Barclay Implementation: A consultation on non-domestic rates reform

If such an accelerator is put in place it should be applicable to all organisations which contribute to the Scottish economy, including those independent schools which are specifically singled out later in this consultation but are constantly improving facilities and capacity.

If the revaluation is to become three yearly from 2022, then any increases under the Barclay proposals should await the 2022 revaluation.
The proposals have been accepted too late for us to appeal our rates valuation in the current period. As such, we should be allowed to undergo an up-to-date revaluation before rate rises are implemented.

If the revaluation is to become three yearly from 2022, then any increases under the Barclay proposals should await the 2022 revaluation.
The proposals have been accepted too late for us to appeal our rates valuation in the current period. As such, we should be allowed to undergo an up-to-date revaluation before rate rises are implemented.

The legislation should work on the principle that bodies of a similar status are treated equally, and false distinctions are not made that run contrary to existing legislation.
The Barclay recommendations, and the Scottish Government's response and partial Business and Regulatory Impact Assessment, both make the claim that while independent schools benefit from reduced rates bills, council schools do not qualify and pay rates. This is said to create a sense of ‘disadvantage for council schools relative to independent schools’ whose overheads are lower, and to give independent schools an advantage over state schools if lower costs allow them to provide better facilities for pupils relative to council schools creating a state funded advantage for private schools.
This incorporates a fundamental misrepresentation of Business Rates that suggests that Independent schools are, in some sense, avoiding "fair" rates. Local authority schools' rateable value is an entirely paper-based valuation - set against the funding from the local authority which funds the school in its entirety. No state school is required to make strategic decisions based on its rateable value, and there are no direct budgetary implications for schools. Every part of those schools' funding is derived from general central and local taxation.
By contrast, all of the business rates paid by independent schools such as Strathallan are derived from parental fee income - parents that are also taxpayers. Such a significant increase does not "result in increased fairness and guarantee of a level playing field amongst ratepayers". It does nothing to reduce the anomaly that state schools are the only educational institutions in Scotland or England & Wales that do not have a reduced rateable value, however nominal. It simply creates a new anomaly that separates 50 registered educational charities from 12,000 others in Scotland and 65,000 elsewhere in the UK.
There are other means to correct the anomaly, namely to provide state schools with local relief through the Community Empowerment Act 2015. If educational bodies are worthy of relief, the same principle should be applied to all – state and independent schools, colleges, universities and other teaching institutions and foundations.

