Lord Khan of Burnley (Lab)

My Lords, these amendments seek to amend the definition of a private school so as to require different types of private school to be carved out of the Bill measure, or to require parts of private school hereditaments to be exempt from rating valuations. I thank the noble Lords, Lord Lexden and Lord Moynihan, and the noble Baroness, Lady Barran, for their contributions. I shall speak first to Amendments 25, 26 and 27. Amendment 25 would result in the exemption of a private school if that private school catered wholly or mainly to pupils who had special educational needs, as defined under the Children and Families Act 2014, regardless of whether those pupils had an EHCP. Amendments 26 and 27 would carve out private schools that provided full-time education wholly or mainly to gifted arts students or persons in receipt of bursaries or scholarships for sporting excellence. The Government are aware of the concerns raised in respect of pupils with special educational needs in private schools that may lose their charitable relief because the school is not concerned wholly or mainly with providing full-time education to persons for whom an EHCP is maintained. Similarly, the Government have listened carefully to representations made by all interested stakeholders more broadly with regard to the design of the policy to remove charitable relief from private schools. The view was reached that, with the exception of the existing carve-out in the Bill for private schools concerned wholly or mainly with full-time education for pupils with ECHPs, no other private schools would be carved out of the measure. That is the fairest approach, as it ensures that the impact on pupils with the most acute needs is minimised. The Bill provides that private schools that are charities that are concerned wholly or mainly with providing full-time education for persons with an EHCP remain eligible for charitable rate relief. In practice, the Government believe this will ensure that most private special schools will not be affected by the Bill measure. In fact, we expect any private special school losing charitable relief to be the exception—potentially, in single figures. In addition, private schools that currently benefit from the existing rates exemption for properties that are used wholly for the training or welfare of disabled people will continue to do so. This general exemption means that they do not pay any rates at all. I know that some concerns have been raised about the possibility that some mainstream private schools may be just under the 50% threshold for the EHCP carve-out within the Bill. In private schools, including private special schools, just 5.7% of pupils have an EHCP, with the majority of those pupils in private special schools. We therefore expect there to be very few mainstream private schools near the 50% threshold. The majority of children with a special educational need, with or without an EHCP, are provided for in the state sector. If an EHCP assessment concludes that a child can be supported only in a private school, the local authority funds the child’s place. The approach chosen in the Bill is targeted to ensure that the impact on pupils with the most acute needs is limited. This Government are committed to reforming England’s SEND provision to improve outcomes and are providing an almost £1 billion uplift in high-needs funding in the 2025-26 financial year. I shall speak in more detail to Amendments 26 and 27, tabled by the noble Baroness, Lady Barran, and the noble Lord, Lord Moynihan. I set out in Committee the changes that the Government are making to the Music and Dance Scheme, which supports pupils from lower-income families to attend one of eight specialist arts schools. On the question that the noble Baroness asked, no decision has been made on the future of the scheme. I acknowledge that the scheme is not available for every private performing arts school in England, but I am aware that many performing arts schools, as well as specialist sports schools and private schools more broadly, choose to provide fee assistance as part of their business model. Providing means-tested fee assistance is one way that charitable private schools can demonstrate public benefit, a requirement that accompanies charitable status. The Bill does not remove the charitable status of private schools, and the Government expect private schools to continue to demonstrate public benefit. It is a commercial decision for individual schools to determine how they meet any additional costs as a result of the Bill measure, but the Government do not expect activity demonstrating public benefit, such as providing fee assistance, to significantly reduce. Amendments 28 and 29 are concerned with requiring parts of private school hereditaments to be exempt from the rateable value of that hereditament. Amendment 28 would require parts of private school hereditaments wholly or mainly used as nursery facilities, or areas primarily used by nurseries, to be exempt, while Amendment 29 would require private school sporting facilities, or areas used primarily for sport, to be exempt if those facilities are also made available more broadly to the community. The Government have decided that where private schools provide for compulsory school-age children and have nursery classes within the school on the same hereditament, the presence of nursery-age children should not remove the school from the business rates measure. This approach best ensures consistency with the policy intent. The allocation of any additional costs as a result of the Bill measure in private schools that also provide nursery classes is a matter for those schools. I acknowledge that the noble Baroness, Lady Barran, has sought to find a middle ground following the Committee debate, but to exempt parts of hereditaments is challenging. This is also applicable to the amendment from the noble Lord, Lord Moynihan, that seeks to exempt sporting facilities. My remarks are applicable to both circumstances. Noble Lords will recall that I said in Committee that I would take away the question of exempting parts of private school hereditaments, particularly in the context of sport. I have done that, so I hope noble Lords present will acknowledge that this has been looked at carefully. There are a very limited number of circumstances in rating where part of a property is exempted entirely. These exemptions are the most generous forms of support in business rates and are currently reserved for cases such as agricultural land, places of public religious worship and property wholly used for the training or welfare of disabled people. To exempt—to totally remove from rating—parts of hereditaments within private schools used as nurseries or for sports would not be proportionate. Stand-alone nurseries and sports facilities, whether they are charities or not, do not currently receive the same benefit, so to exempt them when present in these particular private schools would create a broader inconsistency in the rating system. Furthermore, whether part of a hereditament can be rated differently is not straightforward and depends on the facts on the ground. The key principle is that a property at the same site, in the same occupation and used for the same broad purpose is treated as one hereditament. That is why nursery classes and sports facilities on the same site as a private school, and operated by that school, do not have their own rates bill. The Government have carefully considered this and are of the view that to treat separately parts of private school hereditaments used as nurseries or for sports would not be merited in this case. Business rates are a property tax and, to clarify the position for the noble Lord, Lord Weir, are applicable only to England, as devolved Administrations have their own approach to business rates. Where a property is being used as a private school, even if that school may have nursery classes or sports facilities, it remains a private school property. Amending the basis on which fee-paying schools can retain their charitable rate relief in the way these amendments propose would undermine the Government’s intention to remove tax breaks for private schools in order to raise funds to support the more than 90% of pupils who attend state- funded schools. Before I finish, I want to echo the words of the noble Lord, Lord Moynihan, and give my best wishes to Lord Coe in his bid to be elected the first British president of the International Olympic Committee. I hope I have reassured noble Lords regarding the reasons why I cannot accept the amendments in the names of the noble Baroness, Lady Barran, and the noble Lords, Lord Lexden and Lord Moynihan. I hope they can take from my remarks that the Government have considered the cases they made carefully, and I respectfully ask them not to press their amendments.