 Good morning and welcome to our 18th meeting of the local government and communities committee in 2019 and I're waiting for everyone present to turn off mobile phones. This morning we have David Torrance, substituting for Annabel Ewing. On agenda item 1 is a consideration of whether to take agenda item 4 on private. Are we all agreed? Thank you, that's agreed. Aged item 2 is the Un tripod circumstance in Scotland Bill and we will take evidence on the non-dynamicogy uhmhtazi English The first will be representatives of independent schools. The second will be representatives of local government. For today's first panel, I would like to welcome John Edward, director of Scottish Council of Independent Schools, Liam Harvey, headmaster Saint Mary's School, schön Merrose, Colin Gambel's rector of Hutchison grammar school, Martin Tyson, head of casework i wygwyr i'r gwahanol y cyflawni ar gael trwy maesu ddau yn gwahodol i'r maesu ddau yn ei ddau'r gwahodol. Rydyn ni atŷ i gyhoeddwch? Rwy'n edrych, sefydlwch, yn mynd o'r gwahodol, mae'n cael eu gwahodol i'r prysau. Gwch yn ateb iawn y casodd, sydd mae'n grannu eich gwahodol. Mae'n cael eu gwahodol i'r prysau, ond mae'n cael eu gwahodol i'r gwahodol, Some of our schools teach the SQA exam, some teach the IB, some teach to GCSE and A-levels and some teach all combination of those, plus Steiner, Curricular, Montessori, all sorts of other things. The key difference between them is their management. Obviously, all local authority schools, all schools in Scotland, apart from ours, with the exception of Jordan Hill, are under the control and management of local authorities, whereas our schools are very specifically under the management of independent boards of trustees, boards of governors. All of our mainstream schools in Scotland are registered charities, so they are bound by the legislation that affects charities in terms of the independence of those directors and trustees. It is the autonomy for the head teacher and the senior management in terms of the curriculum, in terms of the extracurricular offer and the management of the school, the size, the location, the curriculum that really is the big difference for us. Thank you, Mr Harvey, for the gamble. I think that it's a very good summary, actually. I mean, there may be details, school by school. Okay, thank you. Can you then tell me, when we had our meeting last week, we talked about the mainstream schools providing support to state schools. Could you extrapolate on that a wee bit? What exactly is the support that independent schools give to state schools and how it differs from— The interaction goes both ways. What the schools do in our case is part of their commitment to public benefit. They take it very seriously in terms of what their role in the community is, both in a broader community sense but also in an academic sense. You may get subject sharing and teacher sharing, you may get the sharing of sports resources or coaches, you may get the sharing of music events or careers events. It's not necessarily one set to helping out the other, it's just those parts of the school system in Scotland working together as best they can. By their very nature, a lot of our schools have a slightly different offer, different facilities, different opportunities, and it's trying to make the most of them. Of course, what changed in 2005 with the Charities Act was that it gave them a specific obligation to make sure that they met that public benefit requirement as registered charities. That changed the nature of the relations in terms of access to the schools, in terms of providing means-tested assistance, fee assistance to pupils wanting to access the sector since assisted places and all those other programmes had ended in the past, but also in auditing their relations with the local community is that the schools sit in, which I'm sure my colleagues can say more about. Does anybody want to say more about it? We have a very good relationship with the local primary schools in Malrose. It's a small town, but we are often involved in joint ventures such as choirs that participate in charitable events and church events. Practices take place within our facilities, which we are blessed with, having a nice assembly hall with good acoustics. That enhances the relationship between St Mary's and Murrow's primary schools, for example. It matters to us and it matters to them, and we have a very good relationship with that school. We find it very variable, depending on the headteachers of the schools that are around us in Glasgow, so we would like to do more, I would argue, but we don't always find that easy. I might want to bring Oscar in here. One of the examples that was used last week is a better-putting record. I thank George Watson for hosting a very useful visit last week for the committee and those who attended, including yourself. One of the suggestions here is that you offer intuition for state school pupils and topics not covered in school that they are enrolled in. How is that different from state schools that offer that to other state schools that don't have that topic? I know that it is, for example, in Glasgow, and I am sure that it is elsewhere in the country. Please don't answer that. One of the things that our sector prides itself on is trying to support, if I call them niche subjects, in other words ones where our parent or body expects that we will provide the full range of the curriculum. I know that that includes support for things like Latin or Greek, which are increasingly—I would describe the state sector as finding those hard-to-support. We can provide a breadth of curriculum and a breadth of permutations within the curriculum that the state sector finds much harder to provide. You see that in subject teaching, for instance, at Watson's, they have developed a big programme on Mandarin teaching, which they have built up in co-operation with state schools in south of Edinburgh, which simply one school on its own would not have been able to do in terms of the scales. That happens in lots of places, as Colin Gamble has mentioned. We see it in subject areas like economics, business studies, design technology, for instance, at advanced higher in Scotland. One of our independent schools sits one-third of all the advanced higher design technology exams in Scotland, so anybody wanting to do design technology who may not have the access to the laboratories or facilities in their own school, there is that option. It is, to a certain extent, keeping the breadth of subjects open, but it is also a provision of more general academic opportunities. You may have heard from Kilgraston School last week in Perth and Kinross. The independent schools in Perth and Kinross provide an enormous amount of arts, drama and sports provision for the primary school sector across the schools in Perth, because they may have the facilities or they may have a dedicated teacher or they may just have the background in that area, and they see it as part of their purpose to extend that wherever possible. I wonder if I could ask Martin Tyson on that. Part of the charitable status, I think, this is kind of like being one of the examples that has been raised all the time about the support that independent schools give mainstream schools, but is that, again, not something that other state schools do, so it would not necessarily make independent schools different from state schools in that way? Where it comes in for us is in the assessment of public benefit. When we reviewed the charitable status of all the independent schools on the Charity Register between 2007 and 2014, we looked at the total picture of public benefit that they provided. That was looking at the benefit that they provided to their students, and that is generally fee charging, but the benefit that they provided in furtherance of education to people with their student body, whether they are students from other schools in the local area or otherwise, counts in terms of their public benefit. That is relevant in terms of meeting the charity test under the legislation. I am just trying to get my head round us because I am not sure that I am only following this. If a state school, for example, a school that was in the state system has just now decided to go independent for whatever reason, the work that they are doing just now in the main would qualify them for that, because most state schools do exactly the point that you are raising just now? If we had an application for charitable status from a state school, we would look at them in exactly the same way. Presumably, they would not be fee charging, so that side of it is to whether their fees are unduly restricted access to the education that they provide. We would not need to think about that, but we would look at the whole picture of the benefit that they provided. The issue here is that our test is not a comparison between state schools and independent schools. It is basically looking at the evidence of what a particular charity does alongside the test set out in the legislation and seeing whether it meets those tests. It is not based on a comparison, but on other sectors. I am not really here to interrogate the charitable status, but I was just trying to get that anomaly in clearing my head. If an independent school is having kids in from the state sector to, for example, study Mandarin or Greek or Latin, do you charge for that? No, I do not charge for that. That would be true of most of the use of community clubs or sports clubs that may get charged a minimal rent for the use of facilities after hours or whatever, but in the vast majority of cases that I was looking into for the last five years, shared careers events, shared music facilities, shared subject teaching, and nanotone. There might be occasions when, for example, people would attend St Mary's from the local authority school to be taught by a parapetetic tutor. The parapetetic tutor might charge a fee, but the facility would be provided free of charge by the school. Can I touch on the cost of rent? Are you saying that, after four o'clock, if somebody comes in and rents your halls, they do it at no cost or minimal? How does your rent compare to the local authority charging for a let, for example? Can I ask specifically on that one? What we are doing is slightly above cost. It is basically the cost of our janitorial staff, so we are not looking to try and make a profit from it. We are not looking as a way that is not a revenue generator for us. We want to share that facility with the local community. It would be at local authority prices a list? I have to say, I do not really know what the local authority prices are, so I cannot comment on that. For instance, in the discussion in Edinburgh recently about the rental of local authority provision, sports provision, it would be lower than that. As was mentioned, in some cases, the janitorial costs or the utilities costs will be featured. In some schools, they do not bother to top that up, so they will just make sure that the access is there. Andy, you wanted to come in. Yes, thanks very much for coming in this morning. A few questions. One of you follow-ups. In response to a question about whether a public school could become independent and get charitable status, presumably it could not, because the charitable status is tied to the organisation, so a local authority cannot be a charity. That is exactly right. To be considered for charitable status, there would have to be an entity. The school itself would have to be a legal entity for us to be able to assess it. That raises a whole lot of questions about the relationship of the school to the local authority. Can I just pick up on something that you said in your evidence, Mr Tyson? If you want to understand this, you say on the second page that there is a possibility—you are talking about the consequences of removing charitable relief—that some schools may wish to request removal from the Scottish Charity Register under section 18 of the 2000 Act in effect of voluntary deregistration as a charity. You then go on to say, when a charity is removed from the register for any reason, it must still prepare and submit accounts to Oscar for any outstanding assets. This is because the assets still need to be used for charitable purposes but not for public benefit. I do not understand all that. If any entity at a school or any charity says that they do not want to be a charity anymore, presumably on a certain date, after that they are not a charity. That is right, but they are removed from the Charity Register. However, what the act does is provide for a bit of residual protection for those charitable assets after they come off the