Group 6 is headed "Charity test—public benefit". Amendment 53, in the name of Mary Scanlon, is grouped with amendment 54.

With amendment 53, I seek to delete the words

"including any charge or fee", which were inserted by an amendment moved by John Home Robertson at stage 2. Throughout the bill's progress, I have raised concerns over the phrase "unduly restrictive" in relation to public benefit. Many witnesses, including from OSCR, have explained how the term is likely to be interpreted. That has given some reassurance, although the phrase "unduly restrictive" is open to wide and variable interpretation. However, I have no doubt that the meaning will become enshrined in law as precedents are set.

The advancement of education is enshrined in a 1601 statute as a charitable purpose. There is no need for secondary justification for tax purposes. However, the addition of the words "any charge or fee" over and above "unduly restrictive" is a step too far.

The issue behind John Home Robertson's amendment was independent schools. It is surely for parents to decide whether they wish to make financial sacrifices to pay for their children's education on top of what they pay in income tax and council tax; it is surely for parents—not politicians or the Office of the Scottish Charity Regulator—to decide whether they are getting value for money.

All independent schools operate on a not-for-profit basis. Any revenue surpluses are ploughed back into investment in the provision of high-quality education, so how can OSCR say that a fee is too high? How can OSCR decide whether the education of our children is too high quality? If the overheads of some of our old independent schools, in their historic buildings and grounds, require a higher fee, it is surely for the parents to decide whether the money is worth paying. We are talking about the one chance that every parent gets to educate their child.

Section 8 challenges the basic tenet of individuals to exercise freedom of choice on how much of their own money they wish to spend and how they wish to spend it—whether it be on their children's education or to pay for treatment in an independent hospital. The inclusion of section 8 brings the politics of envy and not the politics of reason. The end result could be the loss of charitable status for tax purposes. Fees would have to be raised by up to 5 per cent, meaning that there would be less money to pay for bursaries to support those from less well-off families. The result would be elitism and exclusion, not the choice and inclusion that we have at present.

Independent schools should be deemed as charities, as they save the taxpayer £150 million a year. They contribute hugely to the quality of Scottish education and Scottish life. They cannot be deemed to be "unduly restrictive" on the basis of a charge or a fee. As I said, the advancement of education is a charitable purpose and requires no secondary justification. All surplus income is reinvested into serving pupils with the best education.

Inland Revenue issues are the responsibility of the Westminster Parliament. Amendment 53 refers to the loss of rates relief and anything else that relates to the Scottish Parliament.

I move amendment 53.

There are two separate issues and my amendment 54 tries to tease out what counts as "unduly restrictive". I shall be interested in what ministers have to say in response and I would like them to give assurances on the points that I raise.

A housing association clearly benefits its tenants, but it could be argued that it does not provide public benefit. Similarly, it could be argued that a faith charity that is restricted to members of that faith is "unduly restrictive". It could also be argued that a regimental association or a former pupils association was "unduly restrictive". I think that all those organisations can be genuine charities and can benefit the community. Amendment 54 says that an organisation can be a bona fide charity if its membership is restricted but it benefits the people in the group that it is supposed to benefit and does not discriminate unfairly between them, especially if

"the community as a whole benefits directly or indirectly".

Various people have criticised the wording of the amendment, as they always do, but I think that the idea behind it is important and I hope that the minister will make it clear that, even without amendment 54, "unduly restrictive" will be interpreted in a reasonable fashion.

I turn to amendment 53, in the name of Mary Scanlon. I supported John Home Robertson's amendment at stage 2, because the issue goes wider than fee-paying schools and covers a whole range of organisations, clubs, societies and associations. For example, a golf club that charges a modest fee and operates as a community enterprise can be a bona fide charity. However, a golf club that charges high fees and might not allow people in would not, in my view, be a charity, although running such a club is a perfectly respectable activity. The level of charges is a legitimate point for OSCR to take into account.

The issue of fee-paying schools has aerated some people in the press. It is worth making it clear to members that the Inland Revenue is a United Kingdom enterprise and tries to run things on a level playing field across the UK. The procedures of the Inland Revenue, as supported by legal judgments in the past, are such that, where there is a diversion between Scottish law and English law, English law is followed. Therefore, if by any remote chance OSCR were to interpret the bill as indicating that some fee-paying schools did not provide public benefit—and that is up to OSCR's chief executive and her colleagues—so long as the Westminster law, as interpreted by the Charity Commission for England and Wales, accepted fee-paying schools as charities, the Inland Revenue would go with the English decision.

