Private schools and councils are simply not charities
Third Force News, by Susan Smith
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.