Is it justifiable that public schools have charitable status leading to massive tax savings, but state schools don't?

[motherogod]

Many posters here have defended private education in terms of parental choice - fine - but I'd like to know how it can be justified that public schools have charitable status, particularly as half of them then have an 80% deduction on the rates they pay, whereas schools run by councils have to pay business rates. Academies, foundation schools and voluntary aided schools also receive an 80% reduction.

@mpsw

I think you're wrong about CCF - both Brown and Cameron put millions into CCF in maintained schools, and the (very small) fees for kit and activities are standard across all units.

Is it perhaps an issue with things like 'who pays for the minibus?' which will differ, depending on whether/how many the school owns, and how many activities have to be held off-site

The Maintained CCFs did get a small amount but the state schools have to pay staff to run them whereas independents rarely do. State schools have to pay to set up armouries. There was a big flurry about it but not much impact or the full amount of money reaching schools.

I've audited a few private schools and they are not wealthy like Eton, they are surviving year on year. I don't think the tax raised from removing Eton's charitable status would make up for the employment taxes lost and the additional state funding required by effectively closing all small local indies.

@scaevola

while charitable status may technically describe some activities of these schools, the reasons for them to maintain that status isn't really defensible in terms of the spirit of what a charity should be

Charitable status is however a legal and technical thing.

That's why a proper proposal, that covers the legal and technical aspects, wouid be helpful.

And yes, it wouid be pretty chaotic in the year or two around enactment, because so many schools would simply close. There just isn't the slack in the system to accommodate the influx and I wouldn't really want to have a child in either system at the point it happened. The increase needed to the education budget for schools would wouid mean paring back elsewhere, and I don't think there are any remaining easy options for cuts.

I'd only do this as a policy at a time when the nation was fairly flush (or believed itself to be). And definitely not whilst the demographic bulge is still passing though

And yes, it wouid be pretty chaotic in the year or two around enactment, because so many schools would simply close.

So the only reason all the schools can remain open is because of their charitable status, supported by the taxpayer due to being charities, but serving only a tiny proportion of the population? Others have said that many of them no longer wish to be charities, so that's confusing.

This is what I don't understand - it's allegedly c.50% of public schools, and allegedly many of the wealthiest - the full information doesn't seem to be available: www.whatdotheyknow.com/request/list_of_independent_schools_with.

The wealthiest ones can recover the money they'd stand to lose from selling some of their assets, and given the competition to go to these schools they can just hike up their fees if they want, or if they are charitably inclined they can continue to give bursaries and scholarships.

I imagine it's to do with what the government want to spend money on - look how much they've spent on Brexit (obvious I know)

They should have charitable status only if more than 50% of their pupils on means-tested full bursaries.

Letting the poor children swim in their pool once a week doesn't really cut it.

If you decide a charity is not fulfilling its charitable function (as defined in law, nit in perceptions of worthiness) or because you remove relevant charitable function from the current definitions of a charity, then yes it has to wind up

As charitable status is 'worth' around £200 per pupil/term, then that would be absorbed into the fees. They wouldn't need sell-offs

They would close, not because if the figures involved, but because they are charities. And if a charity is closed down for any reason, then it has to be wound up in accordance with the law on closing charities.

But if you can show a proposal that would allow a charity to wind down in other terms, I'd be interested to see it (genuinely, because I can't see how it would be done)

@scaevola

If you decide a charity is not fulfilling its charitable function (as defined in law, nit in perceptions of worthiness) or because you remove relevant charitable function from the current definitions of a charity, then yes it has to wind up

As charitable status is 'worth' around £200 per pupil/term, then that would be absorbed into the fees. They wouldn't need sell-offs

They would close, not because if the figures involved, but because they are charities. And if a charity is closed down for any reason, then it has to be wound up in accordance with the law on closing charities.

But if you can show a proposal that would allow a charity to wind down in other terms, I'd be interested to see it (genuinely, because I can't see how it would be done)

Ah I see what you mean, sorry.

In terms of the techinicalities, it seems it was done in Scotland following a review in 2017 - see www.scotsman.com/news/politics/scotlands-private-schools-start-paying-full-tax-next-year-1332623

However, the law around charities is devolved so in Scotland the definition of what constitutes a charity seems to be different following
The Charities and Trustee Investment (Scotland) Act 2005 which introduced a new test for a body to register as a charity in Scotland consisting of two parts:

the purposes of the body must be exclusively charitable; and
the body must provide public benefit, either in Scotland or elsewhere.

What seems to have happened is that the schools could prove they were charitable in advancing education, but could not prove they were of public benefit.

