PRIVATE schools face a fresh battle to preserve their charitable status in the face of a powerful campaign to end the tax break that helps to keep many of them in business.

A coalition of charities and Labour MPs will target legislation this summer in an effort to block the tax breaks that give fee-charging schools £88 million a year. Campaigners claim that the Charities Bill fails to put an end to the presumption that private schools should have charitable status.

The Bill calls on independent schools to demonstrate that they benefit the wider community to justify their tax advantages. But, according to the Charity Commission’s interpretation of the proposals, private schools and other charities that charge high fees will have to prove only that the less fortunate are “not entirely excluded” from their services.

Campaigners, led by the British Red Cross, among others, say that this does not go far enough. In a joint letter to Charles Clarke, the Home Secretary, they say that the public benefit test will have “minimal impact” on charities that charge high fees unless a more robust definition is drawn up.

“The Bill does not go far enough. Anyone able to benefit from a charity’s service must have a reasonable chance of doing so,” the charities said in a joint statement. Their stance is supported by between 35 and 40 Labour MPs, who are planning to rebel against the Government when the Charities Bill is debated in the House of Commons this summer.

John McDonnell, Labour MP for Hayes & Harlington, said that he hoped to table an amendment to the Bill with a more robust definition of public benefit, modelled on Scottish law, to ensure that charities charging high fees did not place “unduly restrictive” conditions on people wanting to benefit from their services.

“I would like to exclude public schools from being charities. However, if they do want to demonstrate how they are in the public interest, we need to raise the bar and then ensure they do it properly,” he said.

John Grogan, Labour MP for Selby, North Yorkshire, said that to pass a robust public benefit test a public school would have to do a lot more than merely allow the local comprehensive to play football on its grounds once a year or offer a couple of scholarships.

Rosamund McCarthy, a charity law specialist at the firm Bates, Wells & Braithwaite, said that the public benefit clause could scupper the Bill.

“A lot of people might see this as an assault on public schools, but it is not. It’s about identifying what is truly charitable. The vast majority of the public have no idea that the majority of independent schools are charities. It would be a tragedy if the Bill falters on this point because there are a huge number of very good things in it,” she said.

Stephen King, of the Independent Schools Council, said that his members already provided immense public benefit to the wider community. “For every £1 in taxation benefits they get, schools are giving £3 in assistance with fees,” he said.

A spokeswoman for the Home Office said that the Government’s proposed definition of public benefit did provide a sound basis for the Charity Commission to determine whether organisations should have charitable status.

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