register. Some of our regulatory powers still apply to the assets that the charity had at the time that it came off the register, and it continues to be under a duty to apply those assets for the charitable purposes that it had. If it were a school, it would still be under an obligation to apply those assets for charitable purposes. What would not necessarily apply is the requirement to provide public benefit as defined in the act. I do not understand why—how could charity—are you saying that if somebody bequeaths a building, that building then retains a charitable status? No, the building has to be—obviously here, the relevant charitable purpose would be advancement of education. If a building had been in the possession of a charity for the advancement of education, they would continue to be required to use it for the advancement of education even after they came off the register. They would continue to need to report to us on that asset as long as it was in their hands. I still do not understand. It is a safeguard for charitable assets. But it seems to endure forever? It will depend on the nature of the assets. If it is cash assets, it will run down fairly quickly. If it is something like a van or a photocopier, it will endure for the life of the asset. If it is a building, it is going to have quite a long life. I will go to another reading. Sorry, I was just to add to that, but the Scottish Government at the moment is consulting on an extension of an amendment to charity law. That would aim to extend a public benefit requirement as I understand it as well to assets that, once they were no longer registered charity, would be an additional responsibility on them. We might get involved in that in this committee in due course. Are there any independent schools that did not have charitable status in Scotland? There are a number of special schools that do not have charitable status. To my knowledge, I think that all the mainstream schools have charitable status. At present, there are no mainstream schools, so 98 per cent of pupils in the bent sector are under registered charities. There is one school that is seeking to open in the summer, which is not registered charity and has not sought charitable status. However, as was suggested, probably half of the special independent schools that we work with are registered charities or sit-under registered charities such as Capability Scotland or the National Autistic Society. There are other ones who may work under a faith organisation or whatever, but they tend not to be members of ours as well, because their statutes require them to be very stand-alone in the work that they do. I will pick up Mr Edwards on your evidence. You say under the question how the government has responded to the Barclay review, in particular on those recommendations that was rejected in fuller part. You say that the consultation did not address any of the wider context relating to independent schools, and then you go on to list that. Just for the clarity, what consultation are you talking about there? There was actually all of the process, so the Barclay review itself called us in to give oral evidence and written evidence. However, as I think I intimated, there was no discussion about the impact that such a move might have on the sector or any ask or any data on the wider sector. Likewise, the only consultation that has been undertaken subsequently by the government was on their recommendations following Barclay. Again, that just took written evidence from organisations, but we were not requested to provide, if you like, sexual details, nor was the meeting last week from the committee, nor was there any direct engagement with schools. That is a criticism of the Barclay review and its aftermath, up until the point that the bill was drafted and introduced to Parliament. It is not to criticise anybody as such, but to say that you are left with a bill and a financial memorandum that talks about a move that makes no suggestion of what the potential knock-on effects of that would be. There may be entirely unintended consequences, but our clear evidence, in speaking to the schools, is that there will be a knock-on effect in terms of the impact on the taxpayer but also the impact on the schools. Therefore, to simply place it as a revenue-raising exercise denies the other elements that might fall from that. On your evidence in the same bullet points, you say that it is a matter of public record through FOI that neither Oscar nor some departments of the Scottish Government are convinced of the wisdom of creating a small anomalous group of charities, etc. You say that it is a matter of public record. Is this FOI in the public domain? Yes, it was a request, I think, made by a journalist. I am not sure which publication it was. So when you say that it is in the public domain, you mean... Well, the FOI sits on the Government's website. The submission is there. Could you provide us with a link just to save us? Do you have that? I have it somewhere, yes. Equally, there are a couple of news stories on the back of it. Okay, thank you very much. Just to clarify that, I think that that was an FOI request to the Scottish Government. So it would have come out there in the usual way. Okay, thanks. Mr Tyson, could you give us an independent school with 600 pupils, 700 pupils? What would be the typical things that it does that satisfies you that it is a charity? So there is a set of things in terms of the charity test that it has to do. Typically, the purposes will be at advanced education. In most cases, they will advance education primarily by providing education to their pupils. So they have a charitable purpose and they have activity in furthering to that purpose. The other thing that we would need to look at would be whether, if they are charging fees, those fees unduly restricted access to that educational benefit. How much does it cost to become a pupil at the school? If those fees are high, what kind of help is there for people who cannot afford them? We would look at that. We would also look at the rest of what the charity did in terms of providing public benefit. That is the kind of things that we have already talked about here in terms of access to other schools, to pupils from other schools, to subjects, access to facilities, etc. We would look at the whole picture of their public benefit in furthering to that educational purpose. You say that the fees are not unduly restrictive. Over 90 per cent of the population could not afford to pay the fees of a typical independent school, so are they not prima facie and unduly restrictive? What we look at there is what is the level of the fees and where people are not able to afford it but want to avail themselves of the benefit that the charity provides. Is there help for them to be able to do that if they cannot afford it out of their own resources? What is the level of that help? There are a few principles to that. Where the fees are higher, we expect there to be more help in the form of bursaries, discounts, etc., for people to be able to get access if they want to. In your evidence, you say that a number of independent schools are in marginal financial positions. What do you mean by that? We get annual accounts and trustee's reports from all charities, including independent schools. As we have looked at those, there are a number of things that are common across the sector. There is a problem that the majority of schools are running with small surpluses relative to their income. A number of them are reporting insufficient reserves, which is an issue given that continuity of provision of education is a crucial thing for their beneficiaries. In a number of cases, rules are going down. The overall picture that is emerging from the evidence that we have is a sector that is managing but does not have a lot of cushion to deal with additional costs. Just coming back to the other point that you made in Oscar's evidence, some schools may wish to request removal from the charity register, so that they can pay the rates out of income that they might have deferred from providing the kind of benefits that give them a charitable status? That is speculation, but one option would be if they are released from the requirements of the charity test, particularly in terms of undue restriction, in terms of the fee levels, it frees them up to look at charging at a different rate and look at different levels of bursaries, because they would not be subject to that element of scrutiny from us. There is a whole lot of complexity around that, because rates relief is not the only game in town here. There will be other tax liabilities and tax reliefs that a school would have to consider if it was doing that. Those are really things that I can comment on. Of deregistration, it is important to say that I do not know of a single school that would want to deregister because they see their charitable status and their charitable purpose as being integral to them. I do not know of a single school that would want to reduce their level of its means tested fee assistance. In that respect, it is not a road that anybody is looking to go down to somehow avoid their responsibilities. It is quite the opposite, as they say. Unlike our colleagues down south who took the charity commission to court to deliberately not be held to a test, the schools have embraced the test up here, and I do not know of anybody who would want to get away from that. Thank you, convener, and good morning panel. For Oscar, in your written submission to a committee, you say that allowing the creation of a two-tier charity sector with a single-tier regulatory regime could be damaging to the public's trust and confidence in both the sector and charity law. How could that be damaging? Can you expand on how it would be damaging to the public's trust? Our concern here is that it goes to the basis of what the charity law in Scotland says a charity is. The virtue of the system here is that it is very simple. If you are on the register, you are a charity. For a long time, the assumption has been that any tax-reliefs, race-reliefs or whatever, apply equally to all charities. There are not some charities that are more charitable than others. It applies across the board. My main concern is that we start getting a sort of blurring around the edges of what a charity is, and a blurring around the edges of what the public can be confident and understand as to what a charity is. We are just drilling down a bit here what we would have would be a system where we have a whole bunch of charities that are set up to provide education to schools, universities and colleges. There is one group from among that set of charities with the same purpose that starts to be treated differently for purposes of race relief. That starts to be very hard to understand. You start to get anomalies. At the level of principle, it is not clear why you would do that. I will follow on from that, because that is the confusing issue in terms of the public. I have a 10-year-old granddaughter that attends a local primary school. What is the difference between my local primary school and a primary school within the independent sector? What makes one a charity and the other not? The rates bill is a lot of millions of pounds. The public perception of that is what is the difference. The difference is that my granddaughter is in a class of 32 plus. I do not know whether you can tell me what the average class size is in terms of private schools. What is the difference? The confusion is already there. I remember when I was serving as leader of the five council. We had a really difficult budget round. One of the directors in education came forward with a proposal to set up an arms-length school company in order to save the rates. There is quite a number of those who have already been set up in Fife. When David was in the administration, the Sport and Leisure Trust saves about £3 million a year on rates. That is the only reason it was done. However, the point being had I not dismissed and made sure that proposal never saw the light of day. We could have come up with a proposal and said that we will set up the five schools, the company arms left through the council and saved tens of millions of pounds. Is that right? Can you see why the public got a bit confused around this whole question? I understand the comparisons that are made between the state schools and independent schools. Our priority is charity law and the integrity of the charity sector and the confusion that would be created there. In terms of what you say about the potential for analeo, I think that the answer is yes. We would have had to look at that on its merits if