So it isn't outlandish to think it could happen in the rest of the UK, but maybe the definition of charity is what's in question.

oh except it didn't happen due to the pandemic www.heraldscotland.com/news/18423056.coronavirus-scotland-private-schools-thrown-tax-breaks-lifeline/

"So it isn't outlandish to think it could happen in the rest of the UK, but maybe the definition of charity is what's in question"

Of course it's not outlandish

The definitions of charity could of course be changed.

But what are you proposing to change them to?

Remember that many charities have provision of education as one or more of their aims, and any that do, would also be impacted by the change. Or wouid you be tackling it from the permission to levy fees angle?

These are the very areas that have been examined, but still no proposal has yet been devised which does not have unacceptably high collateral damage to other charities which provide education and/or other charities which have fees for services.

Actual proposals, in English law, would be very welcome!

Eton set up a state boarding school - they share teachers, facilities etc
It went down extremely well locally & people move to get their children in there.
www.etoncollege.com/newsarticle?id=740

@scaevola

"So it isn't outlandish to think it could happen in the rest of the UK, but maybe the definition of charity is what's in question"

Of course it's not outlandish

The definitions of charity could of course be changed.

But what are you proposing to change them to?

Remember that many charities have provision of education as one or more of their aims, and any that do, would also be impacted by the change. Or wouid you be tackling it from the permission to levy fees angle?

These are the very areas that have been examined, but still no proposal has yet been devised which does not have unacceptably high collateral damage to other charities which provide education and/or other charities which have fees for services.

Actual proposals, in English law, would be very welcome!

I'm not a lawyer so I'm not personally proposing a specific change, but benefit to the public good seems fairly sensible in terms of the de facto understanding of charity, and as defined in Scottish law since 2005 and in other jurisdictions - Irish law also defines a charity as a body that exclusively promotes a charitable purpose (a charitable purpose is a goal that is of public benefit), but also that it states in its constitution or governing documents that it must use all of its property to further its charitable purpose (except for money used in its operation and maintenance, for example, staff wages)

All Irish state schools have charity status.

'Private' schools do themselves little favour in debates like this. Many claim to give our bursaries to a large % of their pupils, especially those with large endowments, but are very secretive about what the actual value is, especially when expressed as a ratio against the fees they charge.
I doubt if anything will change, the political elite, from all parties, tend to send their kids to private schools, as do the wealthy. Stripping them of charitable status will do little to stop this, those with money will continue to pay to extend their privileges to their children.

Of course they will. Because that's what money gives you - choices. And it does nobody any favours to take away that choice, and squeeze already under-funded schools full of more children.

Young Enterprise charges private schools £1500 per team they enter so that the subsidise state schools who are charged £350 or so

@trilbydoll

I've audited a few private schools and they are not wealthy like Eton, they are surviving year on year. I don't think the tax raised from removing Eton's charitable status would make up for the employment taxes lost and the additional state funding required by effectively closing all small local indies.

I was involved in a project that included checking out the status of schools late last year, for sorting out our database.

I noticed that many of the private schools are small, and removing the charitable status could mean many close.

Which then puts the burden of those children back into overcrowded state schools. Do we really want that?

Also, a number of these private schools were for SEN provision, with services being bought as needed by the LAs. Some provision is very specialist and isn't available in the public sector.

Again, these are small schools, and the charitable status helps them remain open. Should we close these schools and dump the children who need these services back into the public sector where they can't be catered for?

It really, really isnt as simple as you're making out, OP.

To clarify what MulticolourMophead means. When you "dump" the children who attend very specislist SEN schools back in the public sector, the public sector deems that a LA tutor attending as little as 1 hour a week, but a maximum of 5 hours a week is adequete. They dont stand a chance.

Also, a number of these private schools were for SEN provision, with services being bought as needed by the LAs.

Though it would help the public purse if the fees charged weren't so extortionate.

Bit of a catch22 for LA's. No local suitable SEN provision and new schools can only be opened as approved through the free school/academy programme.
Meanwhile pupils have to be transported out of area at huge expense for transport and/or the places, leaving less money to support SEN pupils locally. Lack of places pushes up the cost ( and I mean sometimes figures of £100,000 per pupil per year).
There is a huge issue with costing and overspend because of need, legal requirements and lack of places. Private providers can charge what they want!

It really, really isnt as simple as you're making out, OP.

Sorry but I think it is actually pretty simple going on the reasoning here, and the fact that Scotland has decided to go down this route - in terms of SEN provision, Scottish schools could retain their charity relief if they were dedicated to teaching children with additional support needs. Besides, my original question was about public schools.

Most people are aspirational for their children - and (eg) try to live close to 'good' schools or try to have tutors to help their kids if they can afford it /if necessary. Some people even pretend to belong to a particular religion if they think it will help their children get into what they think of as a better school (and I do judge the latter).

