Non-domestic rates reform: analysis of responses to consultation on Barclay implementation

14. Barclay Review Recommendation 24 – Reform charity relief

14.1 Question 22 relates to Recommendation 24, "Charity relief should be reformed / restricted for a small number of recipients." The Government accepted this recommendation in part in its Implementation Plan, namely removing charity relief for most independent schools from 2020. However, the Scottish Government has committed that schools for children and young people with additional support needs that are in receipt of disabled persons relief or charitable relief will be able to retain that relief. There may be a small number of independent schools with exceptional circumstances that require further consideration.

Question 22 - How should independent schools with exceptional circumstances such as specialist music schools be treated?

14.2 There were 71 responses to Question 22. No Assessors answered this question. The largest respondent categories were Local Authorities, Individuals and the Independent Education Sector. A breakdown of respondent categories can be found in the table below.

Table 22: Respondents Categorised

14.3 The predominant view was that there should be parity of treatment regardless of whether schools are independent, state-run or specialist, supported by Local Authorities, Representative Bodies and Individuals. The Independent Education Sector and Representative Bodies highlighted the necessity for parity across all schools which supported children with additional needs. Therefore, these schools should be treated the same regardless of status. The Scottish Council for Independent Schools stated "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."

14.4 The Independent Education Sector also commented that the Barclay Review unfairly targeted Independent Schools as the suggestion of exempting certain types of Independent Schools would unfairly benefit some schools whilst leaving others struggling. The Scottish Charity Regulator commented that the "creation of a 'two-tier' charity sector within a 'single-tier' regulatory regime could be damaging to the public's trust and confidence in both the sector and charity law." They also stated that the proposed change to remove non-domestic rates relief from certain Independent Schools may devalue "charity status of certain groups of charities".

14.5 Those with an interest in faith schools also stressed the need for parity across the education sector. However, they emphasised that if this change was enacted that they would advocate for an "exceptional circumstance" criterion to be faith schools with minimal fees.

14.6 Furthermore, there was widespread consensus that there needed to be a definition of 'exceptional circumstances' to provide clarity over who would receive relief. The Institute of Revenues, Ratings and Valuations along with the Scottish Chamber of Commerce believed that further consultation was needed in order to determine criteria upon which the charity relief was claimed.

14.7 There were a number of additional points raised:

• The Recommendation's statement that "The separate strand of this recommendation for ALEO [Arm's Length External Organisations] properties is being taken forward administratively" was met with concern. The Highland Council and The Scottish Charity Regulator, along with a number of others, wished to have been allowed to add comment on this section of the Review.
• Scaled relief was perceived to make the relief more proportional to the recipient. Aberdeenshire Council suggested there should be "a reduction in Rates through discretionary relief [based on] e.g. retained profits, unreserved funds. This could be done based on a sliding scale calculation".