Fife had applied for that. Just coming back to your 10-year-old granddaughter and her class size of 32 pupils. Mary Spann's primary range is two years into the secondary range. I can speak for us only but whether this is a case across the sector, we have an average class size of 14 but we have a pupil-to-adult ratio of 7 to 1. If your granddaughter had a particular need, let's say for example she suffered ADHD or what have you, that matters hugely to that pupil because there will be assistance available to her and if needs be we can facilitate one-to-one assistance for her in that class. It is very much a part of what we do and what we believe we should be doing. As I have said in my submission, I would wish that that pupil-to-adult ratio and average class size was available to all children across Scotland and England and, in fact, the United Kingdom. It makes what we do special in a way in our regard. I understand entirely the, I suppose the issue from the majority of the population whose kids go to the state school is why, as Fife Council paying rates in that very large school, my granddaughter goes to when a private school ten miles up the road is not paying rates and they have a teacher pupil or adult pupil ratio of 1 to 7 in my granddaughter's 1 to 32. That, I think, is for a public perception why they don't understand the difference here. You can imagine the tens of millions at Fife Council paying rates if they weren't paying that in rates and putting that into education, then perhaps the class sizes and certainly the adult pupil ratio would be much lower. Do you understand, from a public perception point of view, why would certain schools get rates relief when others don't? I'm no expert on the rate system but, just coming along, I've done reading of the Barclay review and what it seems to me to state is that the purpose of rates is to raise money for education. It says that in the review and so I can't, I don't think that it doesn't seem to me to be real money but the Barclay review talks about cycling of money in that the money is, the government gives the money to the schools and takes it straight back from them so that they never see that money whereas we, I don't think those schools should pay rates. I don't think any schools should pay rates because the explicit statement in the Barclay review is that the purpose of rates payment is to generate money for education. I mean, I've got the paragraph that he states it. There are other reasons as well but that's one of them is to generate money for education so no school should pay money in rates to generate money for education because it's nonsensical and to then say that independent schools should as well is also nonsensical just as it is with universities. It's not the right, it's not the correct reason to generate money because it's about providing education. That's why the rates are charged. To pick up your point about perception, you're absolutely right. There is a lack of understanding and some of it comes from the terminology it's why we don't use the expression private because it gives the indication of somehow a private business wanting to stay on its own and be isolated from the rest of the sector whereas independence speaks to the schools autonomy rather than their business status. They are by definition because of what Oscar does, not for profit. They cannot raise a profit and they have no desire to. Colin Smyth is well made about local authority taxation. If I speak to state school heads which I do all the time, none of them know what their rateable value is because it doesn't matter to them. If their rateable value triples overnight or halves overnight or goes up by five-fold as our schools are proposed to, it makes absolutely no difference to that headteachers, recruitment of teachers of staff, of buying equipment, of changing the subject choice, of any of the facilities or any of the offer that the school makes because it is simply, as was mentioned, a cycle of money from general and local taxation going round. Our contention would be that there are, I think, 11,000 charities in Oscars register whose purpose is the advancement of education of which we are only 50. All of them receive the same and they do pay rates. They all pay rates. All these schools pay 20 per cent in rates of which is new money into the system. It's not cycled taxation money. It is new money from parents every year. The anomaly, in the exception of Scotland, is not our schools. The anomaly is charging a nominal rate to state schools when, indeed, it makes no difference to the financial decisions those individual schools have to make. I would say to you that it does make a difference in the sense that the example I gave earlier where the deputy director of education in Fife wanted to take all the schools out and set them up as an arms-length company, that would have saved millions of pounds. Now, had that budget transferred in its entirety, then it would have made a difference because that money would have went to these kids. So it's wrong to say it doesn't make a difference. It's just a paper exercise. It's what I'm suggesting and that's why it would be difficult for parents where their kids are in class sizes, 30-odd, to understand that their school pays rates and the school along the road where teacher pupil ratio at 7 or 8 doesn't pay rates. That's just a fact. I found the note that I was looking for. In the background, to the bar, non-domestic rates are attacks based on property which is levied in order to help pay for the very wide range of services that council delivers, brackets such as education, and then it goes on. It seems to me to be, I can't understand why the state sector schools have to pay taxes, the rates in their state they shouldn't. I'm going to move on, but I think we acknowledge where I'm trying to get to in terms of the public perception on that part yet. Just to confer your point about that money, I absolutely agree. Local authorities should have that money freed up. I don't understand why it's captured in a cycle. But it doesn't, in that respect, change the overall tax take of local authority one way or the other. Our point is that if you change the taxation rate on these schools, it makes a direct and significant effect on them. I want to move on. Sorry, I'm going to like Kenny Gibson. It's on this particular issue because all Governments have charged the rates. Rates are on non-domestic properties, but rates aren't just collected from, say, Fife Council and Handed Back. They're collected nationally and recirculated based on a needs formula, so it's not quite accurate to say that the rates that are raised are immediately thrown back. For example, a local authority like Nice Drenfisher, which is more prosperous than Say North Lanarkshire, might put in more rates from its schools, but Glasgow will probably put in more rates in just about anywhere else in Scotland because of its huge retail sector. For example, people in North Lanarkshire and Ayrshire all come in and spend their money in Glasgow. That keeps businesses going in Glasgow. The money goes to a collective pot and then gets reallocated. It's all done on a national redistribution formula. Obviously, if schools were suddenly not to pay rates in the state sector, there would have to be a reformulation of that formula. That's an extremely difficult situation because every area in Scotland complains about the money that it gets and it doesn't get, so that's just a brief explanation of that. It's more complex that it seems. Is it highlighting the questions around education and the different levels of provision of education in Scotland? You mentioned, Mr Tyson mentioned earlier, about bursaries and the availability of bursaries. Is there any work being done to quantify the national figures relating to bursary provision in Scotland? The value of that bursary provision and the number of people in receipt of full or partial bursary provision? When we did the reviews of all of the schools, we looked at that and I think we were looking at figures averaging around 10 per cent of schools incomes going on bursary provision. Obviously, it's information for the individual schools but we looked at the situation before the charity test was brought in by this Parliament and subsequent and means testing fee assistance has more than tripled as a direct result of the bill that was brought in indeed by the predecessor of this committee. In the area of means tested fee assistance that is now in excess of about 30 million pounds a year, which is derived purely from parental fee income. It's not coming from anywhere else and on top of that there's probably another 10 million in other forms of assistance for instance sibling discounts, staff discounts or whatever but the bottom line is that means tested fee assistance has now tripled and by my rough calculation if you exclude the publicity costs and other things that are done in the higher education sector to attract people in the per capita fee assistance that's given out to higher education is now roughly per capita the same as the independent schools fee assistance the difference being ours is all derived entirely from parental fee income. It's available I think it would be useful for the committee to certainly have that. OK. Are you interested in a school a specific example? So when Hutchison's was set up in 1641 it was specifically for the education of 12 children, 12 male children all orphans we're now at a situation where we've got 40 pupils in our senior school who are paying no money at all have a transformational 100% bursary and we've got another 90 children who are on partial bursaries and the ratios of that about how we decide that is actually we've taken a steer from Oscar because they have advised us that rather than trying to give solely to transformational bursaries the limited money that we have in the pot will be better spent by trying to make it available to different strata of people who need different levels of support So we've got in our senior school we've got 850 pupils and so we've got about 129 who are on bursaries but 40 on transformational 100% bursaries OK. Thank you for that. Right. Thanks convener Can I ask you what do you think lies behind this move against one more part of the charity sector? I'd love to know I don't think we don't detect any particular desire to single us out I think going back to the deputy convener's point I think there is a problem in general public perception is how the schools operate the fact that the money they have is purely derived and what parents turn up with every term which goes straight out of the door in salaries or utilities and therefore and on the back of a couple of news stories that some education centres were paying 100% rates in schools were only paying 20 that seemed to be unfair it comes back to the previous argument that in our case it's 20p in the pound new money on top of council tax and on top of income tax so I think there was an easy headline a simplistic way of separating 50 charities out of 23,500 on the register our confusion as an organisation is why do that after this Parliament has specifically requested those same small number of charities to pass a public benefit test in detail which no other group of charities was initially singled out for if I may to stem from a misperception of our parent body so if I describe a typical parent's eating to you we've got two parents arriving pretty flustered because they're both working their salaries they are using them they are both having to work to try and afford the education that they value so greatly they don't want to pay that money but they feel that they need to and I don't want to go into that particularly but what we see is flustered parents arriving working hard to me all the time about the challenge that the fees bring and the fact that they are feeling very squeezed that they're approaching a tipping point where so you know that we've faced the challenges from the teachers pension and also from the teachers pay review that we are obviously aligned to and all of these things are making the fees it's £12,000 a year to send the people to our school which is obviously a huge amount out of post tax income but our parents value education that highly that they wish to spend that money but the tipping point is coming Mr Tyson comes in just to pick you up on that so do you Mr Gambals do you think there's a perception of the parents that send their kids to your school they're all extremely wealthy you know turn up in their Range Rovers with a Labrador in the back and they can well afford to pay extra and this will make no difference whatsoever to them who it seems to be