Pupils head out for a break on their first day back from lockdown at Chertsey High School in March (Image: Getty Images)
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All under-18s in England will be exempt from Covid isolation from August 16 if they come into contact with a positive case.
The major change will mean children only have to isolate for 10 days if they test positive for coronavirus themselves.
The move is designed to save the more than half a million children who have had to miss school for Covid reasons last week.
And it came as Education Secretary Gavin Williamson announced the school "bubbles" system would be scrapped from August 16.
He told the Commons: “Keeping children in consistent groups was essential to control the spread of the virus when our population was less vaccinated.
“We recognise that the system of bubbles and isolation is causing disruption to many children’s education. That is why we’ll be ending bubbles and transferring contact tracing to the NHS Test and Trace system for early years settings, schools and colleges.”
Mr Williamson told MPs: “I do not think it is acceptable that children should face greater restrictions over and above those of wider society, especially since they have given up so much to keep older generations safe during this pandemic.”
But while the move will save thousands of children's education from September, it is also a massive change from previous Covid policy – and could fuel the spread of the virus.
Health Secretary Sajid Javid announced the move at the same time as plans to exempt double-jabbed adults from "contact" isolation from August 16.
Covid isolation axed for double-jabbed Brits – but only from August 16
Covid bubble rules force half a million school pupils to isolate in one week
Mr Javid said exempting all children was the fair thing to do, because they cannot currently get a vaccine.
He told MPs: "So in line with the approach for adults, anyone under the age of 18 who is a close contact of a positive case will no longer have to self-isolate.
"Instead they'll be given advice about whether they should get tested, dependent on their age and will need to self-isolate only if they test positive.
"These measures will also come into force on August 16 ahead of the autumn school term."
On adults he added: "We will soon be able to take a risk-based approach that recognises the huge benefits that the vaccines provide both to people who get the jab and their loved ones too.
"So from 16 August when even more people will have the protection of both doses, and when modelling suggests the risks from the virus will be even lower, anyone who's a close contact of a positive case will no longer have to self-isolate if they have been fully vaccinated.
"If someone gets their second dose just before or just after 16 August, they'll need to wait two weeks, after which their second jab can take effect and give them these new freedoms."
The freedom will be available to people as long as it has been at least two weeks since their second dose of the vaccine.
The NHS Covid-19 app will update to take account of the advice so people are not wrongly "pinged" to isolate.
Children over five and double-jabbed adults who have a close contact will still be advised to get a PCR test – not a rapid home test – but will only have to isolate if it comes back positive.
Children under five will only be advised to get a test if the positive test is in their own household.