Labour ready to end schools' tax privileges: Judith Judd looks at a plan to review how education endowments work

LABOUR is preparing a fresh onslaught on the charitable status of independent schools, based on a paper by Frank Field, MP for Birkenhead.

A group of five MPs is devising a new policy which will mark a dramatic departure from its 1992 election manifesto when plans to review private schools' charitable status were dropped. Ann Taylor, Labour's education spokeswoman, believes the group has found a way round legal snags that have beset the party's efforts to remove charitable status, which exempts the schools from some taxes, such as corporation and capital gains tax, and value-added tax.

Lawyers have advised independent schools that the policy would fall foul of the European Convention on Human Rights. The schools say that fees would rise by 30 per cent if charitable status was removed.

Mr Field's paper accepts the abandonment of the party's one-time commitment to abolish public schools. But it proposes the establishment of Education Commissioners, who would examine all education charities, including the public schools and Oxbridge colleges, and decide whether they are using their money for the charitable purposes originally intended.

Once the commissioners examined the title deeds of private schools, the paper says, they would find that many have been drawn up with endowments to further the education of poor pupils. They would be given powers to redistribute the money where they felt justified.

The paper says: 'The establishment of the Education Commissioners should not be seen as an attempt to abolish private education in a surreptitious way. What is questioned is whether the use of educational endowments covered by the privilege of charity should be used to this end.'

The party will also renew its pledge to abolish the assisted- places scheme, which subsidises less affluent pupils in private schools.

Three years ago a survey estimated the value of charitable status to schools at pounds 41m.