A recruitment and retention crisis in the armed forces will grow if the government does not exempt military families from paying VAT on private school fees, insiders have warned.

Sky News understands this more and more families are expressing concerns internally about the “damaging” policy after the chancellor failed to provide enough protection in her budget.

They say a promise to increase a Ministry of Defense (MOD)-funded allowance that helps cover the cost of school fees does not go far enough and that highly experienced personnel – officers and other ranks – will quit if Rachel Reeves do not perform a U-turn.

Such a loss of skills would weaken Britain’s defenses at a time of increased threats, insiders say.

A soldier with a child at boarding school, who asked not to be named, said: “I’m going to have to leave the military because I’m not going to put my child through another school transfer.”

He said: “On the one hand the Chancellor wore a poppy during the Budget announcement and then proceeded to deal a damaging blow to members of Her Majesty’s Armed Forces by not including a simple exemption.”

A military spouse, who asked that her identity be withheld because her husband serves, said: “These are people’s children. This is people’s money in their pocket.”

She told Sky News: “If there is a nice job offer outside the military… it will look a lot more attractive than it did a few months ago. The military is in a recruiting and retention crisis, so why would you do something like this?”

Giving an idea of ​​the scale of the potential impact, the Army Families Federation, an independent charity, said almost 70% of families who shared evidence with it about the policy said, without being protected from the full cost of VAT, they would consider dropping the service. .

The mobile nature of military life – with postings in the UK and overseas – often means service personnel move every few years, with any children they’ve forced to move with them, transiting in and out of different schools.

To protect against this disruption, some parents decide to send their children to private school – often boarding school.

More than 2,000 of these members – mostly in the military – claim money from the Ministry to help cover the cost of private school fees.

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The Continuing Education Allowance (CEA) funds up to 90% of tuition fees, but families must pay a minimum of 10%.

Many who take this option will have struggled with the affordability of the portion they will still pay, which can run into tens of thousands of pounds a year.

They will now have to pay more to cover the VAT on this side of the bill – or take their children out of school, a nightmare option, especially for those serving overseas.

In addition, some other military families who do not qualify for the education allowance – which is awarded only on the basis of very strict criteria – still choose to place their children in boarding schools to ensure the continuity of their education in one location .

They will have no protection against the burden of VAT.

James Cartlidge, the shadow defense secretary, said he had received many messages from affected families and was urging the government to grant them relief.

“The emails I’ve received say: I have to choose between my child and serving my country,” said Mr Cartlidge, who was previously a Conservative defense minister.

“The government really needs to respond to this quickly.”

A Ministry spokesman said: “We greatly value the contribution of our service staff and offer the Continuity of Education Allowance to ensure service staff’s need for mobility does not interfere with their children’s education.

“In line with how the allowance normally works, the Ministry of Justice will continue to pay up to 90% of private school fees following the VAT changes from 1 January, by increasing the current cap rates to take account of any increase in private school fees”.

(c) Sky News 2024: Armed forces retention crisis set to worsen due to VAT on private school fees, insiders say