Examination of Witnesses (Question Numbers
340-359)
DAME SUZI
LEATHER, MR
ANDREW HIND,
MS ROSIE
CHAPMAN AND
MR KENNETH
DIBBLE
9 OCTOBER 2008
Q340 Chairman: We have explored this
at some length in the sessions that we have been running. We have
heard it said with some vigour, including, as I say, by the head
of a major public school, that giving bursaries not only should
not meet the test but actually is a disbenefit to the wider education
system, and so I am asking you: Have you decided that giving bursaries
is now okay in public benefit terms?
Mr Dibble: Our view remains that
giving direct access to the educational facilities of an independent
school through bursaries, scholarships, exhibitions, may well
be a way of discharging public benefit in those cases. But can
I pick up Mr Flynn's point on what is suggested to be the divisive
nature of independent schools in the educational sector. The Commission
is bound by approaching these cases in the legal framework. Our
view is that these wider issues of social division which may be
thrown up by the possibility of independent schools, as you say,
creaming off the best, may be an issue of wider social policy,
but the Commission is confined to follow the legal framework.
Our view, at the moment, is that those wider issues cannot be
taken into account. We have to look at the particular charity
concerned and what it is doing and the way it operates a public
benefit.
Q341 Paul Rowen: If you take a fee-paying
school, should you, therefore, ask those charities to distinguish
in their annual accounts what they have spent on public benefit
and what is therefore being spent, as it were, on those private
individuals who can afford to pay? Do you not think that is a
fairer way of the public being able to distinguish what is for
the public benefit and what is being paid for by private individuals
who can afford it?
Mr Dibble: The pupil attending
the fee-paying school does confer public benefit as well. The
provision of education for children is a charitable purpose capable
of being for public benefit, and those children are being educated.
For fee-charging charities, another aspect is the fact that the
poor should not be completely excluded from the opportunities
to benefit.
Q342 Paul Rowen: They are getting
tax breaks for providing that education. Should it, therefore,
not be distinguished: that that amount of money is being raised,
that amount of money is being put for the public benefit? The
rest of it is for a group of individuals, and I have no problem
in them having that benefit but it should not, therefore, be classed
as public benefit.
Dame Suzi Leather: But the thing
is that in law it is. We cannot change the law.
Q343 Chairman: This has been argued
to you, and it has been put to you and it has been put to us.
Are you saying that the effect a private school has on the whole
school system locally, on the state school down the road, is not
something that you take into your calculus of public benefit?
Mr Dibble: It would be if it was
confined to the locality, but I was suggesting that the wider
impact on society by the operation of charitable independent schools
is not something the Commission ... The Commission has to look
at the individual charity when it is assessing whether it is operating
for the public benefit.
Q344 Chairman: I am getting confused
by this now.
Dame Suzi Leather: I do not think
any of it is straightforward.
Q345 Chairman: No, but this process
that we are engaged in is supposed to produce light out of darkness,
is it not?
Dame Suzi Leather: I think one
of the common confusions is that it is only the benefit to people
who cannot afford the fees that counts as public benefit, and
it is not. The public benefit flows to people who can afford the
fees but must be extended, in a material sense, to other people
who cannot as well.
Q346 Mr Walker: Is there not public
benefit in the fact that people who send their children to private
schools are not taking up a place in the state system, which releases
an additional £5,500 to be spent on youngsters in the state
system? Surely that is a public benefit.
Mr Dibble: It may be in social
terms, but in terms of our approach to individual charities which
operate for public benefit, that is not a matter which we would
normally take into account.
Q347 Mr Walker: You are going to
get a lot of pressure from various sides of the political divide
to turn this into some sort of class war crusade. Are you aware
of that? I think you are seeing some of it now, to be honest.
Are you aware of that?
Dame Suzi Leather: We have not
gone through the last few months with our eyes and ears completely
closed.
Q348 Paul Flynn: I am surprised.
I thought the Tory Party had taken up the Swedish model, which
has been based very much on an egalitarian approach.
Chairman: Let us not go any further.
Paul Flynn: That has gone on for centuries.
I think you are rather behind in your views on class warfare.
Q349 Kelvin Hopkins: I have expressed
considerable scepticism about fee-paying schools at previous meetings
and what I have heard today has not assuaged my concerns at all.
To me, and I am sure to most people, charity is donating money
from those who have more money to those who are less fortunate
and have less money, or who are disadvantaged in some way. That
is a very simple understanding of what I think charity is. Public
benefit is that people who are less fortunate derive some benefit
from this action. It also draws in volunteers: human beings are
naturally co-operative by nature, we like to help other people,
and we feel good about that, and that is another part of charity
as well. I find making an involuntary contribution to rich people
going to private schools through my taxes is nothing to do with
charity at all. I, in my own mind, would suggest that we ought
to have a much tighter definition of charity, move the fee-paying
schools out of the charitable sector altogether. The rich will
no doubt want to purchase private education in the future. Even
if it was not given charitable status, even if they did not get
the tax advantages, they would still do that—although it
would be more expensive and fewer people would go. But the report
we have had from the Education Review Group suggested ways of
overcoming this, by having a few boarding facilities for teenagers
with chaotic lives from urban areas. (I do not know what happens
to those who come from rural areas, but, nevertheless, urban areas.)
