Policy and Politics: Peers warned of public benefit revolt

Stephen Cook

Charitable status of fee-paying schools continues to cause a rumpus.

The Government was warned last week that there could be a backbench rebellion in the House of Commons about the provisions of the Charities Bill that affect the charitable status of fee-paying schools.

Lord Campbell-Savours told the committee examining the Bill in the Upper House that preserving charitable tax breaks to such schools was "an absolute nonsense" and "an embarrassment to the whole charity sector".

The Labour peer said the law could be brought back into repute by removing charitable status from private schools and giving them tax advantages under finance legislation: "This is rebellion material in the House of Commons. During my 21 years there, repeated arguments on this subject took place behind the scenes. For once, let us sort it out."

The Government has already rejected his proposal in its response last year to the report of the Scrutiny Committee on the draft Bill, the document where it was first mentioned.

One proposal that would have denied charitable status to schools which took fees from more than 66 per cent of pupils was put forward by Baroness Turner and Lord Wedderburn, who referred to society's "self-inflicted wound of bolstering and subsidising the secondary level educational apartheid".

The proposal was dismissed by Home Office minister Baroness Scotland, as was an amendment from Lord Phillips and others that would require the Charity Commission, which will have the task of assessing whether bodies provide enough public benefit to qualify for charitable status, "to consider the extent to which access thereto is restricted".

Lord Phillips, an expert in charity law, went through the details of a Privy Council case from 1967 called Re Resch's Will Trusts in which it was decided that a fee-paying hospital's charitable status was unaffected by the fact that it was too expensive for poor people because it was, in theory, available to them.

The judgement also said that if there was a need among a part of the public for superior hospital facilities, then the provision of such facilities was a public benefit and therefore charitable.

Lord Phillips said this precedent would make it possible in future for an independent school, which made little or no concession to poor people through bursaries or shared facilities, to continue to claim it was providing public benefit by offering better facilities to those who wanted and could afford them.

He and "a multitude of other lawyers" had concluded that if the Bill was not amended it would lead to "at best, confusion and, at worst, no change at all in the law regarding public benefit.

"That would be wrong in terms of the avowed intent of the Government in making public benefit reform, wrong in terms of a modern notion of charity, and wrong in the view of those whom I call the progressive people in the independent sectors," he added.

KEY POINTS

- Lord Campbell-Savours sees preserving charitable tax breaks to fee-paying schools as "an absolute nonsense"

- Baroness Scotland rejects proposal by Baroness Turner and Lord Wedderburn to deny charitable status to schools taking fees from more than 66 per cent of pupils

- Lord Phillips believes that unless the Bill is amended, there will be, at best, confusion.

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