Proposal #25: Remove private schools' charitable status

By Hadleigh Roberts / @hadleighroberts

Education has always been a key issue for Labour because it is the foundation of social mobility, yet there still exists a huge division between state and private schools. One of the ways to break through this dividing line is to remove the compulsory charitable status from private schools.

Though education, particularly when dealing with state/private issues, is an area that easily trips up the Tories, who were in favour of grammar schools and selection, then were against it, and are now for one or another or both and neither, we should not use it in this way.

Education is something we must not be tribal about; so often Labour attaches a stigma to those from private school as having an easy ride and of being “natural Tories” but fail to appreciate that these schools provide bursaries and scholarships to non-privileged children, and ignore that parents who send their children to the private sector are not always “the snooty Eton types” but average middle class people who choose to spend all their savings to give their child a boost.

This perceived boost shows that Labour must seek to close the gap between state and private education, but it must not seek to go about it by throwing obstacles in the way of independent schools and pulling them down when it is state schools that must be improved. The gap should be closed, but not at the expense that the net quality of education decreases.

The gap is not just about results, league tables and university places; there is also a barrier because the state and private sector have operated far too separately for far too long. Our attitude should be cooperative instead of contemptuous.

We should not think about removing the charitable status from private schools with spiteful motives; our logic should be that the current system is in need of reform. Although charitable status gives private schools tax breaks, the amount of VAT they have to pay means they give away around 20% of their profit. If the charitable status was removed, and schools were still able to continue to give the free places that they already give, then they would not lose so much money that could be reinvested.

The charitable status has now become a burden to private schools and many would give it up if they could. But currently it is illegal. Private schools are obliged to have charitable status, and therefore are obliged to pay high VAT.

In practice, it means that the more places a school gives away (as an example of a charitable activity), the more tax it pays. Thus, schools which do the bare minimum and provide very little public benefit profit, while those which give out more places lose out.

This is fundamentally counter-productive to both the schools and to us. By removing charitable status we give substantial freedom to the private schools, though to profit from this we also need to change the law so that the more charitable the school is, the more it benefits for itself as well as society as a whole. This will encourage smaller private schools to be more altruistic and improve their links within the community.

We should remove the compulsory charitable status for private schools and, instead, replace it with a fairer mechanism to reward and provide incentives to charitable education.

Hadleigh Roberts also writes at hadleighroberts.co.uk.