Chinese investors are circling around independent schools ‘like a pack of vultures’ amid fears that Labour’s VAT raid on fees will leave many struggling to keep their doors open.
Education experts have seen a rise in interest from firms in China looking to take advantage of the financial turmoil private schools may find themselves in.
They warn that many institutions will have no choice but to accept foreign investment or close following Chancellor Rachel Reeves’s policy to add a 20 per cent levy to their fees.
At least 27 schools have already been purchased by Chinese companies, some with strong ties to the country’s ruling Communist Party, and there are fears this number is set to skyrocket.
Firms in China began buying up private schools in 2014 and there has been an overall percentage growth of 400 per cent since as they seek to expand their influence over Britains education system.
Critics have warned that Labour’s VAT raid, which will on average cost parents £2,000 each per pupil, will leave many private schools in dire financial straits and lead to closures.
The policy came into effect on January 1 and four independent schools have already announced they are closing due to the economic challenges while two have been snapped up by Chinese investors.
Malvern St James School in Worcestershire is one independent school set to be impacted by the VAT raid, with the school looking to change owners as a result
Ruthin School located in Denbigshire, North Wales, is one of the UKs oldest educational institutions at over 700 years old and was acquired by a Chinese investor in 2023
Woolverstone Hall, Ipswich High School for Girls, located in Suffolk, is another school which is under Chinese ownership
Abbotsholme School, located in Uttoxeter, was purchased by a Chinese company in 2017
Maidwell Hall, a 114-year-old prep school in Northamptonshire once attended by Princess Diana’s brother Earl Spencer and girls’ school Godolphin Prep in Salisbury, which opened in 1993, are set to shut their doors at the end of the school year.
Catholic school Loughborough Amherst School, founded in 1850, and Jewish prep school Immanuel College in Bushey, Hertfordshire, which opened in 1990, revealed plans to close in the summer.
Beijing-based market intelligence consultancy Venture Education has seen a surge in interest from Chinese investors looking to pounce on struggling schools.
‘Surprisingly the application of VAT has increased interest from Asian investors, especially Chinese who generally see rupture as a time for opportunity,’ its managing director Julian Fisher told the Daily Mail.
‘But most are wary of the current uncertainty and plan to hold off on any short-term deals; preferring instead to wait and see which are the highest ranked schools that might be available for sale.’
He insisted that the only choices these private schools have is ‘taking Chinese investment, staying open, giving consistent education to its existing students’ or closing.
A director at a UK-based broker agency, who wants to remain anonymous, deals with Chinese investors looking to buy independent schools and is not surprised at the increased interest.
He said: ‘Labour is driving these schools into the hands of foreign investors. Soon they will be left with no choice but to go to these Chinese companies or close.
‘It doesn’t surprise me that they’re closing in like a pack of vultures.
‘I have always been a bit suspicious of this stuff, it’s not getting easier to send Chinese kids to these schools and they don’t really make any money.’
Girls’ schools Malvern St James, founded in 1893, and 114-year-old Durham High School, which charges up to £19,000 a year, were sold to Chinese investors in November and December after Labour announced plans to add VAT to fees.
They joined Galaxy Global Education which purchased 740-year-old boarding school Ruthin School in North Wales in 2023 after it struggled financially.
Dr Gareth Lloyd, headteacher of Malvern St James, believes more schools will be forced to sell up to survive because of the VAT hike.
‘For many schools, working in close partnership with others, and joining forces more formally within educational groups, will be the most assured means to survival,’ he said.
‘It was incredibly sad to hear of three schools just last week having to announce closure owing to the Labour Government’s VAT policy which is nothing but the politics of envy and based on an incredibly weak business case.’
He added: ‘Many thousands of children will be displaced, thousands of staff will lose their jobs, and what has been regarded across the world as the gold standard of education is being savagely damaged.’
Luke de Pulford, of the Inter-Parliamentary Alliance on China, claims Chinese companies are taking advantage of the VAT hike to gain leverage.
‘Head teachers and vice chancellors are being bent over a barrel,’ he said. ‘We can’t have a situation where one of the things that makes us so special is part-owned by a hostile state, one that means us harm and is our biggest security threat.
‘We are really dealing with a whole state attack by the CCP and we’re blindly walking into it.’
Riddlesworth, which eventually closed in April 2023, was bought by the Confucius International Education Group in 2015 and its website lauded its links with the late Princess Diana
Ipswich High School, which was previously attended by author Enid Blyton and the late actress June Brown
Mr de Pulford insisted this worrying trend is a threat to national security. ‘There are major threats posed by these companies with links to the Chinese Communist Party that are heavily involved in critical infrastructure like education,’ he added.
