Charities Bill News: Private schools 'escape' public-benefit test

A fee-paying school can be a charity even if it caters solely for the wealthy, the Charity Commission said last week in additional evidence to the joint Parliamentary committee scrutinising the draft Charities Bill.

In its latest intervention, which seems destined to strain even further the fragile consensus behind the Bill, the regulator asserted that charitable schools were subject to different rules on public benefit from other charities.

They won't have to meet any other demands, such as providing bursaries or opening their playing fields to local communities, in order to pass a public-benefit test when the Bill is passed.

Unless challenged, the commission's stance will destroy one of the primary aims of the new legislation - to ensure that the public character of all charities, private schools included, is tested.

The commission's new evidence says that historic court cases "make clear that an educational institution is charitable, even if its facilities and services are confined to the relatively well off". But this does not apply to charity hospitals, which cannot serve only the rich.

This latest stance is in flat contradiction to the commission's own guidance on the public character of charities, which states that a fee-charging charity "should not cater only for those who are financially well off.

It should in principle be open to all potential beneficiaries (as opposed to entire exclusion of those with limited financial means)". This was also the commission's public position at the time of the Strategy Unit review of 2002, out of which the Charities Bill emerged.

Luke FitzHerbert, researcher at the Directory of Social Change, said the commission's change of position could be "catastrophic for the Bill.

This must be dealt with otherwise it will destroy the consensus behind it." The Directory of Social Change is calling for an amendment to the Bill to put educational charities on a par with the rest of the charity sector with regard to public benefit.

The Charity Commission says it will undertake public-character tests on charities, beginning with charity sub-sectors that charge fees. But the commission also maintains that the Bill's removal of the presumption of public benefit in the Bill will not empower it to overrule "exceptions to public-benefit principles" that are established by the courts. This means that public-character tests on private schools will, in effect, be rendered meaningless. Charity hospitals, such as the London Clinic, will face a sterner test.

The NCVO's policy development officer, Belinda Pratten, said: "We believe that, as a matter of principle, all charities should have to make the same positive case in relation to public benefit.

"If this doesn't happen, the new Bill will be meaningless. This only adds weight to the NCVO's argument that the commission's dual regulatory and advisory role is confusing and contradictory," added Pratten.

Rosie Chapman, director of policy and strategy at the Charity Commission, denied that the latest intervention contradicts earlier commission policy.

"Our position is not new. We flagged up the need to examine the legal scope for these checks in our response to the original Strategy Unit report in September 2002. We have been in discussion with the Home Office about options for taking this forward for many months.

"Our stance is not contradictory - in fact, it accurately reflects some anomalies in the legal position, which will not change if the Bill is implemented in its current form."

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