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Private schools stand to lose £100m a year under new charity law

PUBLISHED: 14:50 07 June 2007 | UPDATED: 14:32 07 September 2010

The independent sector faces a major threat to its existence when a new Act forces them to justify their age-old charitable status, writes Ben McPartland. THOUSANDS of pupils face being pulled out of Hampstead s elite schools and packed into the already

The independent sector faces a major threat to its existence when a new Act forces them to justify their age-old charitable status, writes Ben McPartland.

THOUSANDS of pupils face being pulled out of Hampstead's elite schools and packed into the already overcrowded state sector if private schools lose their charitable status.

The notion sounds sensational but bosses at the independents say it could be reality if the borough's many public schools are forced to raise fees or even close.

Charitable status, which sees independent schools benefit to the tune of hundreds of thousands of pounds each year from tax breaks, is currently under scrutiny by the Charity Commission.

To remain a charity, private schools such as University College School in Frognal and the Hall prep school in Belsize Park will have to undergo a public benefit test to prove they make a contribution to the local community.

The bursar at The Hall in Crossfield Road, Andrew Aiken, said: "Having charitable status is of immense importance to us. We would manage to survive if we lost it but nevertheless there is a lot at stake.

"We would have to look at the whole financial situation in a very different way."

This week, the Charity Commission ends its public consultation on what independent schools should do to retain their tax benefits.

And in October, the commission will publish guidance on how charities will be expected to meet the public benefit clause of the new Charities Act, which becomes law next year.

To give one example, The Hall school, a boys prep school catering for around 450 pupils, benefits from an 80 per cent cut in its business rates - a saving of £181,000 each year.

Mr Aiken said: "Schools such as ours should be prepared to work along the lines of what the Charity Commission wants when it eventually becomes clear and we will make sure the Hall does whatever is necessary to retain that status."

One way private schools in Hampstead and Highgate benefit the community is to let out their facilities to various community groups, sports clubs or businesses.

Mr Aiken said: "This may not be regarded as sufficient public benefit but it has been something I have supported here.

"Some of the businesses would not survive if they couldn't use our facilities. I have always tried hard to help the little businesses who piggy-back along with us.

"It is very easy to bash the private schools - that is something we have to learn to live with, we cannot whinge about it."

Education Secretary - and candidate for deputy Prime Minister - Alan Johnson said recently that schools need to do more than just open up their sports halls. He wants private schools to share their expertise and even their teachers with the state sector, a move that angered many staff in comprehensives.

Acland Burghley headteacher Michael Shew said: "He just sounded very patronising. I think private schools could learn a lot more from us rather than the other way round. If this was a good idea it would have happened by now."

Mr Shew would also like to see charitable status gradually taken away from private schools all together.

"I don't see why any parents who chose to have their kids educated privately should have that education subsidised," he said.

And although Mr Shew is not against the notion of shared facilities, he says the private schools will always have an obligation to their fee-paying parents.

Mr Aiken agreed that priority would always be given to fee-payers. He said: "Our kids must come first - they have to have the first crack of the whip.

"Their day runs from 8am until 5pm so the other groups who come in will have to fit in around that timetable or come in at the weekend, but everything seems to go fine."

Chairwoman of the Charity Commission, Dame Suzi Leather, said: "All charities should report what they do for public benefit. We think that those which charge high fees where the public benefit may not be obvious should assess and report the value of the benefit they provide alongside the value of the benefits they receive, including of course the tax breaks.

CHARITABLE status is believed to be worth around £100million a year to the independent sector.

As well as seeing an 80 per cent cut in business rates, schools also receive tax relief on investment income and covenanted gifts or appeals - a new sports hall, for example.

Education Secretary Alan Johnson wants private schools to recapture their original purpose, which was to bring in the poor and disadvantaged and educate them.

For hundreds of years, any organisation which was seen to advance education could profit from having charitable status. But under the Charities Act 2006 the presumption that these organisations benefit the community will be stripped away.

From next year schools will have to be prepared to prove their worth to the community when the Charity Commission comes knocking.

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