act as a buffer for the school in the coming months, he fears that local parents will be left out of pocket and drain the lifeblood of the school unless day pupil fees are reduced.
Bedstone Educational Ltd, the school's parent company owned by a Chinese investment firm, made a total loss of £1.2m in 2022, according to its latest financial accounts. Directors said key business risks included "the number of students being recruited", which had been exacerbated by travel restrictions in the wake of the pandemic.
Mr Mullins said: "We are owned by a Chinese group and although they have been quite generous in supporting us financially, there is a limit to how much they will do in the future. I can't expect them to bail us out every time.
"Unfortunately, the market is tough at the moment. If we can get just 10 new students, that would be cost-effective for us. If we can get more than that, that would be great."
Specialist learning
The principal also hopes that his school can become a haven for students with special educational needs, who cannot be accommodated by the government sector.
Around a third of Bedstone College pupils have special educational needs, including six who receive an Education and Health Care Plan (EHCP). This plan is reserved for children with the most complex needs, the cost of which is sometimes covered by the local authority.
According to the Council for the Registration of Schools Teaching Dyslexic Students, it is one of 23 schools across the country that has a specialized learning support center for dyslexic children.
"Parents who prioritize small classes, good manners and children with special needs don't really have a wide choice," Mr Mullins said.
Private schools already teach more than 100,000 children with special needs, and another 8,000 pupils with EHCPs. Under Labour's plans, children with the "most acute" needs who receive an EHCP would be exempt from VAT, but pupils with other special educational needs would not.
This has raised concerns that the government's VAT raid will hit children with complex needs hardest, while the wealthiest families can afford any rate increases.
The Independent Schools Council (ISC), which represents 1,300 private schools in the UK, said closures were "unavoidable" as a result of the plans.
'Closures are inevitable'
Sarah Cunnane from the ISC said: "We are very concerned about what this policy will mean for our schools and how many schools will close.
"School closures are unfortunately inevitable and will ultimately impact the families who have chosen to leave school and disrupt the education of thousands of children."
Rachel Reeves said earlier this week that there is an "obsession" with private schools, despite them being a small part of the education sector.
The chancellor told LBC on Tuesday: "I'm more interested in the 93 per cent of children who are in our state schools, with buildings that are often collapsing and with unqualified teachers."
Labour hopes the VAT raid will raise £1.7bn for the public sector, helping to pay for 6,500 new teachers, 8,500 mental health specialists and 1,000 careers advisers for schools.
The Ministry of Education was asked for comment.
