Trading watchdog rules scheme contravenes competition laws.
Graeme Paton reports
Plans to provide more subsidised places in private schools for children from poor backgrounds have fallen foul of the Office of Fair Trading.
The trading watchdog has said the Independent Schools Council recommendation that all large bursaries should be means-tested, would contravene competition laws.
The ruling was made during talks with the council as part of the OFT's two-year investigation into allegations of fee-fixing between private schools. The news emerged on the eve of the annual meeting of the Headmasters' and Headmistresses' Conference.
Jonathan Shephard, general secretary of the Independent Schools Council, the umbrella group for most private schools, said it hoped to develop rules for giving fee assistance across the sector. Scholarships, which are based solely on academic ability, have meant that well-off families often benefit from assistance. The plan was to replace them with means-tested bursaries.
Mr Shephard said the move, affecting any pupil getting more than 10 per cent towards their fees, would have been backed by the majority of private schools. But the OFT says that because schools are private enterprises, potentially competing for the same pupils, one sector-wide policy could benefit some schools to the detriment of others. Smaller schools unable to offer as many bursaries, were likely to be left behind by such a policy.
Mr Shephard said: "Schools are generally in favour of moving from scholarships to means-tested bursaries. If children are bright but from a poor background, they should have access to up to 100 per cent fee reduction. However, the OFT would not allow us to do that in a concerted way because they consider the use of scholarships and bursaries as a means of competing."
The OFT is currently investigating whether some of the country's leading private schools, including Eton and Winchester, broke the law by colluding to fix fees. Schools found guilty could face fines totalling millions of pounds. According to the ISC's annual census, published in May, 32 per cent of all pupils now receive some form of assistance with fees and schools themselves are the major source of help.
In total schools with charitable status gave away pound;302 million in 2004, amounting to 7.4 per cent of their turnover, most of it in assistance with fees. Sir Peter Lampl, the educational philanthropist and chairman of the Sutton Trust, told The TES earlier this month that most private schools are still not doing enough to help bright children from poor backgrounds, saying that most fee help goes to families who can afford places. Some of the country's best-known private schools, including Manchester grammar, already offer fully means-tested support.
Martin Stephen, head of the pound;17,500-a-year St Paul's school, west London, and former chair of the Headmasters' and Headmistresses'
Conference, said last year that only children of the lowest-paid parents should benefit from large grants. The view was backed by Graham Able, head of Dulwich College, another former HMC chair. He said free places at his school would go only to families with an annual income below pound;12,000.
At the pound;6,930-a-year Belvedere school, Liverpool, the owners - the Sutton Trust and Girls' Day School Trust - contribute around pound;2 million a year to pupil fees.
A spokeswoman for the OFT said: "If independent schools choose to get together to set bursary levels it may well fall foul of competition law.
Scholarships and bursaries may be seen as one way in which schools can compete in order to attract pupils and any blanket policy such as this is clearly going to affect some schools more than others."
The watchdog said it was unlikely it would make a ruling on fee-fixing before the end of the year. The HMC conference, at the De Vere Belfry Hotel, Warwickshire, will highlight increased co-operation between private and state schools.
The conference will also feature speeches by Mark Thompson, the BBC director general, and Sir Ken Robinson, Professor Emeritus of Warwick university and an expert on innovation and education.