The most active Chinese company in the British education market is Bright Scholar which bought six schools between 2018 and 2019 including St Michaels School in Llanelli, Carmarthenshire – where former Justice Secretary Robert Buckland and singer Cerys Matthews were once pupils.
It is owned by Yang Huiyan, who used to be Asias richest woman and was reportedly valued at £20billion, and was founded by her father Yang Guoqiang who served on the Communist Partys highest- ranking advisory council.
Her firm has also bought Bournemouth Collegiate School, Bosworth Independent College in Northampton, Worthgate School, Guildhouse School and CATS Cambridge.
Bright Scholar’s mission is to ‘cultivate talents for the rejuvenation of the Chinese nation’ and ‘train patriotic’ citizens.
While Ipswich High School- previously attended by author Enid Blyton and the late actress June Brown- and Bedstone College in Shropshire were bought by a fund backed by the Chinese Wanda Group in 2017.
The company was founded by Wang Jianlin, a former Peoples Liberation Army soldier, who is worth an estimated £10 billion, and has been a member of the Communist Party since 1976.
Elsewhere, Kingsley School in Bideford, Devon, Heathfield Knoll School in Worcestershire and Greenes College in Oxford are owned by China First Capital Group, which has senior Communist Party members on its board.
Chinese firm Ray Education Group bought Adcote School for Girls in Shrewsbury, Shropshire, and Myddelton College in Denbigh, Wales, in 2018.
It has detailed plans on its website to use British schools to help expand to other countries as part of Chinese President Xi Jinpings Belt And Road strategy to boost Chinas global economic and political influence.
Ray Education Group chief executive James Hu has served as a secretary on the Communist Partys Hongkou district committee and the firm has boasted about implementing the ‘sinicization of the British Brand’ and aligning the schools closer to Chinese values.
Dr Gareth Lloyd, headteacher of Malvern St James, believes more schools will be forced to sell up to survive because of the VAT hike
Chinese investor Mark Wang, who serves in the 14th National Peoples Congress which is China’s highest legislative body, invested in Stoke College in November 2019.
And Horizon Education, which is part-owned by state corporation Sinochem, purchased The National Mathematics and Science College near Coventry in 2016.
Donald Trump’s administration previously determined that Sinochem is backed by the Chinese military and banned American individuals and companies from owning shares in it.
Full Circle Education invested in St Bees School in Cumbria, once attended by actor Rowan Atkinson, in March 2017 and reopened the school in September 2018, three years after it was shut down due to declining student numbers.
The 442-year-old boarding school, which charges up to £36,000 a year, became the first independent in the UK to implement an integrated curriculum system ‘by taking the best of Eastern and Western’ techniques.
Thetford Grammar School in Norfolk, which opened in 1566 and was attended by English-born American founding father Thomas Paine, was purchased by China Financial Services Holdings in July 2017.
Other schools bought by Chinese investors include Wisbech Grammar in Cambridgeshire, Chase Grammar School in Staffordshire, Abbotsholme School in Derbyshire, Forres Sandle Manor in Hampshire and Riddlesworth Hall Preparatory School in Norfolk, where Princess Diana was taught.
Riddlesworth, which eventually closed in April 2023, was bought by the Confucius International Education Group in 2015 and its website lauded its links with the late Princess.
Kensington Park School and Chelsea Independent College in London were bought by Chinese private equity firm Sailing Capital in September 2016.
Girls’ schools Malvern St James, founded in 1893, and 114-year-old Durham High School, which charges up to £19,000 a year, were sold to Chinese investors in November and December after Labour announced plans to add VAT to fees
Adcote School controversially boasted about not passing on a VAT hike to fee-paying parents with a motorway billboard which read ‘VAT? What VAT?’ last April.
At least 11 of the other Chinese-backed institutions are absorbing all or part of the policy costs and Bedstone College took it a step further by cutting its fees from £5,700 to £4,000 per term in response.
Shadow Education Minister Neil O’Brien said: ‘The influence of China on our educational system is deeply troubling.
‘So for the industry to be sounding the alarm that Labours Education Tax will only deepen the involvement of a foreign state in the education of our next generation speaks volumes.
‘Labour must urgently provide assurances they will not allow our schools to be a hotbed of malign influence from external actors.’
A government spokesman said: All owners of private schools must adhere to our Independent School Standards and promote the fundamental British values of democracy, the rule of law, individual liberty, and mutual respect and tolerance of those with different faiths and beliefs.
Schools cannot promote partisan political views in the teaching of any subject.
Galaxy Global Education, Bright Scholar, Wanda Group, China First Capital Group, Ray Education Group, Horizon Education, Mark Wang and all 27 schools were contacted for comment.