Private schools and councils are simply not charities

Privateschoolweb

Susan Smith believes the time has come to remove charitable status from private schools and council run bodies

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23rd August 2017 by Susan Smith 4 Comments

The recommendation to strip private schools and council-run quasi charities of business rate relief is a clear step towards removing their charitable status altogether.

The Barclay Review goes so far as to say that charity rate relief for arms-length external organisations (Aleos) of councils is “tax avoidance”. It also points out that as state schools have to pay business rates, so private schools should too.

However, business rate rebates are just a proportion of the financial benefits that Aleos and private schools get from charitable status. They enjoy VAT rebates and benefit from using the charity brand to access grants and tap the public for donations, on which they can then claim Gift Aid. Their existance also raises questions around the whole charity brand, blurring the line even further between state and charity.

Councils, with their dwindling budgets, have been stretching the public pound through the creation of Aleos. This is understandable, but the move is not victimless – both the giving public and legitimate charities are at risk of losing out.

The public, who are already paying for these services through their taxes, are duped into seeing them as charities in need of support, while legitimate charities providing additional services the state can’t are forced to compete with them. 

Distancing Aleos from councils leaves questions about standards, including the pay and conditions of staff. At what point could Edinburgh Leisure lose the contract to provide public sports facilities to the city of Edinburgh, for example? What would that mean for the millions of pounds of public money already invested in it?

It is, as the Barclay Review hints, simply dishonest to call Aleos charities. It also risks taking us back a pre welfare state age where core public services are provided by charities, funded at the discretion of a few rich philanthropists.

This muddle comes from the anti-taxation zeitgeist of the last thirty years, one the Scottish Government itself perpetuated through almost a decade of council tax freezes. Public services need to be paid for and the fairest and safest way to do that is through taxation.

Private schools, on the other hand, don’t provide a public service despite what the Scottish Council of Independent Schools suggests. It is a weak argument in favour of elitist institutions that give unfair advantages to the wealthiest members of society that they remove pupils from the state system.

Their charitable status is a throw-back to that same pre-welfare era of little to no state education and an elite ruling class bent on subsidising its own interests with the excuse of benevolence to a small number of deserving poor.

The charitable status of private schools is an anathema in the modern world. If rich families are determined to segregate their children from the rest of the population, they should pay for it fully. The state should also benefit from tax income from the businesses providing it.

It’s been over a decade since the Charities and Trustee Investment (Scotland) Act 2005, and it is high time for a review. The issue of the charitable status of private schools and Aleos has been rumbling on for too long. The Barclay report recommendations provide a clear basis to start the conversation that will lead to change. 

Susan Smith is editor of Third Force News.

Comments

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24th August 2017 by RealFreedom

According to the existing law applying to charities, private schools ARE charities. Far more than SCVO or some of the sock puppets polluting the Scottish landscape are. If you don't like, it persuade the Parliament to change the law. Otherwise do your job and what you are funded to do, and support all third sector and charitable organisations and charities in Scotland, not just the ones which support your Marxist-driven dogma.

24th August 2017 by John Edward

"Private schools don't provide a public service". "Elite ruling class". "Deserving poor" "Determined to segregate" This whole debate deserves a bit more than this - and a look at a sector which has changed beyond stereotype and preconception in the last 20 years."The state should benefit from tax income..." How about a recent independent economic impact report that independent schools: • generated £455.7 million Gross Value Added for the Scottish economy • made a direct contribution to the Scottish economy of £ 301 million • supported around 10,600 jobs in 2015 • generated £246.6 million for the public exchequer. The same study noted that by applying government cost estimates to the number of pupils who would otherwise be educated in state schools, it was possible to estimate that in 2015 SCIS members generated a total cost saving to the Scottish education system of £156 million - £48.7 million of savings came from educating primary school pupils and £107.3 from educating secondary school pupils.By all means criticise, object, dislike. But best not to pretend there is a pot of money of there that the "state" is somehow being deprived of.There are bigger things to work on, together.

25th August 2017 by Ruchir Shah

John, it seems like you are undermining your own argument by talking up the GVA economic credentials of the private schools sector. For SCVO's position on the issues see http://www.scvo.org.uk/blog/why-private-schools-charity-status-should-be-reviewed/

28th August 2017 by charlie marshall

The author notes that Independent schools "tap the public for donations, on which they can then claim Gift Aid". This is wilfully misleading. Such schools do not mass mail the public: they target those of the public known to them in other words alumni, current and former parents.Much as many other charities look for funding to this who are warm to them.