Ratepayers could be subsidising the country’s private schools by 250 million pounds a year

From the Big Issue in the North magazine. 

Ratepayers could be subsidising the country’s private schools by hundreds of millions of pounds, an investigation by The Big Issue in the North can reveal.

The country’s private schools enjoy charitable status, which means they do not have to pay corporation tax and enjoy an 80 per cent rebate on their rates.

State schools are charged full rates and often pay considerably more than fee-paying institutions that charge many thousands of pounds for a place.

Leeds Grammar School at Alwoodley Gates traces its heritage back to 1552 and is based on a 100-acre site at the outer edge of the city. Whereas state schools take in all pupils in their catchment area, Leeds Grammar draws its from a 25-mile radius. 

Annual fees at the school are £11,282 for a secondary school place. Class sizes of 18-20 are, at least, a third smaller than in a state secondary school. 

As charities, private institutions such as Leeds Grammar School are only required to pay 20 per cent of their non-domestic rates (NDR) bill, the funds from which help finance local services. Now The Big Issue in the North can reveal the extent of the savings private schools are making from that concession.

NDR is nationally set and was 43.3p in every £1 in 2011-12. Leeds Grammar School has a rateable value of £1.41 million. If it were a state school, it would have paid NDR of £534,978.50. Instead it paid £106,995.70.

Another private institution, Rishworth School in Sowerby Bridge, has a rateable value of £286,616 and would have paid NDR of £124,971.12 if it was a state school. It actually paid £24,994.22.

St Peter’s School in Clifton, York – where fees for boarders are £24,000 – has a rateable value of £610,000 and yet paid just £51,348 last year.

If all three Yorkshire schools were not classed as charities the taxpayer would have collected close to £863,000 in rates, rather than just £183,000.

It’s a similar story elsewhere in the country.

Benenden School in Tunbridge Wells, Kent enjoyed an NDR discount of £185,000. There are 14 independent schools in the Tunbridge Wells area and in 2011-12 they avoided paying more than £1.5 million in NDR.

King Edward’s School in Bath saved £145,000. 

In York the six largest private schools avoided paying a combined £360,000 and figures obtained from six local authorities – Leeds, Calderdale, York, Kirklees, Bath and Tunbridge Wells – revealed that many fee-paying schools obtain charitable discounts exceeding £100,000 a year. There are 2,500 independent schools in the country.  

State schools, by contrast, are charged full rates. Milthorpe School, a York comprehensive for 11-16 year olds just 1.6 miles from St Peter’s, has a rateable liability of £202,000. Last year it paid NDR of £87,400.52. 

According to the figures obtained from the six authorities listed above no state schools enjoyed exemptions from paying full rates. 

In comparison to the good facilities at private schools, basic spending on pupils at state schools was cut by 2.5 per cent last year. In the future construction costs for new state schools will be capped at £14 million – £7 million less than under the last government. As a result they will also be 15 per cent smaller. 

Stephen Twigg, shadow education secretary and MP for Liverpool West Derby, said: “Independent schools need to do much more to earn their charitable status. Under a future Labour government we may need to review the current legislation.”

In Scotland the Office of the Scottish Charity Regulator was asked in September to assess whether private schools such as Fettes in Edinburgh should retain their charitable status. OSCR chief executive David Robb said: “Schools will need to demonstrate the benefits they provide.” 

Neil Roskilly, chief executive of the Independent Schools Association, denied that the NDR reduction amounted to a subsidy to his members.

“There’s no cross-subsidy taking place as private schools give back to the economy far more than they may benefit from in relief,” he said. “Most private schools are small and do a great job locally in filling in the gaps in educational provision. 

“There are now over 5,000 children from disadvantaged backgrounds at private schools who are on 100 per cent free school places. Private schools, most of which are small, also engage in a huge range of local and national partnerships with state schools, charities and organisations.” 

Mark Metcalf