People should not get too excited about the subject. A lot of people in the fee-paying sector genuinely feel that they can demonstrate a public benefit and I feel that there is no risk of their losing charitable status, but that is up to OSCR. We are trying to supply an independent organisation with sensible rules and I believe that we are achieving that.

If the minister says the right things, I will not press amendment 54, but I shall certainly vote against amendment 53.

I call John Home Robertson, to be followed by Christine Grahame, but I can give you only a minute each.

That is disappointing.

I have been accused of many things in my life, but never before have I been accused of indulging in the politics of envy. Amendment 53 would delete the change that was made by the amendment that I moved at stage 2 on 20 April, which was agreed to by eight votes to one. The single vote against it was Mary Scanlon's. My amendment sought to make crystal clear the meaning of the public benefit test in section 8. I wanted to emphasise that public benefit means just that—benefit to the public, not benefit that is restricted to people who can afford to purchase a particular service. The provision of benefits for financially exclusive groups of people is not what any reasonable person would recognise as a public benefit. As amended at stage 2, section 8 sets a realistic and fair test for OSCR, the independent regulator, to apply. The same test will apply to all charitable organisations, not just schools.

I read in today's press that some people are already looking for loopholes that might enable organisations that do not pass the public benefit test—and therefore do not satisfy the criteria for registration as Scottish charities—to get charitable tax relief. That would be an absurd state of affairs, but it raises bigger questions for the Inland Revenue than it does for us. It might be a useful start to establish that Musselburgh Grammar School, which is genuinely a public school, should not have to pay more rates than Loretto School, which is not quite so public, as is the case at present.

My former colleagues at Westminster are about to resume their consideration of the charities legislation for the rest of the United Kingdom. I suggest that they would do well to adopt the sound principle that we are establishing on the basis of wide political and public consensus here in Scotland. I urge the Parliament to reject amendment 53.

We need a little more light and a little less heat. Section 8 applies not just to independent schools, but to a wide spectrum of organisations, of which private hospitals and sports clubs are just two examples. The issue is proportionality. The test is whether the payment made is so great that it is unduly restrictive, which means that the organisation that charges the fee is not inclusive. That is a matter not for the Parliament, but for OSCR.

Mention has been made of the Inland Revenue. I understand that, as Donald Gorrie highlighted, the Inland Revenue will completely ignore the position that OSCR takes on charitable status in that it will treat organisations that have been disarmed of charitable status as if they were charities. I think that that is something to get excited about. It makes me despair when Westminster is prepared to override the will of the Scottish Parliament to do something for Scotland. That is not a constitutional point; it is a fact.

You must finish now.

The only reason why I feel that amendment 54 cannot be supported is that its use of the phrase "directly or indirectly" in paragraph (c) of the subsection that it seeks to insert is very woolly.

I ask the minister to be brief.

I will be as brief as I can.

Since the bill was introduced, an attempt has been made to turn its passage into an argument about people's views on a particular part of the independent sector, which of course is highly diverse. That is not what the bill is about. The issue of how people choose to spend their money on their children would be more appropriate to raise in a debate about education. We are talking about the regulation of charities and those organisations that are entitled to call themselves charities.

Amendment 53 seeks to reverse an amendment that was made at stage 2. It would remove the reference in the public benefit test that highlights the fact that, in deciding whether a body provides public benefit, OSCR can consider whether any charge or fee is unduly restrictive. The Executive did not object to that amendment at stage 2 because it did not alter the public benefit test. It was always intended that OSCR would be able to consider charging as part of the test and the amendment made that clear in the bill. That does not mean that a body will automatically fail the test because it charges a fee, but OSCR will have to have regard to that issue.

I hope that I can reassure all charities that charging a fee so that access is granted to services will not automatically prevent bodies from being deemed as charities. Whether charitable status is granted will depend on individual circumstances and OSCR will consider each body on a case-by-case basis.

Amendment 54 is intended to address an issue that Donald Gorrie raised at stage 2. He seeks to clarify that the public benefit test does not prevent a body that is targeted at specific groups from being deemed as charitable. I assure him that, as it stands, the bill does not prevent that. That is made clear by the fact that the public benefit provision refers specifically to circumstances in which the benefit is provided only to a section of the public.