If removal of charitable status meant some small independent schools closed and children went to the state sector, then maybe those parents would lobby for better funding for all or vote for the party that is most dedicated to improving education - perhaps motivated by self interest, but with the side effect of the common good. They might even set up a charity to do so!

.... also defines a charity as a body that exclusively promotes a charitable purpose (a charitable purpose is a goal that is of public benefit)

Much the same as in England then, and of course the law also defines what (currently) counts as a charitable aim/goal of public benefit (I'm assuming these terms are interchangeable). The provision of education is one of those aims. The schools are therefore legal charities fulfilling their core function

but also that it states in its constitution or governing documents that it must use all of its property to further its charitable purpose (except for money used in its operation and maintenance, for example, staff wages)

Yes, they'd probably be fine on that too, as they are not-for-profit and and generally don't carry large reserves relative to turnover. Reports to the CC should include amount (direct spend, or other use of resource) for other community activities in addition to the provision of education.

If you propose ending them as charities, then it's not some small schools which close, it's all which have no legal basis to remain open (because they must be wound up, a everything owned by the now defunct charity must be disposed of in line with the (current) rules.

This means there will be rush to these schools which are not charities, and possibly those which have their own Acts (Eton and Dulwich do, there may be others, and I've no idea how on earth you unscramble those!)

And possibly a boom in the private tuition sector?

@scaevola

.... also defines a charity as a body that exclusively promotes a charitable purpose (a charitable purpose is a goal that is of public benefit)

Much the same as in England then, and of course the law also defines what (currently) counts as a charitable aim/goal of public benefit (I'm assuming these terms are interchangeable). The provision of education is one of those aims. The schools are therefore legal charities fulfilling their core function

but also that it states in its constitution or governing documents that it must use all of its property to further its charitable purpose (except for money used in its operation and maintenance, for example, staff wages)

Yes, they'd probably be fine on that too, as they are not-for-profit and and generally don't carry large reserves relative to turnover. Reports to the CC should include amount (direct spend, or other use of resource) for other community activities in addition to the provision of education.

I think the terms aren't interchangeable - in Scotland independent schools were deemed to fulfill their charitable aim (educational provision), but not be for public benefit. It would be hard to see how independent schools do benefit the public - creating a tiny amount of relief for the state sector wasn't accepted as an argument in Scotland. I guess it's a different jurisdiction, but that's how it was interpreted.

The ones I'm most familiar with due to cousins and university friends are Eton, Dulwich, and St Edwards in Oxford

Op Wow so do you bang on all the time about the evils of charitable status to your cousins and friends who are/were privately educated?
They must dread seeing you.

@Andante57

The ones I'm most familiar with due to cousins and university friends are Eton, Dulwich, and St Edwards in Oxford

Op Wow so do you bang on all the time about the evils of charitable status to your cousins and friends who are/were privately educated?
They must dread seeing you.

Why are you being so rude? Op Wow so do you bang on all the time about the evils of charitable status to your cousins and friends who are/were privately educated?

No, it only struck me yesterday as I was reading about the A level debacle. I've been talking to one of them today and yes we discussed it and they were also interested in it and said they always found it anomalous - some of their classmates in Eton used to joke about being 'charity cases' (ironically). You know, it is possible to be connected with a public school or have gone to one and find some aspects of them unusual or even dislike the whole system.

I don't 'bang on' and I don't deem it an 'evil'. I was pleased at the civil tone of this thread but it seems on MN (I'm not here often) that there's always someone who wants to jump in with the ad hominem insults.

To be fair to @Andante57, there have been a fair number of chippy comments about the perceived unfairness of fee-paying schools.

Some people choose to spend their money on their child's education. It may not seem fair. Who said it had to be?

@PamDemic They're benefitting the most wealthy 7% of society. That's it. There's no public benefit.

Sorry to point out the obvious - but statistically the more educated a person, the higher their income, and the more taxes they contribute.

Societies with higher rates of degree completion and levels of education tend to be healthier, and have higher rates of economic stability.

[quote Bagatelle1]**@PamDemic* They're benefitting the most wealthy 7% of society. That's it. There's no public benefit.*

Sorry to point out the obvious - but statistically the more educated a person, the higher their income, and the more taxes they contribute.

Societies with higher rates of degree completion and levels of education tend to be healthier, and have higher rates of economic stability.[/quote]
Except 1/10 of people earning more than 1 million pay only 20% tax. Here's the report warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/bn27.2020.pdf

Societies with greatest equality are healthiest and most stable, not sure how public schools being charities benefits greater degree completion in general.