Independents face giving more charity

7th November 2008 at 00:00

The failure of some Scottish independent schools to pass public benefit tests could be followed by private schools in England having to give more money away in means-tested bursaries, lawyers warn.

Four schools in Scotland have been told that they risk losing their charitable status, after failing to spend enough money on bursaries for children from poorer homes.

Doing good work in the community and awarding scholarships for academic or sporting excellence will not be enough for Scottish schools to pass public benefit scrutiny, the Office of the Scottish Charity Regulator (OSCR) has indicated.

Now lawyers are warning that the Charity Commission may follow suit. Barney Northover, of Veale Wasbrough Lawyers, said: "OSCR's approach can only increase the likelihood that independent schools in England and Wales will be expected to demonstrate most of their public benefit by offering means-tested fee support."

Alan Boyd, a charities specialist with McGrigors law firm, said: "There has been a hope among some private schools that this review would be largely a formality, but unfortunately this is not the case. The Scottish charity regulator's actions are likely to set a precedent for the English counterpart."

Mr Northover, whose firm represents more than 700 private schools, said schools needed to act now to assess how much money they were putting into bursaries.

Charity laws in England and Scotland are different and decisions in one country are not binding on another. But private schools in both countries must prove they contribute to the public benefit.

In Scotland, four of the 11 private schools recently examined were told they have a year to show how they will widen access. At Merchiston Castle School in Edinburgh, 41 per cent of pupils receive fee assistance, but only 3.7 per cent receive means-tested help. The other three schools that failed were St Leonards School in St Andrews, Hutchesons' Grammar in Glasgow and Lomond School in Helensburgh.

Gordonstoun School, Prince Charles's alma mater, passed the test even though it had the highest fees of any of the schools, with boarding fees reaching Pounds 24,900. Just under a third of pupils receive fee assistance, but a much higher 13.4 per cent are means-tested.

Schools in England are still waiting for the final guidance by the Charity Commission on public benefit tests. It is due by the end of the year, but pilot tests have already started with five schools.

Earlier drafts made clear that schools would be expected to make more places available to children who could not afford their fees.

It also suggested that building strong links with state schools could count towards the test. But some critics have said that too much emphasis has been put on bursaries over state-school partnerships, which can benefit more pupils.

David Russell, chief executive of the Bedford Charity (Harpur Trust), which oversees four independent schools in Bedford, said: "It is right to keep giving bursaries, which will affect individuals throughout their lives. But we must be careful not to place undue emphasis on these at the expense of innovative partnerships with maintained schools."

According to the Independent Schools Council, which represents almost 1,300 schools, just over 30 per cent of pupils received some fee assistance last year. There is no breakdown of how many of those received means-tested help.

As The TES reported in September, a survey by accountancy firm Horwath Clark Whitehill found that private schools spent more on bursaries than scholarships last year for the first time.

Pounds 100 MILLION TAX BREAKS AT RISK IF CHARITABLE STATUS IS LOST

Private schools in England and Wales will have to follow the Charity Commission's public benefit guidelines or risk losing their charitable status, which is worth Pounds 100 million a year in tax breaks.

If schools fail the tests, they will likely be given advice on how to improve their performance and time to turn things around.

Should they continue to fail, the commission could appoint its own trustees to run the schools.

But for schools that have long enjoyed the benefits of being a charity, the option of dropping charitable status and turning into private business is a difficult one.

All of the charity's assets have to serve the original charitable purposes. For a private school, this would mean selling its buildings and land and then using that money, along with any cash in its coffers, in line with its original charitable aim.

This process might culminate with donating the money to another education charity or setting up a charitable fund.

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