A government review is calling for private schools to cease to benefit from the “reduced or zero-rates bills” they receive as charities, estimating the move could save £5 million.

According to today’s Barclay Report on Business Rates, it is “unfair” that independent schools benefit from business rates relief due to their charitable status, unlike state schools.

The report calls for this “inequality” to be ended “by removing eligibility for charity relief from all independent schools”. The schools would, however, continue to be classed as charities and other benefits would “continue to flow to them from that status”, it says.

The review was set up by the Scottish government last year to make recommendations to improve the current rates system, and was led by former RBS boss Ken Barclay.

However, the Scottish Council of Independent Schools has hit out at the recommendation, saying that it would put Scottish private education at a competitive disadvantage in the UK and globally, and would impact on the financial support that private schools are able to offer to families unable to afford their fees.

‘Families will return to the state sector’

John Edward, director of the SCIS, said: “Most of all, for a rates review, they would most likely cost the Scottish taxpayer and government more than they seek to raise.”

Speaking to Tes Scotland, Mr Edward said that private schools would have to pass on any additional costs to parents - given that their only income is from fees - and that this could result in families returning to the state sector.

Mr Edward said: “Research in England has shown that this could mean something like 20 per cent of pupils going back into the state sector. We don’t know the figure for Scotland but even if a small number do that, £5 million would quickly disappear if you had to build one new school in Edinburgh or increase teacher numbers.”

However, the review was welcomed by the early-years sector due to its recommendation that the Scottish government remove business rates for nurseries.

Purnima Tanuku, chief executive of the National Day Nurseries Association, urged the Scottish government to accept the recommendation, saying that high business rates were leaving some nurseries “unable to balance their books”.

She said: “Nurseries are particularly badly hit with high business rates as they tend to have large properties with plenty of space for children to play.

“This recommendation sends out a positive message to all childcare providers who are looking at how they can deliver expanded free early learning and childcare.”

Scottish finance secretary Derek Mackay also welcomed the review. He said that the review group had worked incredibly hard, spending more than a year engaging closely with the ratepayers across Scotland before compiling this report, and that the government would “respond swiftly to its recommendations”.

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