Children’s mental health could be significantly impacted as a result of the Government’s plan to charge VAT on private school fees, a Conservative MP has said.

Dr Luke Evans argued that the tax change, which is due to come into effect in January, will lead to children moving school during term time and called for money to be allocated to supporting their welfare.

Treasury minister James Murray said removing private schools’ exemption is “a tough but necessary decision”, as MPs debated the Finance Bill on Wednesday.

Ending tax breaks for private schools is a tough but necessary decision that will secure additional funding to help the Government deliver its commitments to improving education in state schools across the country

The Bill brings into law measures laid out by Chancellor Rachel Reeves in last month’s Budget, including raising air passenger duty, ending non-dom tax status, and the introduction of a new vapes tax.

MPs voted 332 to 176, majority 156, to approve the Bill at second reading – and it will undergo further scrutiny at a later date.

Opening its second reading, Mr Murray told MPs: “Ending tax breaks for private schools is a tough but necessary decision that will secure additional funding to help the Government deliver its commitments to improving education in state schools across the country, and achieving the aspiration that every parent has for a high quality education for their children.”

Intervening, MP for Hinckley and Bosworth Dr Evans said: “In my area I have two private schools where parents have written that they’re going to have to move out into the state system. The problem is, there aren’t places in the state system to accomplish that. So, will there be a dedicated fund to help those schools when pupils do move?

“And is there also going to be some funds put aside for the welfare of the kids who are being taken out of school for mid-term transfers? Which are expected to be about 3,000 pupils so far, according to figures released. That’s going to have a significant impact on their mental health.”

Mr Murray replied: “Let me just put this number in context for him, 3,000 pupils estimated to move within the current year.

“Every year, many pupils move between schools, including between private and the state sector, and a 2022 DFE (Department for Education) report looking at this found that if you look at the moves between state schools and out of state schools, almost 60,000 moves take place every year.”

Shadow chancellor Mel Stride said: “We have already heard about the displacement effect, the behavioural effect, the thousands of pupils that will have their education disrupted and the impact on their families.

“But does not this measure tell you all you need to know about socialism? Those who stretch to try and make ends meet, to send their children to those schools, are to be denied, their aspiration to be sacrificed on the altar of envy.”

Liberal Democrat Treasury spokeswoman Daisy Cooper said the Government has had to make some “difficult decisions” and her party agreed with some of them, including investing in the NHS.

But she added the Lib Dems cannot support the Bill, explaining: “The first question is around who should pay for fixing our NHS and social care. We Liberal Democrats have always said it should be those with the broadest shoulders.

“Unfortunately, the Government’s Finance Bill does not reverse tax cuts given to the big banks by the Conservatives, it doesn’t raise the digital services tax on the big tech companies and it doesn’t increase the remote gambling duty either.”

Ms Cooper said the Bill paves the way for major inheritance tax changes, adding: “I urge the Government in the strongest terms to think again about the family farm tax.”