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| THE charitable status of private schools and hospitals will be challenged by a powerful committee of MPs and peers set up to examine the draft Charities Bill. Under the Bill, to be published on Thursday, the schools and hospitals will have to demonstrate how they benefit the public to retain the tax-exempt status which helps to keep many of them afloat. But committee members are understood to want to apply a ?commonsense test? so that an organisation must clearly appear to be a charity rather than a business to keep its status. This would appear to be an attempt to force exclusive schools and hospitals to do more to help the state sector, especially as the draft Bill is expected to remove the presumption of charitable status from all private schools. The most expensive schools and hospitals are clearly in the line of fire as the Bill is also likely to require checks by the Charity Commission on the ?public character? of charities which charge high fees. This was recommended by a Home Office consultation that found regular checks to be necessary, ?otherwise charity itself will fall into disrepute?. The committee will be chaired by Alan Milburn, the former Health Secretary, who has used several recent speeches to urge greater co-operation between the public sector and voluntary groups. Members will consider whether the Bill should include a detailed definition of ?public benefit? or whether to leave the interpretation up to regulators such as the Charity Commission. A senior adviser to Charles Clarke, the Education Secretary, warned independent schools this month that they should consider sponsoring city academies or lending staff to comprehensives. Sir Cyril Taylor, chairman of the Specialist Schools Trust, said that the Bill would require a better demonstration of genuine public benefit. Mr Clarke called on private schools with large endowments to recapture the purpose for which they were founded by helping poorer students. One senior member of the committee believes that it is astonishing that some private hospitals are allowed charitable status when their clients pay high fees and there are no links with the public sector. The London Clinic in Central London benefits from charitiable status while organisations such as BUPA which have contracts with the NHS, do not. A private room at the clinic costs £650 a night. Dick Davison, head of the Independent Schools Council, said: ?Clearly it does raise a question mark over charitable status. But we are reassured by ministers that there is no intention to have a wholesale change to charitable status.? He said that independent schools would lobby the Government and the committee to tighten the legislation to prevent an attack on the charitable status of most private schools. He said: ?The vast majority of schools are not big, they are not well endowed and what they do by way of public benefit is derived entirely from their own resources. Charitable private hospitals also emphasise the hidden savings they make for the taxpayer. A spokesman for Nuffield Hospitals, the biggest of the independent hospital groups to operate as a charity, said: ?Nuffield Hospitals delivers its charitable services through the provision of acute healthcare services, not only for those who have the ability to pay themselves but also through private medical insurers and by assisting the NHS in reducing waiting lists.? Schools or hospitals which lost charitable status would have their income taxed at 40 per cent and face extra taxes such as corporation tax and higher business rate tax. Mr Milburn said: ?Charities are a cornerstone of a modern civil society but current charity law is ancient and chaotic. That is why the draft Bill is so important. It can help promote public confidence in charities and encourage more giving and volunteering. A modern legal framework can help realise the potential that some charities have to play an even bigger role in regenerating communities and providing services.? His committee is due to report by September so that the legislation can appear in this autumn?s Queen?s Speech. A poll by the National Council for Voluntary Organisations (NCVO) last year found that 80 per cent of people did not know that the Royal Opera House possessed charitable status, while 89 per cent did not know that Eton College was a charity. To convince the public that these organisations deserve their tax breaks, the NCVO believes that the public benefit test will need to require charities to prove that they benefit the whole community and not just fee-paying customers or a small band of ?public? beneficiaries chosen by the charities themselves. With two thirds of Britons wrongly believing that the campaigning organisation Amnesty International is a charity, Mr Milburn will have to explaining why this assumption is wrong. While the new legislation is expected to include the promotion of human rights as one of 12 charitable purposes, Amnesty may still not get charitable status because Charity Commission guidelines say that charities cannot have political campaigning as their primary purpose. |