Charities Bill [HL]

I support my noble friend Lord Hodgson of Astley Abbotts. I am speaking to matters which were spoken to in Committee before the election by my noble friend Lord MacGregor of Pulham Market, who, unfortunately, has to be in the United States and therefore is not here to make the same points that he made previously. In responding to the points made by the noble Lord, Lord Borrie, it seems to me important that the data should be on the record. The benefits that Independent Schools Council schools receive from charitable status are just under £100 million, as my noble friend Lord MacGregor said. In rounded figures, business rate relief accounts for £72 million; tax on investment income is £7 million; tax relief on donations is a further £7 million; IHT relief in legacies is just under £4.5 million; stamp duty exemption is £1 million; and CGT exemptions are £8.5 million. That comes to a total £100 million. Those fiscal benefits, against a turnover in the schools in excess of £4 billion, represent rather less than 2.5 per cent of the total turnover. In fact, that figure has shrunk from 2.9 per cent in 2000 as a result of the changes to ACT rules. The benefits given back are fee reductions of £276 million; grants and prizes of £14.5 million; and external charitable activity of just over £11 million, giving a subtotal of more than £300   million. Therefore, the ratio of benefits given back to benefits received is of the order of 3:1. In addition, because of the nature of tax law, VAT of £127 million is to be paid on school operations and £69 million on capital expenditure, which is of course irrecoverable VAT, constituting another £200 million that the sector is paying to the Treasury. There again, the ratio is 2:1 against benefits received. Adding the two subtotal contributions gives a ratio of 5:1. That excludes the £2 billion on education that independent schools save the Government in the service that they provide—which is obviously of the order of 20:1. Therefore, if you take the 5:1 ratio for which I provided subtotals a moment ago and the cost of education which the independent schools are shouldering on behalf of the state, you have a ratio of 25:1 overall. The noble Lord, Lord Borrie, may think that the charitable status is of great public relations significance to the schools. It does not seem to me to be an exceptionally good bargain in purely financial terms. However, I also endorse most strongly what my noble friend Lord Hodgson of Astley Abbotts said   about seeking to provide a whole series of sub-distinctions and subsections in the context of public benefit, when the whole purpose of the legislation is to make matters clearer rather than more opaque.