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London: The UK will end a tax exemption for private schools on Wednesday, the centre-left Labour government has announced, in a move set to raise over £1.5 billion ($1.9 billion) for public education . ET Year-end Special Reads What kept India's stock market investors on toes in 2024? India's car race: How far EVs went in 2024 Investing in 2025: Six wealth management trends to watch out for After years of worsening educational inequalities, from January 1, private schools will have to pay 20 percent value added tax on tuition fees, which will be used to fund thousands of new teachers and improve standards in state schools. "It's time things are done differently", finance minister Rachel Reeves said in a statement on Sunday. The funding will "go towards our state schools where 94 percent of this country's children are educated", she said. The policy was promised by Labour in its election campaign and officially laid out in its inaugural budget in October. 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Tuition fees in private schools already average £18,000 a year, according to the Independent Schools Council, which represents private schools. That figure is set to rise, with the government estimating that tuition fees will increase by around 10 percent, with schools taking on part of the additional cost. "High and rising standards cannot just be for families who can afford them," said education secretary Bridget Phillipson. Opponents of the reform say state school enrolment will explode if the private sector is lost, increasing the cost to the government. But studies contradict this. The Institute for Fiscal Studies calculated that the number of children in state schools will actually fall by 2030 due to a projected population decline. Several research centres also point out that the disparity between private and state schools widened sharply under the 14-year Conservative rule. The Labour government won a landslide election in July promising to boost economic growth and improve public services. (You can now subscribe to our Economic Times WhatsApp channel )

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