There is no distinction in successive Education Acts, nor in the Charities and Trustee Investment Act of 2005, between mainstream independent schools, those that deal with complex additional support needs, and those that cater to specialist areas such as music or discrete teaching philosophies such as Steiner or Montessori.
As such, it is invidious to seek to draw a distinction with independent schools that have very substantial learning support facilities and resources, or those with substantial music or arts provision which is extended across other local schools and the community - much of which will be made possible and supported as part of the specific public benefit requirements that charitable rates relief aims to support.
Many mainstream independent schools operate learning support departments larger than some other schools, dealing with a wide range of physical, behavioural, emotional and social needs.
Many schools also host and coordinate local school and community music provision, including community choirs and instrumental tuition.
If such provision is recognised as a public good and worthy of modest relief, that relief should be available to all registered bodies on the basis or provision.
It was made clear at the time that OSCR tested independent schools (uniquely, at that point) on their public benefit, that the existence of rates relief formed part of the calculation that schools needed to make to extend public benefit provisions as far as possible. In removing that relief, the rigourous testing of OSCR is undermined. The BRIA makes the assumption that the average charity relief for independent schools in 2017/18 per pupil is estimated to be £225. This is misleading – for Strathallan this financial year the figure is over £387. It takes no account of the different size, location and facilities of schools - small or large, day or boarding, urban or rural - distinctions that were explicitly understood and considered in the charity test undertaken by OSCR into the public benefit of each school.
The BRIA also assumes that schools such as Strathallan can simply ‘pass on the increase of the loss of rates relief’ to our current and future parents – this is to totally misunderstand the current market conditions and affordability issues being faced by Schools and parents.
As it stands, the impact of the measure contradicts the opening statement in the Consultation Document by the Cabinet Secretary for Finance: "As Cabinet Secretary for Finance, I am always seeking opportunities to make Scotland a better place to do business" - placing successful not-for-profit educational institutions in Scotland at a clear competitive disadvantage to England, Wales and the wider world.
As a rural boarding school, Strathallan is an important contributor to the local economy, providing good quality jobs and drawing significant revenue into the area. We provide over 90 non-teaching jobs which are almost exclusively undertaken by employees living locally. We provide over 90 teaching posts, with the vast majority actually living within the School campus, and all living within an hour’s drive of the School. The School generates over £13M of gross fees which are then effectively spent within the local community of Perth & Kinross. Our custom sustains a number of local firms and service providers. This financial year we will give over £1.7M of means-tested fee support in order to allow parents who could otherwise not afford a Strathallan education to send their children to the School. In keeping with many other Independent schools, we operate on exceedingly tight margins – so the loss of rates relief is material to the finances of the School, and may result in our ability to offer such generous means-tested fee assistance going forward being compromised. The impact on the School of further costs in losing rates relief could be to see the School’s business model becoming un-workable with the real prospect of the loss of 180+ local jobs and >£11M being put into the local economy (with this figure not even reflecting the collateral spending of pupils, their parents and others).
Studies undertaken for the Scottish Council of Independent Schools by Biggar Economics have established the significant benefit of the independent schools sector to the Scottish economy. It is difficult to see how a measure designed to hamper that sector is congruent with "making Scotland a better place to do business". It is also clear that the independent sector provides a service to incoming business as it can accommodate children of relocating staff in a way that local state schools cannot. In particular, by providing a range of qualifications beyond the Scottish National Qualifications is can make it much easier for families relocating to Scotland with children to find appropriate education for them.
The concept of charity has a longstanding legal status and is not generally considered to be politically contentious. Furthermore, charities must themselves be independent of Governmental control. By identifying a small group of charities of which it does not approve, the Government threatens to undermine the status, standing and independence of charities generally. Other charities of whose activities some may disapprove, for example on religious grounds, may have cause to be alarmed at the measure proposed. The proposal lacks the objectivity that should be expected from a finance measure of this kind.
That it appears that a Nursery operated for profit by an offshore owned private company would benefit from mandatory Non Domestic Rates Relief in respect of its building whilst the same nursery operated by a not for profit Scottish charity which happened to be an independent school would not clearly demonstrates both the perversity of the measure and that its objectives are narrowly political and not truly financial.
The principle on which charities are afforded relief from business rates is long established. In a 1959 Report , the Committee on the Rating of Charities and Kindred Bodies commented on the position with a focus on England and Wales, but setting down principles which were adopted across Great Britain. It stated that it would require a strong argument to deny one group of charities relief, while all other charities would be treated more favourably. There is no logic in singling out one type of charity for a denial of relief: if the final proposals included both Universities and ALEO proposals as Barclay proposed, then the Government would not be singling out one type of charity.

The fact that listed properties are singled out for particular consideration demonstrates another issue with the proposals (22) to remove relief for independent schools.
16 independent mainstream and additional support needs schools (approximately one quarter) schools manage buildings that are Category A listed - of national or international importance, either architecturally or historically. Many more are Category B such as Strathallan’s Main Building.
The recent histories of the old Royal High School building on Calton Hill, and the old Donaldsons' building at Haymarket, demonstrate the considerable logistical and financial implications of maintaining such buildings.
That rates relief should be removed from buildings - which are a significant and exceptional part of Scotland's heritage, and are used, maintained and improved on a not-for-profit basis at no cost to the taxpayer - represents a considerable disincentive to support such activity.

Any such definition should include the extensive sporting facilities operated by independent schools, and shared with state schools, local teams and communities as part of the explicit public benefit provisions of each school.
The expectation that such facilities should - rightly - be as widely used as possible - runs contrary to the decision to remove business rates relief from those same schools. This is at a time when sports training provision is at a premium, and fully-maintained grass pitches, all-weather pitches, swimming pools and other facilities are increasingly hard to access and afford. When local authorities are seeking to increase the public contribution to access their own facilities - which only recently sought charitable status - it is manifestly counter-productive to the wider health needs of the nation to exclude other facilities in the same way, or to force the, by paying full business rates, to provide access to their facilities at more commercial rates to recoup the added overheads.