Tory MP says private schools should lose charitable status

On the Conservative Home website, Robert Halfon, chair of the Education Select Committee, says his party should confront this ‘shibboleth’

Robert Halfon, the Conservative chair of the Education Select Committee, has called for the end of across-the-board charitable status for private schools.

Writing for the Conservative Home website, Halfon, who is MP for Harlow and was skills minister between July 2016 and June 2017, says it is unclear why private schools should be regarded as charities and questions the purpose of granting them charitable status.

Halfon, who went to a private school, says that although many private schools offer bursaries, he is not sure whether they are actually reaching really low-income students and those from truly deprived areas.

“Through their charitable status, private schools get significant tax breaks, including concessions with VAT and business rates – and, of course, no corporation tax if they make a surplus,” he says.

“Is it fair that these tax advantages are available to public schools, though further education colleges and public sixth-form colleges have to pay VAT on their purchases? Yet these latter institutions really do provide a ladder of opportunity to those students from socially disadvantaged backgrounds.”

Halfon argues that private schools should therefore lose their charitable status and the money the government would have spent on charitable concessions for them should be used to fund teachers in outstanding inner-city schools.

“If we Conservatives are to be able to present and make the case for a moral and fair capitalism, we must not be afraid to take on a few shibboleths so that a fair-minded public will really believe us when the government have to take tough decisions on the economy,” Halfon writes.

“How much better would it be if it were Conservatives who counter-intuitively got rid of charitable status rather than leaving it to the left to claim the moral high ground?”

The article also questions the argument that private schools deserve charitable status because they save the Treasury money by educating children who would otherwise be taught in state schools.

Halfon says this logic would mean that “any private good purchased, over a state one, should then be offered charitable benefits in kind”, and would include private health and even homeowners in a broader-than-intended interpretation of charitable status.

Halfon’s article comes after the Barclay Review of Business Rates in Scotland told the Scottish government that private schools should lose their business rates relief because it was unfair on their state counterparts.

Research by the business rates firm CVS in June found that 586 charitable private schools in England and Wales would save £522m over the next five years because of their entitlement to the 80 per cent mandatory charitable relief on business rates.

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Islamic schools trust was ‘mismanaged and poorly administrated’

A Charity Commission report says the Rabia Education Trust had inadequate financial controls

A Luton-based Islamic schools trust that had been criticised by Ofsted for segregating male and female staff was mismanaged and poorly administrated by its trustees, a Charity Commission statutory inquiry has concluded.

The Rabia Education Trust, which runs the Rabia Girls and Boys School in Luton, was found by the commission to have inadequate financial controls, although the regulator’s report says the charity has made progress towards addressing the concerns.

According to the commission’s report, the regulator was in contact with the charity’s trustees from 2012 after their repeated late submissions of accounts and annual reports. An action plan was submitted to the charity’s trustees in 2015 addressing concerns with internal governance, decision-making processes, financial record-keeping and compliance with other regulators.

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After the charity failed to respond on time or address all the points raised in the action plan, the commission launched a statutory inquiry in 2016.

The report of the inquiry, published today, says that the commission was also aware of findings from an Ofsted inspection of the school and a letter from Ofsted to Nicky Morgan, education secretary at the time, about the school, which the regulator said raised further concerns about the management by the trustees.

The Ofsted allegations related specifically to the segregation of male and female staff during a meeting, but according to the report trustees said the segregated meeting was a one-off because it took place in a prayer room.

The report says trustees have promised not to hold future meetings in such a setting.

A speaker policy has also been introduced because of concerns expressed by Ofsted about the school’s vetting of guest speakers: the commission report says this should be strengthened.

The commission found that trustees were unable to show accounting records to explain all of the charity’s financial transactions. The report says that about 40 per cent of the charity’s income was not being banked and some staff were paid in cash, issues which have now been addressed by the charity.

The report adds that the charity failed to get Charity Commission consent before renting out part of its office space to a nursery and did not register a 99-year lease with the Land Registry, despite being required to do so.

The lease was also drawn up without legal or professional advice, the report says.

But it adds that the charity showed a willingness to comply with the commission’s action plan, and also addressed issues such as overdue accounts and to improve internal governance.

A statement from the Rabia Education Trust said that the trustees “have fully cooperated with the Charity Commission and will ensure that all recommendations are fully implemented”.

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Private schools ‘will save £522m in business rates tax relief in next five years’

According to the business rates firm CVS, 586 of 1,038 private schools in England and Wales have charitable status and are therefore entitled to 80 per cent mandatory business rates tax relief

Charitable private schools will save £522m on business rates over the next five years because of their charitable status, according to new research.

The figures are based on requests to 132 councils made under the Freedom of Information Act by the business rates firm CVS, which found that 586 out of 1,038 private schools in England and Wales had charitable status and were therefore entitled to the 80 per cent mandatory business rates tax relief.

All charities are entitled to the 80 per cent relief from business rates, with a further 20 per cent available on a discretionary basis.

CVS also analysed government figures on private schools and found that 2,707 properties were classified as private schools.

These schools had a combined rateable value of £386.6m based on the last property assessment in 2010, but this has since risen by 19.6 per cent to £462.5m, CVS said.

CVS estimated that private schools could pay almost £1.2bn in business rates over the next five years if the business rates revaluation were to take place, but their charitable status meant that this figure would fall to £634.3m. 

CVS also released the figures for some well-known private schools that will save substantial sums over the next five years because of the business rates exemption.

For example, Eton College, which was attended by the former Prime Minister David Cameron, will pay £821,040 in business rates over the next five years, but would face a bill of £4.1m over the same period if it were not a registered charity.

Dulwich College in south London, which was attended by the former Ukip leader Nigel Farage, will pay £786,752 in business rates over the next five years, compared with a potential tax bill of £3.9m if it did not have charitable status, according to CVS.

Waverley Borough Council in Surrey grants the highest amount of business rate relief to private schools, the research shows, with five London boroughs also making the top 10.

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