Although I have no difficulty in offering reassurance on the point, I have some concern about the possible impact of amendment 54 as drafted. Because it outlines which conditions should never be considered as unduly restrictive, OSCR could find itself unable to deny charitable status to bodies with a discriminatory membership condition that would otherwise have been considered to be unduly restrictive. Moreover, some membership bodies that charge different rates for students or older people, for example, might be viewed under the provision as discriminating between members.

As I said, the public benefit test as it stands will include those bodies that are targeted at specific groups. I hope that what I have said will reassure Donald Gorrie. On that basis and because of the possible problems that I have highlighted, I ask him not to move amendment 54.

I emphasise that at the heart of the purpose of the public benefit test is the desire to give confidence to the charitable sector and to those who wish to give of their time and money. There is no presumption against or in favour of any group. Equally, any group that seeks charitable status should be able to establish public benefit. I am confident that OSCR, as an independent regulator, can take a rational, dispassionate and objective view of these matters. I believe that the public benefit test, as identified in the bill, gives sufficient guidance on the matter.

As we have run out of time, I ask Mary Scanlon whether she wants to press or withdraw amendment 53.

I would like to press amendment 53.

The question is, that amendment 53 be agreed to. Are we agreed?

Members:

No.

There will be a division.

Division number 5

For: Aitken, Bill, Brocklebank, Mr Ted, Davidson, Mr David, Douglas-Hamilton, Lord James, Fergusson, Alex, Fraser, Murdo, Gallie, Phil, Goldie, Miss Annabel, Johnstone, Alex, McGrigor, Mr Jamie, McLetchie, David, Milne, Mrs Nanette, Mitchell, Margaret, Monteith, Mr Brian, Scanlon, Mary, Scott, John, Tosh, Murray
Against: Adam, Brian, Arbuckle, Mr Andrew, Baillie, Jackie, Baird, Shiona, Baker, Richard, Ballance, Chris, Ballard, Mark, Barrie, Scott, Boyack, Sarah, Brankin, Rhona, Brown, Robert, Butler, Bill, Byrne, Ms Rosemary, Canavan, Dennis, Chisholm, Malcolm, Craigie, Cathie, Crawford, Bruce, Cunningham, Roseanna, Curran, Ms Margaret, Deacon, Susan, Eadie, Helen, Ewing, Fergus, Ewing, Mrs Margaret, Fabiani, Linda, Ferguson, Patricia, Finnie, Ross, Fox, Colin, Gibson, Rob, Glen, Marlyn, Gorrie, Donald, Grahame, Christine, Harper, Robin, Harvie, Patrick, Henry, Hugh, Home Robertson, John, Hughes, Janis, Hyslop, Fiona, Ingram, Mr Adam, Jackson, Dr Sylvia, Jackson, Gordon, Jamieson, Cathy, Jamieson, Margaret, Kerr, Mr Andy, Lamont, Johann, Leckie, Carolyn, Livingstone, Marilyn, Lyon, George, MacAskill, Mr Kenny, Macdonald, Lewis, Macintosh, Mr Kenneth, Maclean, Kate, Macmillan, Maureen, Martin, Paul, Marwick, Tricia, Mather, Jim, Matheson, Michael, Maxwell, Mr Stewart, May, Christine, McAveety, Mr Frank, McCabe, Mr Tom, McFee, Mr Bruce, McMahon, Michael, McNeil, Mr Duncan, McNeill, Pauline, McNulty, Des, Morgan, Alasdair, Morrison, Mr Alasdair, Muldoon, Bristow, Mulligan, Mrs Mary, Munro, John Farquhar, Murray, Dr Elaine, Neil, Alex, Oldfather, Irene, Peacock, Peter, Peattie, Cathy, Pringle, Mike, Purvis, Jeremy, Radcliffe, Nora, Robson, Euan, Ruskell, Mr Mark, Scott, Eleanor, Scott, Tavish, Smith, Elaine, Smith, Iain, Smith, Margaret, Stephen, Nicol, Stevenson, Stewart, Stone, Mr Jamie, Sturgeon, Nicola, Swinburne, John, Swinney, Mr John, Turner, Dr Jean, Wallace, Mr Jim, Watson, Mike, Welsh, Mr Andrew, White, Ms Sandra, Whitefield, Karen, Wilson, Allan

The result of the division is: For 17, Against 98, Abstentions 0.

Amendment 53 disagreed to.

Amendment 54 not moved.