A private school says it is closing after it forecast a sharp drop in pupil numbers because of Labour tax increases.

St. Joseph’s Park Hill School, a Catholic primary school in Burnley, Lancashire, has said it will close this year, blaming the imposition of VAT on fees, which it says has made its fees unaffordable for a large number of parents.

It is estimating pupil numbers to drop by as much as a third, citing the VAT raid as well as higher National Insurance (NI) and business rates.

Sister Bernadette Holmes, the leader of the Institute of Our Lady of Mercy, which runs the primary school, said the taxes meant its “lower fees were becoming out of reach for some of our community”.

Ivor Emo, a local Conservative councillor, said: “I’m not keen on any school closing. The VAT tax is the straw that has broken the camel’s back, and the parents are going to have to pay extra funds and they might have already been on the breadline.”

It is the latest school to be forced to shut as a result of Labour’s tax raid on private schools, which came into force on Jan 1, making school fees subject to 20 per cent VAT for the first time. In March, a dozen private schools blamed the Government’s VAT raid for forcing them to close.

With the 20 per cent increase in school fees, parents at St Joseph’s Park Hill, who had previously been paying around £8,000, would now have to pay more than £10,000 a year.

The Catholic school opened in 1913 and was rated as excellent in all areas by the Independent Schools Inspectorate. It was last recorded as having 128 children, aged three to 11, on its roll, with a capacity of 131 places.

In her letter to parents, Sister Bernadette said that “it has proved difficult to secure a viable and stable future given the unrelenting headwinds we face.”

She told The Telegraph that the school would be closing at the end of this year’s summer term.

“St Joseph’s Park Hill has always been a very special place. Children have thrived at the school for generations, and they have made a real and lasting contribution to their community.

“In line with our charitable objectives, we have always tried to ensure that fees have remained as low as possible to support local families. However, the number of pupils at the school was expected to drop by a third over the course of this academic year.

She added that an accumulation of issues: the imposition of VAT on fees, a declining birth rate, increased NI contributions and the removal of business rates relief, had made it “increasingly difficult to find a long-term viable future for the school”.

Oliver Ryan, the independent Burnley MP, who was previously a Labour member, said: “This is clearly very sad news. This is a lovely school, and I am supportive of parents being able to choose to pay for private provision should they wish to...

“The local council, my office and I stand ready to assist any parents and students in finding alternative provision. On VAT specifically, we have some really lovely excellent local schools that will receive additional funding because of this Government’s decision to end the VAT tax break on private educational establishments.”

Neil O’Brien, Tory MP for Harborough, Oadby and Wigston in the East Midlands, said: “Once again, we can see the deeply damaging impacts of Labour’s education tax.

“Every independent school that is forced to close by this punitive measure represents more pupils that will need to be found places for in state schools, many of which will struggle to accommodate them. Fewer parents will get their first choice of state school as a result, and classroom sizes will inevitably get bigger.

“At the end of the day, it will be parents, pupils, and teachers in the state sector that will pay the price for Labour’s ideological attack.”

Labour has repeatedly defended its tax policies, saying they will raise funds to plug gaps in public services, including in education. (The Telegraph)