Is charitable status for state schools really a good idea?


Commonspace columnist James McEnaney discusses SNP Conference motion 19: Charitable Status for Scotland's State Schools.

AS anyone reading this will surely know, the SNP Conference is currently taking place in Glasgow's SECC.

Members from across the country have come together to, amongst other things, debate party policy, with one of the items on the agenda calls for a change the law in order to allow state schools to gain charitable status. This, according to motion 19, would 'relieve state schools of taxation burdens', bring them into line with their fee-paying counterparts and help towards the creation of a more equal Scotland.

It sounds good, at least at first – but scratch beneath the surface and problems starts to arise.

First of all, the taxation burden referred to in the motion is a matter for local authorities, not individual schools, with councils paying business rates on all schools under their control. Charitable status would therefore represent a significant saving for local authorities which could certainly free up more money for education spending. So far so good.

It sounds good, at least at first – but scratch beneath the surface and problems start to arise.

The trouble is that business rates are paid to the Scottish Government which also provides the vast majority of councils’ cash. Charitable status for around 100 private schools costs the Scottish government about £10m a year, so imagine the figure for 2500 state schools. If the government could promise not to claw back this money by reducing education funding then that would be one thing, but the money will surely have to come from somewhere.

Furthermore, if the government is indeed willing to finance a significant increase in education spending – such as would be achieved by the non-domestic rates exemptions associated with charitable status – then why not simply hand over the money right now?
Another area where people assume savings could be made is in relation to VAT, with some arguing that charitable status would allow individual schools to reclaim money currently sent to the treasury in London. This is certainly an appealing prospect but, again, it doesn’t quite match up with the reality: a local government source has confirmed that councils already claim back VAT associated with education spending.

So would charitable status be of any benefit to state schools? Maybe – but there are serious pitfalls to be considered.

Charitable status would allow schools to access new sources of funding which, in theory, could mean more investment in education across the country. Once again, however, it’s not that simple.

This type of system…carries with it a real risk of entrenching, perhaps even increasing, the gap between rich and poor.

Under such a system any government would find it easy to ‘pass the buck’ on education spending, with calls for increased public investment potentially dismissed with a wave of a National Lottery funding form.
'Unhappy with your budget for the year? Well that's not our problem. Use that charitable status we gave you and start fundraising.'

This type of system would align with the government’s views on increased school autonomy but it also carries with it a real risk of entrenching, perhaps even increasing, the gap between rich and poor. Schools in predominantly wealthy areas would likely find it much easier to boost their income, with the social and professional capital of well-off, middle class families providing an enormous advantage when it comes to working through funding applications or locating additional sources of revenue. 

Extending charitable status to state schools would also risk encouraging a culture of donations and patronage, with wealthy local residents—such as prominent business owners — invited to ‘support their local school’. It doesn’t take much of an intellectual leap to see the potential problems with private individuals treating schools as prime advertising opportunities.
So given that charitable status for state schools will likely cause more problems than it will solve, why has the motion made it into the famously well-protected SNP Conference agenda? A total of 166 motions were submitted for the conference so it is surely worth asking why this one survived the cull.

One possibility is this move could provide some political cover by effectively killing off the argument around tax breaks for the elitist, fee-paying institutions through which the wealthy are able buy an educational advantage for their children. Members of the SNP who are opposed to private schools holding charitable status (and there are plenty of them) should be aware that motion 19 will cement, rather than challenge, that obvious injustice.
It is also possible that the extension of charitable status to state schools is linked to the government's plans to markedly reduce local authorities' involvement in education, both through the creation of new 'educational regions' and, more importantly, the intention to bypass councils – to an as yet unspecified degree – when it comes to school funding.

A total of 166 motions were submitted for the conference so it is surely worth asking why this one survived the cull.

Remember that the government is yet to make (or at least announce) a decision on proposals to turn St Joseph’s primary into a parent-led "state-funded autonomous school" (or, in simpler terms, a Free School). It’s also worth noting that Swinney’s own conference motion says that “head teachers, parents and communities should have more responsibility for schools in their areas”.

John Swinney may have (quite rightly) pledged not to pursue the Academy model of school governance seen in England but that does not necessarily preclude the possibility of institutions being effectively run by boards comprised of headteachers, local parents and other ‘stakeholders'. This, combined with the introduction of the sort of parallel funding structures outlined above, would look an awful lot like the establishment of a Scottish version of Free Schools.

It would also do nothing to reduce educational inequality in Scotland.