John Edwards

John Edward, director of Scottish Council of Independent Schools, reports on money, politics and the independent sector in Scotland

The UK Labour Party’s stated policies on some removal of relief or of exemption from independent education has not changed since the last Labour leader was in post, but the odds of an administration able to implement it shorten by the day.

The problem for all concerned is that while the policy is the same, the world is not. The implementation of a reserved tax affecting a devolved area could have serious issues for Scotland and Wales.

The brackish backwash of Brexit and Covid-19 and inflationary and energy squeezes on the cost of living, coupled with the end of cheap mortgages, will sour what is financially viable for many families.

Although many of these pressures are UK-wide, it requires repeating on a daily basis that nothing about British education is truly British. Regional economies differ, historic provision is variable and, crucially, devolution has only given formal recognition to the fact that education systems were already in no way unified over the four home nations. In a chart of the key bodies in UK independent education – government, minister, registration, inspectorate, care regulator, teacher registration, qualifications regulator, pensions, charity, and disclosure – only pension and charity regulation are the same… in England and Wales alone.

In Scotland, the independent sector is small, less than 5%, but with pupil numbers equivalent to those across the 10,000 square miles of Highland Council or the Scottish-domiciled students in Scottish universities. Fees remain comparatively modest, which puts strategic limitations on the ‘facilities arms race’ so recently prevalent in England Yet the sector appears to live rent-free in the minds of certain politicians and commentators.

The Charities and Trustee Investment Act passed through the Scottish Parliament in 2005. The Act provided that fee-charging schools should reduce the barrier to access that fees constitute, as well as ensuring that public benefit outweighed any private benefit that users of the institution benefitted from. The Office of the Scottish Charity Regulator then spent the next decade testing each school individually, unique to the organisations on their register, to ensure that schools met those tests.

As a result, means-tested fee assistance in independent schools rose from around £13 million in 2009-10 to over £33 million in 2020-21, just prior to Covid-19. Derived almost entirely from parental fee income, that support is now equivalent – per capita – to the direct bursarial support that Scottish students receive at Scottish universities (all taxpayer funded). Hundreds of day and boarding pupils now receive 100% (or more) financial support to widen access to the schools. A quarter of the sector overall now receives some form of means-tested assistance. In addition, every school has audited and revisited the use of teaching and examination support; facilities; careers, music and sports events; and other resources by other schools and the wider community.

The Non-Domestic Rates (Scotland) Act was then passed in 2020. For reasons best known to the Scottish government, and discouraged by the charity regulator, the Act removed independent schools from the automatic rates relief afforded to all other 25,000 bodies on the charity register. Following delays caused by the pandemic, independent schools began to pay rates at commercial levels of 100% in April 2022, despite being not-for-profit by law.

Rates relief removal combines with the ongoing widening access obligation of the charity test, which the schools were actively and enthusiastically engaged in, while removing the one main support for the advancement of education that charity law provided for. The effects of Covid-19 were and are as real for staff and families in the sector as anywhere else, not least given the substantial efforts to repurpose funds into hardship support for families and staff throughout the crisis.

Schools rightly feel that they have met obligations made specifically for them twice-over, but with a sense that further financial demands of the sector will be made, threatening to undo the progress that has been made in funding widening access. Placing VAT on school fees would create an additional challenge for Scottish families and schools as affordability hits most families, whether those receiving 80% means-tested assistance or none.

Every pupil that leaves the independent sector is either an additional cost and pressure to the state education budget (support for which VAT is proposed to assist), with implications for school buildings – especially in the four largest cities – class sizes, school catchments, teacher recruitment, etc or a loss to the Scottish economy entirely if boarding pupils move elsewhere.

The assumptions made in the report by the Resolution Foundation that informed Labour’s policy – that there is no net loss to state finances from such a move – are not borne out by families themselves.

The report was also compiled before the impact of Covid-19 and inflationary, utility and interest rate increases. In addition, the report states that “private schools are attended on a fee-paying basis only by children from households with significant means” – an unsupported

statement which runs directly contrary to the aim and reality of Scotland’s public benefit test for independent schools.

The Scottish independent sector has no desire to oppose any policy to support the state sector, quite the opposite. It has no appetite for undoing the work that has been undertaken in Scotland on public benefit and widening access. There is a real and immediate concern however that yet another specific and discrete demand for more income from a limited group of families threatens to do both.

John Edward is the former director of the Scottish Council of Independent Schools (2010-2023)