that they are truly affluent but there are a great many who are really struggling to pay those fees and we know that because we've got a list of pupils who we can't give bursary support to every year in places too and they cannot come to us I think one of the things we should be careful of is that you mentioned earlier on people who value education who are being squeezed to put their children through that which kind of suggests that there's parents out there who don't value education as much as that and I know that's the thing but that certainly could be how it was perceived and I think we have to make it clear that there's lots of parents who can't afford to get some support from you to get their children out of school and that's where we try and broaden access to our bursary programme and try and publicise it so that everyone knows that they can come to our school and there are places there that we are trying our best so we're strategically committed in our documents to raising more money for bursaries because ideally we'd be needs free that if we could save if we could save away in a fund maybe £40-50 million we could start becoming a needs blind independent school If you could answer the original question what do you think lies behind this? I think looking back at the history of I think particularly our engagement with this issue since the 2005 act the charity's happened past I think it's very clear to us that there is a lot of concern around the charitable status of the schools that was acknowledged when the charity legislation went through Parliament originally and a lot of the provisions of the charity test came out of that discussion and that is why we put a lot of effort and resource over those years into looking very carefully and very rigorously at the charitable status of the schools to try and address those concerns Right we heard last week when we visited George Watson's and we met a range of schools there and indeed it's come out in your Oscars evidence that some of the smaller independent schools are on the brink they're not wealthy struggling in your evidence I'm not suggesting you're on the brink but you give us some figures of what this could mean to your school could be an increase per year of £326,000 That's our calculations that's our understanding of what it will do to the bottom line for us, yes So do any of you think that schools could actually go under as a result of this? More certainly I think with the employer's contributions increasing on us too that's added to our budgets for next year or that's going to be a dent in our budgets in due course and I think it's just another hit that is going to make things very very difficult for schools to operate We as a business have operated quite efficiently over the last three or four years at St Mary's but again just coming back to an original point 15 per cent of our income to bursary so we open our doors to as many people as we can financially accommodate We have made decent surplus and I think it's important that this committee knows that we've made a decent surplus over the last three years but our intention is to reinvest that into the community at St Mary's we intend to put down a sports facility that will be available for all local authority schools to use and actually whether you're aware of it or not the Scottish Borders Council went to the asymmetric week model which means that on a Friday afternoon at 12 o'clock children are not in local authority schools and it's our intention to welcome those people into St Mary's into a facility into our facilities and actually provide them with expert coaching from our staff and that would be free of charge but of course all of a sudden our plans have been put on hold because we are now staring at an increased bill that is coming down the line at us and so it's stifling our ability to widen our scope to welcome the community welcome the Milner's community and the wider community into St Mary's Graham asked a question about schools closing does anybody have any a name of a school that they think are under threat? Our neighbouring school has just closed its senior school after 150 years of history which one is that? which one? Well it's Craig Holmes school who's closed so I don't like putting that on public record a small and specific school a very the committee had last week from one of the attendees who's been on public record from Hamilton College a school goes back less than 40 years that took over an old teacher training college they have said subsequently in the press as well that they would be close we've in the time that I've been at Skizz there's been pupil numbers haven't dropped much there's been a lot of belt tightening in the sector but the one thing that's started to happen has been changes to the structures of the school so Craig Holmes others Beaconhurst and Bridger Valley closed last summer again looking forward the projections that boards have to do six, seven years in advance those two schools that you've mentioned except for the Hamilton one which is a completely different type of school from the mainstream they are they part of a cluster like the Craig Holmes part of a cluster? Craig Holmes latterly did and the junior school is still operating it did seek to go into connective days trust with Kelvin side academy which is quite unique model basically to support each other but generally most of the schools are almost entirely stand alone there are two here in Edinburgh they have closed part of the school and the expectation is that most of the pupils will go to one but for instance in the case of Beaconhurst in Bridger Valley some of those pupils may have gone elsewhere to independent schools but many will have gone back to the state Hamilton college who were raised are not the same as Hamilton school in Aberdeen which closed a couple of years ago St Margaret's in Edinburgh so it does happen sorry can I just add to that there are five standalone prep schools in Scotland five remaining standalone prep schools in Scotland and whilst I'm not going to name schools I would ask that the committee scrutinise the accounts of those five standalone prep schools and you will see that three of them are under threat and much more to do with our things well I'll just go have a look at the accounts haven't you and is in your evidence that you said that schools were struggling I think it's not the previous point there there is you know there will be as many individual circumstances as there are schools but I think that there are different groups of schools in different circumstances clearly you know where it's a boarding school that's going to be in a different market as it were from the day schools but you know rather than talking about schools beyond the edge I think what we're seeing is schools or a lot of the schools operating without much in the way of fat to be cut and there will be some difficult decisions to be made in terms of absorb and extra costs marginal financial position you could say that's on the edge well I think it's that idea that there isn't much to play with I go round schools speaking to governing boards on a regular basis probably two or three strategy sessions of boards at a term all we've talked about for the last 18 months is money not challenges of education and other respects so for a fact that boards like Beaconhurst looking ahead and taking their strategic decisions had Barclay in mind and of course if you're giving means tested bursaries to somebody in S1 you're committing to five, six, seven years of education so if you're projecting yourself through to say 2025 and being told in 2020 your budgets are all going to go haywire then that does speed up the decision making process in schools quite quickly and you wanted to come in briefly in us chicken vener, I mean this has always been an issue first of all we heard earlier on that there's a new school a new private sorry independent school going open this summer but Alan Glenn's and St Mungo's in Glasgow went down the stank many many years ago there's always been evolution within the sector, mergers, new schools et cetera et cetera but we're asking what was the point of all this and we're going to be asking obviously the government directly on this but it would seem I think to many people saying you should have charitable status because of your involvement with the community but the schools in my constituency, none of which are independent also allow the local community to use their halls and playing fields, swimming pools and they have to pay rates but one of the issues we haven't touched on is that you choose who goes to your school I went to Bill Houston which is near Hutchie and we used to get all the pupils that were expelled from Hutchie so folk were taking drugs or involved in fights or any other anti-social behaviour effectively dumped onto our schools so you're able to select who you have at your school and obviously there's a rigorous selection process, I understand the fees are about according to your own evidence the fees that you charge at Hutchie and on twice what's spent on a state pupil per average what has been the impact of recent changes in teachers salaries and pensions on the sector for example, Hutchie he said you have 850 senior pupils what is the capacity in 2006 we had 1,720 pupils and now we have we've now got 1,220 okay, is that a choice of the school or is that because there's an erosion of people who want to send their kids there what's the reason for that the pattern that I would describe is that the pupils come to us the pupils still want to come to us our educational standards are excellent and our results are excellent the only thing that I can see is that the fees keep going up and that the tipping point is coming for more and more parents right, okay so have you done any analysis of what you think you've said for example that 47 children 3.7 per cent could leave in the state sector fund them obviously be economies of scale I can't in the state sector but if you get any evidence that that increase in rates which understands if I do a wee if I divide the £326,000 rise among your 850 pupils £400 quid that's what an extra 3 per cent almost on the fees if you get any information what impact that will have have you any feedback from parents or pupils about that I believe a number of our parents have submitted to this very committee on this because they are starting to understand I think it's quite a a lot of our parents don't understand the import of they haven't picked up on it somehow it seems to be a little bit stealthier but those that are have written to you remember of course there are 130 who are on bursary recipients so that we can't charge that money to them we have to further subsidise them so again it's bigger than it looks and how do you choose these bursary recipients how do you decide who comes to hutch you on a bursary say for example you know a thousand people in the south side of Glasgow who can't afford the fees want to actually send their children there how do you decide who gets in and who doesn't so there's an entrance test and then we rank people and then on their performance in that test and then it's a simple we go to the person at the top and we say you need a hundred percent bursary here so when you say rank them on academic ability on their performance in that test so there's an argument and there has been an argument in the comprehensive sector for many years that that's effectively stripping out some of the better, more able, more capable the sector and for example the schools that a lot of us actually went to so there's an argument so that alone is an argument does that benefit the wider community to have some of the more ambitious parents have their children removed it may actually benefit their specific children but what about the rest of society so that's an argument just ask you all the answer briefly please because we have got a lot to go through we've got another panel that's coming in after this it's been a really, really interesting discussion and I do hate to curtail it it's important to come in here because I understand exactly what you're saying in this reference to people being dumped on your school because they've been expelled from Ho Chi or wherever actually our means-tested bursary process we don't actually we screen children to assess their level of need we don't overlook the fact that we have a number of pupils at St Mary's who aren't coping in the local authority system because they have ADHD or perhaps they are slightly on the autistic spectrum and they need one-to-one assistance and actually don't overlook the fact that we provide and have in the past provided 100 per