Welsh Secretary Jo Stevens criticised over 'ignorance of devolution settlement' in school fees row

Martin Shipton

Welsh Secretary Jo Stevens has been ridiculed after posting a message on social media that appeared to show ignorance of the devolution settlement.

Praising the introduction on January 1 2025 of VAT on private school fees, announced in her autumn Budget by Chancellor Rachel Reeves, Ms Stevens wrote: “And every penny raised through the removal of this tax break will be spent in our state schools.”

However, the UK Government of which she is a member does not have the power to order the Welsh Government or local authorities in Wales to spend the money in the way she suggests.

Many people criticised Ms Stevens on X, formerly Twitter. One, Maxwell Marlow, wrote: “Apart from the falsehood that this is a tax break, there is no indication of earmarking or hypothecating for this tax.”

Some messages were ruder, including one which described Ms Stevens as a “useless xxxxwit”.

[mid-content-banner]

'Bad mistake'

A Welsh Labour source told us: “This is a very bad mistake by Jo Stevens. She or those who wrote this must be thick. Any money would go as a consequential to the Welsh Government, who could spend it on anything.

“If it went to local authorities they could spend it on anything unless it is ringfenced.

“How is she going to explain this if local authorities cut school budgets? She’s totally out of her depth.”

We wrote to the Welsh Government stating: “The Secretary of State for Wales has suggested in a social media posting that all the money derived from imposing VAT on school fees will be spent ‘in our state schools’:

“Quite a few people on social media have pointed out that this is a decision for the Welsh Government and local authorities. It would certainly be a departure from normal practice.

“What arrangements have been put in place to transfer a proportion of such VAT revenue to the Welsh Government, and has the Welsh Government made a policy decision to direct local authorities to spend such money in such a way?”

[lower-mid-content-banner]

VAT

A Welsh Government spokesperson responded: "The UK Government’s Education Secretary Bridget Phillipson has said that VAT from private schools will be spent on state education. Wales receives additional funding when spending on devolved areas, such as education, increases in England. It is up to the Welsh Government to decide how that money is spent."

We sought comment from Ms Stevens’ government department, the Wales Office. We also drew the Wales Office’s attention to a TV interview between the journalist Robert Peston and Sir Keir Starmer from January 2024 when Sir Keir was still the Leader of the Opposition. Mr Peston challenged him over the serious problem of knife crime, asking where the money would come from to combat it.

Sir Keir responded: “We’ve set aside for this £100m, which will be taken from the money which is yielded from VAT on private schools, and use it for those support services to come together - the mentoring.

“I had three terrible cases in my constituency of teenagers being killed by knife crime, running up to 2019-2020, and we resolved to bring together this package of support in our schools, in our communities, in our hospitals, to ensure it is available. So we have put that money, £100m, aside. It’s the choice we make, which is to impose VAT on private schools and use some of the money from that to put it into this intervention, which I hope will drive down knife crime.”

Briefing notes

A spokesperson for the Wales Office was unable to answer our questions, but sent us a question and answer briefing note which states: “We have ended tax breaks on private schools to improve standards and opportunities for the nine out of 10 children who attend state schools.

The money raised from VAT will fund public services, including education priorities for the next academic year.

“How much money will this raise?

“The tax is expected to raise £1.725bn a year, according to the Treasury, to go towards the public finances and help improve education and outcomes for young people.”

The Wales Office said that if we wanted more information we should ask the Treasury directly.

We wrote to the Treasury, forwarding the Welsh Government quote and asking: “The Wales Office has been unable to tell me how money from VAT receipts will make it to Wales. Are we correct to assume that it will be ‘Barnettised’ with no direction to the Welsh Government over how it will be spent?”

A Treasury spokesperson responded: “The Welsh Government spokesperson quote is correct, any uplift to UK Government departmental budgets results in uplifts also to funding for devolved governments via the Barnett formula. So any extra funding for state schools in England will mean an uplift for the Welsh Government, given that education is a devolved responsibility.”