Charities Bill [HL]

My Lords, I support the amendment. The link between the Bill’s public benefit requirement and the charging policy of any charity is most notable in respect of fees charged by independent schools that are charities, as we debated earlier. The amendment tabled by the noble Lord, Lord Phillips, requires the Charity Commission to look closely at those cases. I believe that the outcome after consultation would be a more robust defence of the charitable status of those schools. In effect, the result of the Charity Commission addressing head-on this tricky issue would be that schools that charge fees—they are likely to be quite significant fees, affordable only by the relatively affluent—would be clear on the requirements that the public-benefit test would bring, and, having satisfied those, clear that their status as a charity was secure. I have made the point at earlier stages that independent schools that are charities are different—have different and extra responsibilities—from those run purely as commercial enterprises seeking to make profits for shareholders. By accepting those responsibilities, which will have been defined by the public benefit criteria, those schools will deserve the concessions, principally in relation to taxation, that society bestows on charities. There are now private companies promoting purely profit-making, fee-charging independent schools. The previous inspector of schools, Chris Woodhead, is promoting the Cognita company, for example, backed by a £475 million fund from venture capital investors. Such schools will take their fees and do not accept a responsibility toward the wider community—no bursaries for those from less affluent households, no support from specialist teachers for the comprehensive school down the road, no opening up of facilities for pupils of state schools, no underlying tradition and ethos of educational service to the educational community. There is a difference between an independent school that is there to make money for its backers and shareholders, and one that has charitable objectives and must recycle surpluses—profits, if you like—for charitable purposes. I strongly suspect that, when confronted with the phenomenon of private education, the public would much rather it were provided by charitable bodies, motivated by a philosophy of goodwill toward the wider community in which they exist, than by profit-making companies that turn their backs on the maintained sector and wish to operate in a way that polarises society between the rich and the rest. As Jonathan Shephard of the Independent Schools Council said:"““There is the very serious point that charitable status underpins the social purpose of our schools and integrates them into society. There is a real risk that purely commercial schools will concentrate on fee-paying parents and ignore the local community””." Charitable status, with the public benefit requirement, implies something special. The Charity Commission must consult on exactly what that will mean. I hope that there will be quite lengthy consultation, both about public benefit generally and about the specific sectors, which will lead to benchmarks that can be applied flexibly to each individual case. I guess that the commission would want to take a proportionate approach in looking at the size and resources of each charity, that it will not take a one-size-fits-all approach, and that there will therefore be no universal expectation of a set number or percentage of bursaries, for example. No doubt there will be some comparison of the fiscal benefits to the school with what that school gives back. Probably, if a school returns more than it receives, that is evidence that would tend to support the contention that it provides sufficient public benefit. But the commission needs to consult on all that. I can see a possible danger of overloading the requirements. If the requirement were to return substantially more than the fiscal benefits gained, that would negate the advantages of charitable status and give a competitive advantage to the commercial operators. That would be a logical nonsense and bad for society. The aim must be to ensure that the public benefit requirement is real. The noble Lord, Lord MacGregor of Pulham Market, suggested that some will fail the test, but we should not make that a large number of the schools in question. In other words, the Charity Commission will need to spell it out with a great deal of care. Those are the very issues that would be put into play in a consultation process of the kind that the amendment would require. It is an important ingredient and I support the amendment.