cent bursaries to children who have been isolated, marginalised by their community because they have been disruptive in their local primary schools and they've come to us and we've done our level best to provide that pupil with a level of assistance that makes learning accessible to them whilst managing their conditions and managing and helping so there's this assumption that we are creaming off the more academic pupils we are creaming off the more affluent members who come to our schools to apply for positions in our places in our schools don't overlook the fact that that's not the case there's a much more Can I just ask in that point there is there any statistics available that would show the amount of pupils who receive a bursary not because of academic ability but because of their level of need such as it would be slightly blunt but we could put together figures that showed from schools individually in terms of the selection process in purely academically selective schools there are relatively few and when we talk about the pupil teacher ratio a lot of the attraction for the schools is precisely because there is a higher level of one-to-one learning support for instance Can I just we also have a number of pupils who are high functioning autistic and who are aspergers for example who we know that the parents are coming to us because they are not coping in the state sector those children are not flourishing and that is why the parents have come to us That's exactly the type of person I'm asking about Mr Tyson Just a general point when we reviewed the schools and looked at their public benefit there's a separation between scholarships which are usually awarded purely on academic merit and bursaries which are means tested and what we gave the weight to was the means tested bursaries that were about need and ability to pay The point that Mr Gibson makes was that both of them seem to have coalesced around the entry to example schools like Hutchison The scholarships in that traditional model have almost died out in Scotland apart from a nominal amount Down south you will still get people offered places on their ability and have fee assistance attached which is something you simply could not do in our schools anymore so that has changed the result of the test that this Parliament passed and I think the other point that comes back to Mr Gibson's general point about parents is that we are only 4.5% of the sector so it doesn't matter how many pupils or parents there are in our sector we say no disservice to the 95% in the state sector who do extraordinary things Be about public perception and that's very important Very briefly Kenny to move on There's a north issue where I'm a private schools but 29% of pupils in Edinburgh have got your private schools so the impact in different local authority areas is different and I have to say as I said last week I'm not against the private sector at all people want to spend their money on that that's completely up to them I know other people in the committee are against the private sector but I think what the Government is looking for is a level playing field and that's what we're debating that's what we're deciding where that should be I can know No, I need to move on David, do you have any questions on this? You've talked about the marginal funds that are available and the additional costs that many schools are having to manage and many committee members have talked about some being on the brink Can I ask about specific industry sector? So can I ask how many industry schools provided as part of the independent schools are likely to be affected by this removal of the rates relief? Every one of them? Every one that has nursery provision and of course what Barclay also did was extend 100 per cent rates relief to nurseries irrespective of where they were profit making and privately owned where taking away from those schools that have contained nurseries some schools have nurseries that stand alone and could claim a different rates relief but in every case every school that's in nursery partnership every school that has an incorporated nursery will be affected Yes, and within five miles of my school there are 33 private for profit nurseries who will get 100 per cent rates relief now a quirk of where we put our door means that we are not eligible for that So that that devastates the whole sector within your own sector? It does not, it is inconsistent policy it seems to me we offer education there for profit we are a charity but we should pay rates and they should not and that would be penalising your sector completely within the process It appears to me? You'd all believed that would be the case Can I ask about the the relief that is being proposed for the specialist music schools do you believe that that is appropriate? I think that's a question for the one specialist music school I understand I think the justification for doing so on the basis that that school most of the places are allocated funding by the Government and so going back rather to the argument about whether state schools pay rates or not it is all tax payers money in the end I assume that's the justification for doing it because I'm sure every school if they wanted to could say that they'd make a huge commitment to music but I think it's the status of St Mary's in terms of and I know there's been a piece of legislation through here in the last couple of weeks about the fee levels there that because the support is coming primarily from central government that's why it's been accepted I would like to support what Mr Tyson was saying that as soon as you start trying to put different value on different charities it becomes very very difficult so my understanding is that the music school is exempted because of they select on the basis of musical ability and half of our pupils in first year are taking music lessons and classes aimed at developing musical excellence while all of our pupils in first year are in music classes designed to develop musical excellence now if you'd like us to put in place a requirement that all of our children have to have an instrument the parents would be delighted because they perceive that as a good thing for their children's education but to do so would be precisely to go at the point about arms length bodies none of these schools are doing this or existing or educating because they want to avoid paying taxes that's the point they are paying 20% rates because they have been educating in the case of Hutcherson's for hundreds of years right thank you very much Andy you wanted to come in just a few points to sort of wrap up I think I'm not sure we're wearing it first of all just to be clear non-domestic rates are a tax that's been around for the best part of two centuries, 150 years on the rateable value of property so it's a property tax do you agree that every property occupier of non-domestic property should pay in principle something because the local services assist you they provide the roads to your schools and all the rest but you agree with that in principle all I would say is that the taxes are there to raise money for education so you have to net gain that of course we want to pay our way non-domestic rates they said including education right thank you non-domestic rates are a sort of local government revenue to pay for all the services that local government provides social services everything but obviously they provide critical your schools could not exist you need the roads maintained you need the sewerage and all the rest of it so as a matter of principle you agree that all non-domestic property should pay something currently you pay 20% you agree with that that's fine so what I want to explore is the argument is that this is a rather blunt instrument just taking away the 80% relief do you have any other suggestions about how I mean Barclays argument in the report was that independent schools that are charities benefit from reduced or zero rates bills whereas council schools do not qualify and generally will pay rates this is unfair and that inequality should end by removing eligibility for charge relief for all independent schools that is Barclays argument I don't think that argument has changed I think that's the government's argument as well but we'll give the government the chance to tell us what it is on the basis that there might be some change it may not be the complete removal of mandatory 80% relief it could be in making non-domestic rates more progressive there are flat tax at the moment, 48p you could have tax free amounts and 10% and 20% we could do something about phasing it in over a number of years we could do something about it's not 80% it might be 40% last week people have talked and it's important for people on the record to know that we visited George Watson's stations that were held last week in private it was interesting to me when the schools there told me what the school role was how much the proposed taxes would cost them and what that meant per pupil so we had like Watson's and indeed Hutchinson's 1300 pupils or so so that would be £246 per pupil Watson's is £191 per pupil but for the smaller schools like Hamilton College 450 and 500 so there's an issue about scale here and also there's a question about your property because this is being charged on your property are some of your schools inefficient users of property and you could rationalise your estate and possibly reduce your non-domestic rate bill so just any general ideas on if we wish to address this unfairness and I know you don't agree it is an unfairness we'll take that as red what else could be done I would have thought personally what needs to be done is a calculation needs to be made for charities about what would be a fair level of support that they should make to their rates and then that should be applied to charities that's the 20% and if that's wrong if that's too low then charities and what I would propose is that you should bring back the state schools to the same level that is you make you devise a formula that says or a charity or a state school this is what they should pay rather than full rates to a state school which makes no sense at all that headteachers need that money it should not be being paid in rates to raise money for things including education but a formula would be I think the fairest way across the sector go ahead thinking slightly out of the box here my own personal philosophy is that I wondered and forgive me Martin I wondered why nobody suggested in England apparently a level of bursaries per independent school 5% was over 5% was bulked up by and challenged in England through the courts I believe but it I wondered if there was any scope for whatever it may be per independent school in Scotland whether it be 6% 8% that is deemed acceptable plus public benefit being apparent in the function of that school a lift in that percentage would help all concerned so just take for example if there was an expectation when the Charities Commission were carrying out their inspections that if independent schools were expected to give up 10% of their service that is going to slightly alleviate pressures on oversubscribed state schools and actually most schools in Scotland most independent schools would accommodate that would be able to accommodate that accommodate it if you are telling us that they are under a huge financial pressure just now because half a fee would help the bottom line as opposed to no fee at all in terms of rates themselves you are completely right although Barkley suggested it I don't know of any of our schools that pay no rates at all maybe possibly some of the special schools get full discretion from their local authority but certainly none of the mainstream schools pay no rates at all so you are absolutely right that it should be part of their role in society the trouble that the schools have had is that in contributing that money and the charity test is there they are now stuck between what do we do to maintain our situation as at school and I take your point about facilities but I mean there's no bursars on this panel but if you ask a bursar whether their facilities are well used they will say they are extremely overused I was talking about whether their property is efficiently managed but they might have too much property and they might have a high rate of value which comes back to the question about where do you pay if rates go up where does the money come from the money comes from parental fee income and there is independent evidence that shows beyond a certain point affordability cuts and people start to leave and each one of them is on average six and a half thousand back to the state the