Tax threat to private schools

PRIVATE schools will lose their charitable status unless they can demonstrate that they benefit the public, not just an elite group, under new rules being drawn up by the Charity Commission, writes Rachel Sylvester.

A review of charity law, to be published before Easter, has concluded organisations must be of value to the community at large to qualify for the lucrative tax benefits of charitable status.

Fee-charging schools currently benefit to the tune of pounds 65m a year. Independent school heads fear a change in the law could lead to sharp fee increases. In the past they have been relaxed about Labour threats to abolish charitable status. This time they are taking the threat much more seriously.

The Independent Schools Council has advised its members that new criteria are likely to be introduced which will be difficult for some schools to meet. It is drawing up a strategy for helping headteachers to find ways of proving the public value of their schools by, for example, sharing their playing fields or music facilities with comprehensive pupils.

The new rules will lead to accusations that the Government is seeking to remove the charitable status of private schools by the back door. They will be seen as a compromise which will force private schools to become less elitist while keeping middle England on side.

Although the Charity Commission insists it is not mounting a "witch- hunt" against pri- vate schools, Whitehall insiders acknowledge they will be hard hit. "If a school is surrounded by barbed wire fences and only accepts children of people who earn more than pounds 1m then there will be some doubts about its charitability," one source said.

The Independent Schools Council argues as a first line of defence that private schools should qualify for charitable status simply because they make "an invaluable contribution to the nation's education".