Funding reforms amount to an unfair attack on private schools

28th September 2018 at 00:00
Removing business rates relief fails to take into account independent schools’ status as non-profit organisations that play a big role in local communities

Scotland’s independent schools represent upwards of 30,000 pupils across Scotland and employ in the region of 7,000 teaching and support staff. Their track record of academic excellence continues, as demonstrated by another set of outstanding exam results this year, matched by individual and collective successes in sports, arts, music and other community endeavours. They consistently deliver the best level of service to their pupils and parents, and we at the Scottish Council of Independent Schools (SCIS) are very proud to be representing the sector.

Despite the continued level of achievement, however, the independent sector in Scotland is facing significant issues that pose a challenge to this success. As well as the uncertainty around Brexit, the biggest issue is the impending roll-out of the Barclay Review.

The review was commissioned by the Scottish government with the aim of enhancing and reforming the business rates system in Scotland in order to better support business growth. One of the main recommendations was to remove charitable rates relief from Scotland’s independent schools. The government accepted this recommendation and, from the 2020-21 financial year, independent schools will lose their business rates relief and be subject to a five-fold rates rise, costing the sector in the region of £5 million a year.

Independent schools will retain their charity status but will lose out on the principal financial benefit of that status. There has been a lot of discussion in the media about why independent schools were granted charitable status in the first place and why they have been able to claim rates relief up until now. In reality, there are in excess of 12,000 educational bodies registered as Scottish charities – all of which currently receive the same treatment – and there are more than 65,000 in England and Wales.

In 2005, the government created the Office of the Scottish Charity Regulator (OSCR) to assess all of the organisations that, at the time, held charitable status in Scotland. It decided that independent schools should remain as charities, having ensured that their public benefit outweighed their private status (OSCR established a specific and detailed test for each school to determine that this was the case).

Helping hand

Since 2005, the provision of means-tested bursaries has tripled as a direct result, with independent schools dedicating more than £30 million a year towards 100 per cent bursaries for parents who could not otherwise afford to send their child to an independent school.

In addition, independent schools continually reach out to their local communities and work in partnership with local authority schools, offering staff expertise, and sharing best practice and facilities to the benefit of pupils in all schools involved.

Contrary to popular belief, independent schools do not operate as profit-making bodies – indeed, they are legally prohibited from doing so. Money from fee income is either invested directly back into the school (to pay teachers or improve facilities, for example) or it goes towards means-tested bursary assistance.

Regardless of the implications for schools, the fact that independent schools will retain their charitable status but will not be eligible for the same financial benefits as every other registered charity in Scotland, England or Wales is unfair and anti-competitive.

How will the Barclay Review impact on the sector? The principal way in which schools can realistically accommodate a potential six-figure spending increase per year is to increase their school fees – a decision that will hit parents. While it won’t affect the number of bursaries provided, individual schools will have to factor the increase in bursary into their annual budgets.

It may end up also affecting the provision of resources and facilities to local communities and local authority schools – either schools will end up revoking this because of the cost of maintenance or will be forced to charge fees for the use of their resources that better reflect their full business-rate obligation.

This is not forgetting the potential impact on recruiting and retaining teaching staff. In an already incredibly competitive marketplace, where Scotland is experiencing a shortage of teachers, schools need to be able to offer a competitive salary to encourage teachers into the independent sector and continue to drive the academic excellence offered by Scotland’s independent schools.

Mutual benefits

The fallout from the review will be damaging as schools work incredibly hard to manage budgets in order to keep fee increases to a minimum while being able to share resources and facilities, and attract quality teachers.

What can independent schools do? At SCIS, we continue to oppose the implementation of the review – which makes an anomaly of Scottish independent schools and does nothing to improve state provision. Schools are engaging with their local councils to highlight the mutual benefits of access to school facilities and shared resources. The consultation on the implementation of the review will allow the sector to show the impact that the removal of rates relief will have on schools, pupils, teachers, parents and communities.

Recent correspondence revealed that the government has suggested individual councils might mitigate the rates increase by using the 2015 Community Empowerment Act – recognising the local economic impact that schools have. However, the real challenge for the government, if it believes in Scotland’s competitive edge and in removing an apparent inequality in the relief for educational bodies, would be to leave all registered charities alone (subject to OSCR) and instead encourage councils to use the 2015 act to remove the entirely notional rates bill for state schools so that all education institutions operate the same, without having to pay rates relief.

At the end of the day, the independent sector is robust and will weather this storm, as it has done before. There is not the slightest chance that this issue will diminish the dedication, energy and expertise that independent schools and their staff have shown over decades – nor will it change their commitment to choice, diversity and excellence for Scotland’s young people.

John Edward is director of the Scottish Council of Independent Schools

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