other two places to get that money are to sell off assets and that may be rugby pitches but there are a lot of staff none of which I presume in the ideas of increasing physical activity and improving attainment in Scotland is something that anybody wants so there are no other ways of generating that income and if you start to sell off the buildings you're in the problem we sit under the shadow of a former school that for 60 years has sat letting in the water because it's a grade 1 listed building that nobody can do with we have in both the mainstream and the listed buildings I know one school here in Edinburgh that spent £1 million on roofs in the last two years so they are making their contribution and keeping those facilities going but I don't think any of them would fail that there are a lot of houses in Edinburgh Glasgow and elsewhere built now on former playing fields I think that most of them would think they don't want to go any further in that area a specific example had she we've got some rugby pitches so we maintain them we keep them looking lovely we play sport on them but our lease is up for renewal in the next few years so it's not something that we own Mr Tyson you Oscar believe is it the case quite strongly that you want to retain the integrity of the charitable sector and therefore the reliefs associated with it as one sector and I think you'll hear your previous question I think that what we would want to see there is a way of looking at that question that looked at on that basis the principle, on the basis of how charity law is and that does bear in mind the integrity of the sector okay thank you very much does anybody have any last final questions but we're just at the time thank you very much panel for today's session that was very very useful indeed I'm going to suspend briefly to allow a witness change over for the next panel okay for today's second evidence panel in the non-domestic rate Scotland bill I'd like to welcome Cheryl Hind customer manager transactions and Fiona Law NDR team leader city of Edinburgh council Brian Murrison revenues manager of the Highland council and Jack Orr senior property executive from West Lothian council thank you for all your submissions and I'll just kick off with I wonder if you could tell us whether you feel the bill is drafted along with the early measures implemented by the Scottish Government sufficiently address the findings and recommendations made by the Barclay group would anybody like to be the first to dig a tone of water Cheryl, I'm happy to respond to that thank you Mr Orr yes, I think in broad terms the bill is drafted in lots of respects with regard to the main recommendations of the Barclay report as ever with these things the devil is in the detail to some extent and I think that having looked at the bill in that respect there are a few points of detail and I think that's why we've been invited along here today to perhaps elaborate on some of these detailed aspects of the bill OK, thank you very much Does anybody else have any other thought to comment like that? Sorry, we just concur that we feel it's a work in progress and as I said in the detail that something needs to be ironed out Do you have any views on the recommendations of the Scottish Government rejected the 28 recommendations to 28 all-property should be entered in the valuation role except public infrastructure and current exemptions should be replaced by 100 per cent relief to improve transparency and recommendation 29 that large-scale commercial processing and agricultural land should pay the same level of rates as similar activity elsewhere so as to ensure fairness Do you have any strong views on these? No OK, well listen can I ask you you'll have heard some of the previous debate and one of the things that kept on coming round again was round out of schools particularly but how the non-domestic rates works within the state system I wonder if somebody could give us a sort of easy to understand the explanation about how the non-domestic rate system works within the state system I'm happy to just give a brief view from my own view in West Lothian All of our schools are subject to the valuation process All of our schools secondary primary and nursery as well as special schools are all eligible to pay rates as per the rateable value that's entered in the valuation role There are certain exemptions or exceptions from that through various reliefs and the most obvious of these are some of the special schools where there are reliefs granted and other disabilities so those schools do get an element of relief from that Otherwise everything that's in the valuation role is charged and I don't have it split down into individual schools but the total non-domestic rates paid by West Lothian Council last year was £8.7 million Of that some £2.9 million was paid in respect of primary and nursery schools The remainder is made up of the other schools which by far form the largest part of our estate together with other operational buildings I think just to put some context on the total bill, the £8.7 million for non-domestic rates that slightly exceeds what we pay for all of our energy and all of our estate and as a proportion of our total revenue budget or property revenue budget is somewhere between £23 million and £24 million so it's a substantial percentage proportion of that total sum Do you have any other comments on that? I guess for Edinburgh I just put in context for ourselves The total non-domestic rate bill as it March just finished it was £19.3 million of which £12 million was for schools and it is a considerable amount of money so it was interesting to see discussions from colleagues in the private sector also to get a balanced approach and I think reading some of our ideas and their submissions the fact that everybody's willing to have a conversation and by no means is this all set in stone it goes towards the ethos as far as we're concerned of the Barclay review that it's up for discussion and people's thoughts and views are actually taken forward because it might just be a number on a bit paper but it's people's lives this does affect Can we just clarify for the record that all that money doesn't recycle back into the education system? No Graham, you wanted to come in briefly and then Alec? It's really just to clear this whole thing up Who is actually paying the money and where is it being paid to Is it individual schools if that rates bill goes up does that affect any head teacher? It's a central process whereby the money is just taken from a service budget it's a top line service budget so the head teacher will not in many cases not even be aware that they paid rates for that building Okay, it's for all of you Is that a set budget at the beginning of the year so you'll know the rateable value of your property role obviously for Edinburgh that includes all of our buildings whether it's for a secure unit or a library etc so you know the central costs for your council which is why I started off by saying it's £19.3 million in total for us so that is an overhead and it has to be part of your considerations for your budget you know you've got to pay your bill and whatever funding that you have as an authority that's taken into account because people understand this every council is handing over that money to the Government to itself Mr Whiteman is saying to itself that it accepts just different things councils on themselves obviously you've got your council tax and you've got your non-domestic rates and then there will be some grants from central government so the money that we get as councils have to pay for all of the services and staffing costs Can I just move on because any of your authorities represented here today have set up allios in order to avoid paying rates or have you set up allios where the not having to pay rates has been a saving to the council Council operates an allio but as I said I wouldn't have said it was set up to avoid rates no a consequence is that as a charitable organisation they get the 80% relief Can I move on and then whether there are additional measures that could have been included in the bill so one that comes to mind is the changes to rates for out-of-town shopping centres I actually want to focus a bit in this part and the impact to town centres on rates but is there anything that's not in the bill that you think could have been put into the bill that could have helped councils and helped town centres I take it as it is I think in terms of you mentioned out-of-town shopping centres and I like clearly they are already in the role and they are in direct competition with traditional town centres and there's generally in my view only one winner and that tends to be the out-of-town shopping centres because of the convenience and all the rest of it so there are a few town centres and I can think of places like perhaps Bridge of Island where there's a good range of shops independent shops and the like but I suspect certainly in West Lothian speaking from my own experience of our town centres over the years they have become homes for in many cases things like charity shops many of the multiples that we used to have for example people like Woolworth and Pound Stretcher I think it was and people like that have failed and gone into liquidation and that hasn't helped coming back to your question is there anything that should have been in the bill or could have been in the bill to help redress that balance it's perhaps difficult in terms of the bill itself but I think in general terms the only way to do that is to try and incentivise town centres in some way whether that's through further reliefs in terms of the rateable values being reduced in some way either through specific reliefs or similar measure that's very difficult but I think there are all sorts of intractical problems if you start to go down that road as well in terms of comparing one scenario with another I'm right in saying that the community empowerment bill gave councils authority if they so wished they now have the powers that they could make a town centre free but they would have to pay for it Is it self-financing? Is it self-financing? The authority would have to finance any relief scheme which obviously would have difficulties on budgets, pressures etc And has any of your authorities looked at that? We have looked at it but due to financial constraints we haven't been able to offer any form of relief Right Right Okay So the role of the assessors and local authorities potential application of discretionary relief to restricted sports clubs What's Is there any, I mean playing fields seem to come up as an issue in this bill concerns around playing fields Is there changes there that give a threat to to businesses running cafes or whatever in public parks? The difficult ones that we were aware of in close proximity they were we felt that it would be so small in value that they would be entitled to the small business bonus and such here just creating an administrative burden the net gain would be very limited Gerard, sorry Mr Rowley I would concur with that view we in West Lothian we already have a number of individual entries for some of our public parks things like cafes and shops and caravan sites and the like it's in some ways difficult to see without incurring a burden, an administrative burden or whatever how you might then bring other activities into into the valuation role we have an interesting scenario at the moment where on one of our country parks we have a proposal in front of us for someone from someone who wants to do a if you will a winter wonderland which would be modelled along the enchanted forest at Pitlochry and so clearly in terms of that it's probably a thing focused on Christmas so it would be very much time limited it's not something that would be there all year round and I suppose that might be the kind of thing that that could attract some sort of some sort of entry or some sort of look from the assessor to see whether it would be appropriate to put something like that in the role but other things that are de minimis whether it's an archery club or an ice cream stance or something like that which are seasonal I think to speak for themselves really Will there be Edinburgh's or any? Certainly from Edinburgh's point of view as a capital city if you were to look at say the Christmas market in Princess Street Gardens they currently don't go on the role at Christmas if you were to do that to deter those things from happening which if you look at the tourist attraction at that time it would then be detrimental to the other businesses in the area as well so you would need to weigh up To finish on this is there