Top private schools to keep tax breaks

Britain's top private schools and hospitals will keep their annual £100 million tax break when the proposed Charity Bill is published today.

Some 80 per cent of independent schools, including Eton and Harrow, and many private hospitals, such as the Nuffield group, currently enjoy the tax advantages of charitable status.

They had feared the new legislation-would force them to prove they achieved government-set levels of "public benefit" before their status would be renewed.

There had also been claims that the top public schools would have to throw open their doors to the general public if they wanted to keep their tax breaks. But the Bill contains no such measures and instead the definition of what benefit they provide to the wider public will now be left up to the Charity Commission which has taken a traditionally benevolent attitude to fee-charging schools and hospitals.

The Charity Commission has previously said the test it wants to set organisations which want to register as a charity is whether or not they are "delivering benefit to the public, or a sufficient section of it". A spokesman for the Independent Schools Council (ISC), which represents 1,200 schools, said the Bill was "what we were hoping for".

He added: "It sounds as if the Government has accepted our argument that there should not be a statutory definition of public benefit. We are confident that schools will be able to demonstrate that they provide public benefit."

Many fee-charging charities had feared the worst from the first major review of charity law in 400 years. Private school boards had assumed, following Labour's description of the country's independent/state school split as "educational apartheid" in its 1997 manifesto, they were to be thrown to the wolves in an effort to please the party's Left wing.

Predictions of doom deepened three months ago when a powerful committee of MPs and peers involved in drafting the Bill suggested all fee-charging schools and hospitals should lose their charitable status and only get tax breaks "in exchange for clear demonstration of quantified public benefits".

The committee was chaired by Labour MP Alan Milburn, now Tony Blair's election strategy supremo, who said people were "amazed" even "aghast" or "appalled" that independent schools and independent hospitals enjoyed the tax perks of charitable status.

The ISC responded by claiming "overwhelming evidence" of the public benefit provided by its member schools and said its members educate half a million pupils a year from all ability ranges at virtually no cost to the public.

Their work, said the ISC, saves the country ?2billion a year in education costs - more than 20 times the amount of the tax breaks they received. Another reform expected in the Bill will see an expansion of the work organisations can undertake to achieve charitable status.