Would that not be a little bit of a sugaring of a pill? It really
would not alter the situation that the rich really want, which
is to buy better education for their children at the expense of
the taxpayer?
Dame Suzi Leather: I think what
you are asking would require a change in the law. That is not
for us, as the regulator. It is for you, as Parliament.
Chairman: I think that is the answer,
Kelvin.
Q350 Kelvin Hopkins: Indeed, but
in your response you list a series of organisations. The views
I have expressed must surely have come through from some people,
but it is not reflected in your response at all. There is not
a strong rebuttal of that view. It is a bit fuzzy. I think the
whole debate is a bit fuzzy. I could make a fairly trenchant argument
for having private schools taken out of the charitable sector
altogether—and if the Government wished to subsidise them
directly for other reasons, that would be their choice—so
that they do not have the tax advantages of Mind or other organisations
which are genuinely concerned about the less well-off.
Ms Chapman: On the specifics of
the responses, we published at the beginning of the week a summary
of responses. When we publish the final guidance, we will do a
fuller set of responses saying how we are dealing with particular
comments. We have tried, even in the summary of responses on fee
charging, to represent both perspectives that have been put to
us, so there is a section about the challenges that have been
made to us but there are also areas where people have been supportive.
When we do a fuller response, we can go into more detail.
Q351 Mr Prentice: There are people
who say the Charity Commission is straying beyond its brief. What
exactly is the status of the supplementary guidance? There are
people who want to know whether it has almost the same authority
as the statutory guidance, because you may be asking fee-paying
schools, the Etons of this world, to do things that they really
do not want to do, and they may not want to follow this supplementary
guidance.
Dame Suzi Leather: Trustees are
required to have regard to our guidance.
Q352 Mr Prentice: What does that
mean "have regard"?
Dame Suzi Leather: The supplementary
guidance as well as our general guidance.
Q353 Mr Prentice: The supplementary
guidance really has the force of the statutory guidance. That
is what you are telling us.
Dame Suzi Leather: No.[3]
Q354 Mr Prentice: There is no distinction
between the two.
Dame Suzi Leather: The guidance
is not law. It is a summary of the principles implicit both in
statute and in case law.
Q355 Mr Prentice: What happens if
a charity disagrees with the Charity Commission on this?
Mr Dibble: Do you mean in an assessment?
Q356 Mr Prentice: Yes.
Mr Dibble: In an assessment, of
course, by implication it has the same imprimatur as the statutory
guidance, in that the trustees should have regard to it. We would
discuss the outcome, where there are issues, with the trustees.
For example, say, the Commission was to conclude it was not charitable
or could not operate for the public benefit and the issue was
deregistration, then of course that would be a decision which
the Charity Tribunal could look at, so the trustees would have
recourse to the Tribunal. In other cases, where the charity was
capable of operating for the public benefit, we try to work with
the trustees to that end. If they did not follow our advice and
suggestions, we may have to direct them on a certain course of
action, and if they disagreed with that, they could challenge
that at the Charity Tribunal. The Charity Tribunal was set up
by Parliament as a vehicle to test the Commission's statutory
decisions.
Q357 Mr Prentice: And the decisions
of the Charity Tribunal can be reviewed presumably by the High
Court. They could go all the way up there.
Mr Dibble: On a point of law,
yes.
Q358 Mr Prentice: It may be an impossible
question for you to answer, but, at this stage, how many charitable
organisations do you think may fail the test that you are setting
them and may have to be deregistered because they cannot show
that they are fulfilling this public benefit requirement?
Dame Suzi Leather: It is a difficult
question; it is not an impossible one. It is impossible to give
a categorical answer, but we are on record as saying that we do
not think very many charities will lose their registered charitable
status.
Q359 Kelvin Hopkins: I understand
from our papers that it is very difficult, when you are a charity,
to become non charitable and to deregister. Many of the charities
are there because historically they were charities. Indeed, many
of the private schools started off as voluntary educations to
educate not very well-off people. My own school was not a boarding
school, as such, but a fairly posh grammar school which started
400 years ago for the poor boys in the town. Now, it is the most
intensive selective grammar school in the whole country, but it
was started off for the poor boys in the town. It was not necessarily
of charitable status, but others rather like it were. Is it not
time to think about deregistering some charities which clearly
are not charities, that do not deserve to be charities?
Dame Suzi Leather: If we have
wrongly registered them, then they clearly have never been charities.
In a sense, that is easy. What is more difficult is if we do not
think that a charity is demonstrating public benefit and is almost
determined not to. In that case, that charity is not free to simply
stop being a charity and walk away with its charitable assets.
Because charitable assets are charitable assets forever, then
we have to make sure that those charitable assets are placed elsewhere
in another organisation with identical or very close purposes.
3 Note from witness: Error by witness: should
be "yes" (this was due to a misunderstanding of the
question). Back
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