Saturday, 29 October 2011

So what exactly is a charity? A lesson in bad lawmaking.

Recently, the courts arrived at a conclusion to the matter of public benefit and charities that charge fees (the consequence of the 2006 Act where the Labour government tried to shaft private schools without being seen to do so directly). In simple terms the Labour Party wanted to stop schools for wealthy parents receiving the "benefits" of being a charity, chief among which is tax relief.

The judgment - although it appeared to get the schools off the hook - left us with the consequence of Labour politically-motivated approach to charity. We should recall that not only did the party pass the 2006 Act but they made sure that the leadership of the charity commission was on their side in the mission to shaft private schools.

Then it started doing public benefit guidance on high risk (ie possible low-public-benefit charities).  For some this was akin to Thomas Cromwell going round dissolving the monasteries in 1536.  In 2009 the Commission failed two prep schools on their public benefit assessment – this was because the schools were giving inadequate provision to poor people. 

These schools, like most private schools, were long-established and operated exclusively to the benefit of their users rather than in the search of profit. As such they had met the idea of charity that existed prior to Labour's tinkering - the provision of education had been assumed to be a purpose worthy of being deemed charitable.

More to the point, the new "public benefit" requirements raised concerns for other charities that charged fees:

...‘where a charity charges high fees that many people could not afford, the trustees must ensure that the benefits are not unreasonably restricted by a person’s ability to pay and the people in poverty are not excluded from the opportunity to benefit’.

Lots of facilities run by charitable trusts - places such a swimming pools, clinics, sports clubs and theatres (how much does a ticket at the Royal Opera House cost these days?) - were caught in the headlights of this definition. A definition introduced purely from political spite.

Nobody loses from a public school - or the Royal Opera House - enjoying tax relief. Except a very marginal loss to the government. And many thousands gain - Britain retains the examples that are the world's best schools as we also have the pleasure of knowing that the high arts retain a significance and importance in our culture.

Had it not been for Tony Blair's desire to appease the bigoted left of his party, none of this would have happened. The 2006 Charities Act was bad law and this judgement reminds of of the fact.


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