anything that we could be looking at in this bill to try and help town centres up and down the country struggling most of them and as David will know being the MSP for Kirkcalde it's not easy to see what the answers are any thoughts on that? No The main issues we have with town centre businesses are the two issues, one being the rateable value but that's an assessor's matter and it's driven in effect by non-retail businesses to pay that rental value within a town centre and obviously the other one the issue out of town centre is the parking issues but we're obviously trying to address those offering free parking within town centres for a limited period Okay Jair, convener we just for the record we have no parking charges in West Lothian in any of our towns at the current time Andy Thank you very much Have you made any evaluation of the impact of moving to a three-year evaluation, revaluation cycle on the administration of non-domestic rates within your councils? In our own case certainly as far as I'm aware we haven't specifically modelled that from a property perspective clearly that's something that we would be supportive of because it would help to iron out the large swings that can take place at revaluation particularly the last revaluation has been seven years in the making and during that time the property market has fluctuated widely for a number of reasons so anything that helps to iron out those fluctuations for ratepayers in general businesses in particular has got to be seen as welcome and I also think that in terms of the tone date being reduced from the two years in advance of the revaluation to the one year will also help that particular situation I don't know if that answers your question Yeah, I mean this is more a question really for assessors but I'm just wondering if there are any other impacts for councils Well there will be impacts and we often use revaluation years to review reliefs that are awarded particularly small business bonus, rural relief and obviously there will be an increased impact on that I mean we have an automated interface with assessors but we will still get manual rejections which you will have to deal with so yes there will be an increased workload it's something that we just would have to manage Sorry and Mr Weyman should have said that of course there is an obvious impact for certainly property people within local authorities and that is that we will be involved in appeals every three years rather than every five years so there's an obvious impact there from our day to day working So you'll be involved in appeals Yes because the local authorities generally can't think of any local authority which wouldn't appeal where it sees it as appropriate to do so against revaluation variations throughout its authority so we actively manage these in-house as it were with some external assistance So do local authorities lodge quite a number of appeals I'm just thinking because the undomestic rates that you pay as local authorities goes straight to your local authority So why would you bother appealing In terms of to ensure that our assessments are fair in the round with everyone else we don't want to be in a position where we feel our assessments our entries in the valuation or our rateable values are significantly different from the rest of the market if you like Okay can I turn to the question of parks because seems the intention of the the bill is to make sure that commercial activities in parks are not exempted unnecessarily and that there's parity between what goes on within parks of a commercial nature that is similar to what goes on out with a park Are you comfortable with the provisions as they are in the bill and do you think they have do you think they're justified? Yes for Edinburgh it's mainly around consistency of approaching making sure that across Scotland it's applied in the same way because I think a lot of our comments throughout the bill have been from an administrative point of view as well as a rate payers point of view that needs to be consistently applied our concern would be if you've got someone who is on West Lothian Council or Highland or Edinburgh regardless of which council they're using any exemptions, discounts, reliefs etc would all be applied in the same way it's just about the consistency and making sure that people know exactly what the regulations are Okay because I've had a quick look at Prince Street Gardens I can't find I mean I note that the the Scott monument is listed as a distinct historic building for example and that St Andrew's Square which I think many members will be familiar with in Edinburgh there's a Costa coffee with a rateable value of 42,000 so it seems that there is already premises within parks it's already on the roll this new provision appears to be about making sure that all that should be particularly in local authority parks is that fair assessment? If that's the intention then I think we would welcome that as I said in West Lothian's case we have a number of commercial activities which are already on the roll that are within our public parks if the intention is to treat that consistently across the board then we would certainly agree with that and just as colleagues from Edinburgh were saying if it's applied across the whole country then that would appear consistent and fair to everyone Okay thanks Okay thanks very much Andy Graham No I'm fine Right thanks very much David you had a couple of questions you wanted to ask Thank you convener and good morning still The anti-avoidance measures in the bill especially around empty homes empty properties do you think these measures are strong enough to close the loophole? I think there are movement towards it but I think as practitioners we can say that we feel that certain rate pairs will just find a new way around it I think it'll just be a constant movement but there's certainly a help and it's very welcome it's giving us an opportunity to close some of them but we feel that a lot of it will come down to case law in the end Is there any measures you would like to see in it to close these loopholes? One of the things that we have put forward in our feedback is a review panel so whether it would be through councils or the institute of revenue and rateable valuation that as practitioners we get together and we discuss the loopholes as they're calling them and any new ones that come up it's about discussing as a professional group what's happening, what the best way of dealing with those things should be keeping an abreast and if there's analysis that comes through a case load from a particular council that pinpoints something that's happening you can use it as a learning tool to be able to address and put forward amendments to legislation etc so it's about constantly reviewing things and not just saying we've addressed it through the Barclay review let's leave it it's making sure it's kept fresh and that there are committees or panels put in place to review things to make sure that all potential future loopholes are looked at it's consistency and fairness and making sure that we all approach things in the same way in previous evidence phoenix companies have been mentioned too created for tax avoidance it's not covered in the bill do you think it should be or is there any cases that examples of phoenix companies are rare? We've got a particular issue at the moment it's not so much a phoenix company we've moved on to Shell companies where companies have been created purely to absorb debt and again through the IWRV we did a survey throughout Scotland and this particular range of companies owe something like £2 million in outstanding rates throughout Scotland and we have recently we are going to court they've taken us to court and they disagree with what we've done but hopefully that will allow us to raise it but in many cases that's what we have to do it's basically be challenged under the court system before we can get a decision what we'd like to see is some sort of link between these furious directors and the companies and the actual owners of the properties whereas the properties are being bought up by owners but it's Shell companies who are operating the properties on their behalf I'm sure if you if you want to name that this organisation that you're they go under a variety of names predominantly you'll have about four or five I would think in Edinburgh under a very tartan house of Scotland cashmere Shell printer prices they have a range but if you trace it back they have a single director the old gentleman from Edinburgh who I'm quite sure is unaware that he's a single director okay and in previous evidence we heard on this topic I suggested that the problem there is that you're trying to track occupiers and it's occupiers who are liable whether they're a tenant or an owner is there a case for revisiting the liability for rates and placing it on owners rather than occupiers that was actually a suggestion we made on the workly review was we make it an owner's tax and the owner is responsible and if the occupier is there for a charitable organisation or various others who may be entitled to some sort of relief that that relief is claimed through the owner so it was one of the suggestions Highland Council did make so yes we're fully in favour of that Were other councils do you know? I'm not aware I think that Mr Whiteman the difficulty that I can see there yes you can make the owner responsible for the tax but through commercial leases and all the rest of it that ownership will then be transferred to the less he or the occupier and I wonder if suppose by a circuitous route it then gets back to being a shell company and so you almost end up with the shell company again through the commercial leasing aspect of say that that situation being responsible for payment of rates now if there was something that then could be done to reflect on that and cast that responsibility back to the owner then that would be a way of capturing it that would be That's a very interesting point that's just been raised there Alexander Can I talk about the potential impacts of the bill because I've indicated that the financial memorandum is effective of the figures but there would be room for refinement in years to follow so can I ask whether additional costs for local authorities are funded including any additional costs that are higher than the estimations that come from the financial memorandum Do you have a view on that? We've obviously got an estimate of initial costs such as software changes and so on but until we see how the bill progresses it's really difficult to make an adjustment for that The biggest administration would normally be for the assessors themselves There certainly will be administrative changes required by the assessor but that could have a knock-on effect as to how it's progressed and processed and the second one is what discussions local authorities have had and have you been involved in about the cost for future years because this is only talking about what's going to happen initially and it may have to be refined as years progress I personally haven't seen anything for future years that would be something that you would learn and if you're changing anything you need to take on board what needs to be amended to make it successful in future years I would say one thing that we're very good at is Scottish councils is sharing learning and things that we have shared as practitioners for instance automation with publication and on domestic rates on websites etc that's one thing I'm actually proud to be an authority employee certainly through the institute revenues that's one of the things that they talk about quite particularly sharing learning so in relation to the non-domestic rates for future things for administration etc it's not always going to be the case that it's going to be money it's maybe just how to do things in a smarter way and I guess as authorities that's something that we've got very good at because we've had to you've been forced into many of the situations that you've had to adapt and you will adapt in these circumstances but it still may have a knock-on effect on the personnel and the resources and the implications for them at the minute it's an unknown unknown thank you Andy, do you want to come in on this? not okay, Kenny I mean a lot of things I wanted to raise or been raised actually I mean I think one of the issues about town centres really is hasn't been mentioned and there's not really a lot we can do about it but there's the issue of online shopping and I think there's an issue about how they in some future date perhaps get taxed by I know the UK Government is at least thinking about looking at