It looks as if it is finally going to happen. After a stay of execution during the pandemic, independent schools in Scotland will lose their Non-Domestic Rates Relief from April 2022. Unsurprisingly, there has been no howl of protest at this news. If anyone outside the sector were paying attention, they probably nodded quietly in approval at the Scottish Government removing the tax breaks enjoyed by those “posh schools”.
And so, one of the most illogical and unfair fiscal measures enacted in recent times will be implemented. Scottish independent schools are already the only charities in any UK jurisdiction that must prove to the satisfaction of the regulator that they actually provide charitable benefit. They are now also to be the only ones deprived of one of the major benefits of charitable status. They may be forgiven for thinking that it’s something personal.
“If I own a private offshore company routing profits via the Cayman Islands, I can operate nurseries in Scotland and pay no rates.”
But it gets worse. If I own a private offshore company routing profits via the Cayman Islands, I can operate nurseries in Scotland and pay no rates. But if the same nurseries are operated by a Scottish charity that happens to be an independent school, the whole rates bill is payable. It’s not only personal, it is also highly political – and vindictive.
It is also disingenuous and self-defeating, of course. Far from costing the state money in lost tax revenue, anyone who bothers to understand the sector knows that we save the state millions a year. At a conservative calculation, my school alone saves the state about a million pounds every month by educating children and young people who would otherwise be in state schools. Against that, our annual £450,000 of rates relief looks like a pretty good deal for the state.
It is difficult to know what the impact will be on schools. It may be that the Scottish Government is banking on the continued resilience and ingenuity of independent sector and the willingness and ability of parents to pay a little bit more for what they value in their children’s education. Let’s hope they are right in doing so.
“Attacking so-called ‘elitist schools’ by increasing their costs has the perverse effect of making them that little bit less accessible.”
But there is clearly a risk that on top of all the other financial challenges that Covid and Brexit have presented, some schools will not manage to either absorb this additional overhead or pass it on to fee-paying parents without affecting their pupil numbers or long-term financial planning.
And even if they do manage, an impact on bursary funding and affordability is highly likely. We know from previous experience that attacking so-called “elitist schools” by increasing their cost base has the perverse but inevitable effect of simply making them that little bit less accessible.”
“Doom-mongers see this as the thin end of a very nasty wedge.”
And what of the future? Doom-mongers see this as the thin end of a very nasty wedge, the thick end of which is VAT on fees, the end of charitable status and even forms of proscription. More cheery types suggest it might in fact be “red meat” to convince the more ravenous of SNP supporters that the sector has had the kicking they think it deserves, so enabling the Government to take a more pragmatic line in the future.
There is evidence to support that view in some of the First Minister’s words and in the exclusion of policy on independent schools from the recent agreement between the SNP and the Scottish Greens.
Depressingly, none of this is about the great work that schools do for their pupils and their communities. It is too much to ask that one day policy should be driven by an understanding of that?