that but I'm just wondering the thing about parking in West Lothian have you noticed that by not charging for parking in West Lothian has that had a positive impact in terms of people not going into Edinburgh for example to shop because obviously the parking charges in Edinburgh are a thick probably the people who largely go shopping in Edinburgh to un-centre take the train I would guess but although parking in all our town centres is currently free it seems to me that that hasn't of itself had a positive impact there are some of our town centres thinking of places like Linlithgow for example where there are a good range of independent shops on the high street and the occupancy rates on the high street are very high but in probably the remainder of our traditional town centres which were formally associated with coal mining areas and the like certainly that isn't the case and I don't think that the free parking as such it may help in some respects it shows a specific positive impact I think many of these spaces probably are simply used by people on a day-to-day basis whether they be employees of the retail enterprises or whatever but the parking once that car's in there in the morning it's there for the whole day I mean in St Andrew's for example they have a two hour turnaround time because if you do that you can have a 20% increase in revenue just because people go in and do their shopping and then they move and bizarrely in my own constituency in Lags a lot of the shopkeepers were very reluctant to have something like that because they like to park your side of their own shop even though it means a customer can they do it so I understand that but I want to just briefly to mention one last topic which is compulsory sales orders and it's certainly in my constituency and I believe many people in Scotland have got buildings that have been left derelict, particularly in town centres by elsewhere for many years properties and the owners have maybe bought them for a speculative or whatever purpose maybe they've looked to invest in them when they haven't had the money these people may be overseas maybe living here but they're an eyesore and we need to do something about it so we're a compulsory sales order whereby if someone is not willing to utilise that property and be forced to auction that would be a positive step I think there are some issues around that as well I don't know what the criteria would be for example to assess into three years for example if there are workable criteria like that then I think probably all of us can think of properties in certain parts of our authorities which would benefit from that and certainly I can think of one in one of our towns which has been it's an imposing building it's been empty and vacant for probably 10 years and it's now got various shrubs growing out of it and all the rest of it so I think in principle then I don't see any reason why that wouldn't seem to be a positive move and what would other members of the panel think about that? No, we would agree with that and they wanted to come under then David general questions about financial memorandum to the bill so the financial memorandum estimates a cost administrative cost to local authorities of £2.5 million from 2020 through to 2025 and it also estimates the total administrative cost of the bills to local authorities to assessors in the Government is £32 million and the estimated cost to rate payers of £68 million so it's going to net raise more money Are you broadly content with the estimates set out in the financial memorandum on the financial implications of this bill? I would say from my old point of view from Highland we certainly sat down when we were asked to estimate the cost to ourselves so I can only comment on that but yes I'm content with the figures that we provided I can only comment on we sat down when we were asked to estimate the cost of the bill towards Highland and we're talking from an administrative point of view and I'm comfortable with the figures we provided where a fair and accurate figure of what the actual cost would be When the bill first came out we were asked by COSLA by COSLA fine now we've already asked COSLA that goes for Edinburgh also all the councils were asked to sit down and have a look at it and make sure that they were comfortable and they've had a chance to feed back through COSLA so if there's any discrepancies if you get any surprises then you'll be ready for them and they'll be based on your own figures and see if we work out why they went to skew ok thank you It was just to say that we did the same exercise I think to some extent all I would say is that we had to make some fairly broad assumptions in terms of what these costs might be given the level of knowledge and detail that we had at that point Mr Orr, you wrote to us about nurseries you did I just want so that I don't know if you were here for the previous panel but they were at independent schools and they were raising the same issue that where they put a gate determines whether they get relief or not this is not covered obviously in the bill, this has been covered by secondary legislation already but do you think we should revisit this question in the context of this bill convener, can I answer that question in terms of I understand that you've been circulated with plans that I've supplied the reason for my raising this was because of the current nursery relief provisions that are already in place and I did hear some of the evidence later in the previous hearing and I can only speak from my own authorities point of view in terms of the reliefs and the provision of the relief I think the regulations are to provide 100% non-domestic rates relief from the 1st of April 18 until the 31st of March 2021 for properties wholly or mainly used as day nurseries within the meaning of the Education Act and I think my reason for writing on that was to point out I don't know whether it's an anomaly or an unintended consequence of the regulations but if I can perhaps give you some figures to illustrate where I'm coming from West Lothian Council currently has 58 nurseries which range from a total capacity of 140 places in one instance and reduce from that but generally 40 places are there abouts so 58 West Lothian Council nurseries the bulk of these are contained within school campuses if you like so they're associated with the feeder nurseries for individual primary schools and so forth and because of that and the way that they are presented on the valuation rule of the 58 nurseries that we record only two are eligible currently for the nurseries relief and that comes back to the fact that they are included as what we call a unum quid on the valuation rule so it doesn't give us the ability to claim those reliefs in terms of the number of places that represents across the authority something like a total of just under 4,000 nursery places in terms of the reliefs currently within West Lothian I mentioned that the council West Lothian council currently only qualifies for two nursery schools which get relief and there are a total of 26 nurseries which currently are eligible for the reliefs so the other 24 of those are from the private sector and these are kind of standalone buildings specifically for day nurseries and the point of sending the plans is to illustrate how in many cases not all but in many cases our nurseries are actually self-contained buildings within a larger school campus and that seems to me to be on the face of it iniquitous that standalone nurseries elsewhere are eligible for these reliefs but because of the way that we use our estate and this is all about efficiencies in terms of education and so on that that is denied to us for that reason just in terms of being a property tax or a property tax To be clear this bill just deals with the Barclay recommendations that require primary legislation the Barclay recommendation on nursery relief didn't require it so the government just did secondary legislation would you like us to revisit that in the context of this bill I think I would speaking from my own council's point of view I don't know about my colleagues here I suspect that much of what I've said applies to other authorities within Scotland and it's been a fairly constant theme throughout the hearing that you have been asking is there anything else that should be considered within the bill so I think that would be yes Yes we've also been asking to use your estate wisely it seems strange that you're using your estate wisely and being penalised for it so it's certainly something that we'll discuss after in the private session later on Thank you David you wanted to come in You mentioned free parking across West Lovien how much does that cost the council to do that I know that's something that's restricted by the council in implementing it in areas like Kirkcaldy how much does it cost for your free parking because you've got maintenance of these car parks and everything like that where we have multi-stories so a lot I think in terms I'm trying to think actually we don't have any multi-stories that aren't associated with say Livingston Town Centre which are in private ownership so our car parks are surface car parks and on street parking I can't unfortunately give you the maintenance figures for the surface car parks but inevitably there are and there are also rates paid on these surface car parks as well there's no rates paid on the street side parking but on the surface car parks but I don't have that figure unfortunately Do you have a you must learn some calculations about lost income Well until a few weeks ago and for the previous 20 years one of our car parks the only one in the authority in Linlithgow Centre of Linlithgow was led to private car parking company and the reason for that was that until 1995 or thereabouts it became used as a commuter car park so people would park up there of a morning walk along to the station and go to wherever they were going from and our transportation people at that time and I appreciate as many years ago took the view that we should go for some form of short term parking the two hours if you like in St Andrew's being the obvious comparison so similarly that was the principle it was employed there we decided to put it out to the private sector because we didn't have the expertise or resources necessarily in house to do that ourselves two effects first of all it very quickly removed the commuter aspect from parking and secondly provided us with a commercial income of around £40,000 per annum and thirdly it made the less ease responsible for payment of non-domestic rates so it was a win-win situation from the council's point of view so why then did you scrap the parking charges if there was income coming in and it's not had any positive impact on the town centre we the tendency came to an end at the end of May and the current car parking operator decided not to renew and relinquished our tendency at that time we currently have it in the market and we already have expressions of interest to do the same thing again in that particular location if nobody else has any other questions then can I thank the panel once again for the evidence today that was very useful further evidence sessions will take place on the bill at our next meeting on 26 June after which we will hear from the minister at a meeting in September the committee will also visit Eastershire on the 24th of June and at one of our meetings we will discuss the bill with local businesses, enterprises and charities I now pause briefly to allow the witnesses to leave the table thank you very much agenda item 3 is a consideration of negative instrument 177 as listed on the agenda and I refer members to paper number 3 the instrument is laid under the negative procedure which means that its provisions will come into force and the Parliament agrees to a motion to annull no motion to annull has been laid the Delegated Powers and Law Reform Committee considered the instrument its meeting on 4 June 2019 and determined that it did not need to draw the attention of the Parliament to the instrument on any grounds within its remit do members have any comments on the instrument? Andy? I think in the circumstances it's sensible but I don't understand why personal licence holders who knew there was a deadline coming up on applications but I think it's a proportionate response to the demands placed on licensing boards by the failure of people to apply to renew their licences but does the committee agree that it does not wish to make any recommendations? we do agree and thank you very much that ends the public part of the meeting and I now move this meeting into private thank you