Worth selling the second car to save his education?

27th February 2009 at 00:00
Of course, old chap. Which explains why independent schools do not seem too worried about the recession - yet. They're even planning to put their fees up next year. David Rogers reports

In any other business it would be reasonable to expect institutions that charge money for a service - when a free alternative exists - would be under severe financial pressure and, in times of economic slowdown, even close to collapse.

In the past few months, the recession has sent many businesses to the wall. However, listen to those in the independent sector - and it is worth remembering that these schools are businesses - and they seem to be the equivalent of the pound shops and discount stores that many are now flocking to: recession-proof.

A spokeswoman for the Independent Schools Council puts it like this. "Parents will do anything they can to keep their children in," she says, "whether that be sacrifice holidays, not have a second car, maybe even sell a piece of art."

Selling a piece of art might not be an option for most. But, clearly, pulling children out of fee-paying schools is something that parents will do only when all other options have been exhausted.

In many ways, the independent schools sector is not a normal business area. Where industries can be boiled down to bricks and mortar, sales projections, turnover, profits and losses - ie. the bottom line - schools deal with a very different commodity, namely the hopes and dreams of the children they teach - and those of their parents. Their principal reason for existence is to educate, not to make money.

Charles Robinson, a director of the private schools group Cognita, says: "Parents do a lot of things for their children. If they can give them a head start in life, then they will bust a gut for that. If a child is happy in a school, the last thing they will want to do is take them out."

While car manufacturers are putting their workforces on four-day weeks or enforced leave for a few months, the Headmasters' and Headmistresses' Conference, which represents 250 of the leading independent schools, expects its members to be raising fees next year. Most are doing the number crunching now and will break the news to parents during the summer term.

Bernard Trafford, chairman of the association and head of the Royal Grammar School in Newcastle upon Tyne, where annual fees are about Pounds 9,000, expects to be increasing the charges again for 2009-10. Last year, he says, they went up 5 per cent, the year before by 7 per cent.

"I don't think many of us will freeze prices," Mr Trafford says. "If we do, we'll be cutting what we do."

Sending a child to a fee-paying school is not a necessity and should be viewed, if not as a luxury, as something that is both aspirational and sensible to do. You get what you pay for.

"We compromise on quality at our peril," Mr Trafford warns. "If we hold prices, do hardworking parents want fewer A-level courses or fewer GCSE classes? Independent schools are selling quality. If you are selling a Mercedes, you don't take the thrills off it."

However, it would be wrong to suggest that Mr Trafford sounds like a man sticking his head in the sand. In the past few years, many independent school fees have been paid from City bonuses or the equity out of ballooning house prices. Access to that sort of credit has mostly come to an end. Mr Trafford knows it would be foolhardy to write off financial difficulties.

"There will be some people who are struggling," he said, "and I expect it is a problem in London and the South East, where soaring house prices have helped pay for fees. Our schools are realistic and will plan accordingly."

ISC figures from the last recession show that economic downturns do, eventually, have an impact on parents' ability to afford fees. However, schools feel the impact of a slump just as other parts of the economy start to come out of it. The figures show that pupil numbers were hit hardest at the tail end of the 1990s recession - in 1993.

Only the main teaching union working in the private sector seems to have expressed concerns over the impact of an economy in decline. John Richardson, the Association of Teachers and Lecturers' national official for independent schools, reckons the heaviest impact on parents will fall this September, given the time lag of 18 months between a recession starting and its affect on schools. He is expecting some not to renew school places when the new academic year starts.

"This recession started in April 2008 and we're expecting a major fallout from September," he says.

Already some prep schools are having to close, he says, while he knows of three senior schools where teacher numbers have been cut to balance the books. He is reluctant to name them in case he causes - in recession parlance - a run.

"Parents could take their kids out once they get a whiff that redundancies are being made and move them to a more solid school, which of course just makes things worse for the first school."

He expects prep schools to be most at risk: budget-conscious parents will send their children to a local junior school before making the switch to an independent when they reach secondary school age.

If five children in a 100-place school are pulled out, that represents a 5 per cent drop in income. Prep schools tend to be smaller. When margins are squeezed, that could prove the tipping point.

Cognita, which runs independent schools for nursery, prep and secondary pupils, reports that numbers are holding up. "We're getting messages about the economy, and then there's the schools," says Mr Robinson. "Things are tough, but children are still there. Open days are full and busy. There will be failures, but I would be surprised if the numbers kicked up dramatically. You've got to remember that the majority of people in a recession don't lose their jobs."

He thinks small, single-sex boarding prep schools are most at risk. Some are already merging, and those in the sector expect more of that. Diana Watkins, chairman of the Independent Association of Prep Schools, says: "Schools see strength in numbers."

However, for the time being, she says, school rolls are not declining. "The numbers have not changed at the moment. Schools are telling us that inquiries are more serious, rather than parents coming just to have a look."

Independent schools are bullish about their chances of riding out the economic storm. Some are getting their finances in order before things get really bad.

Some will fail - it would be hard not to be touched by the ravages of the worst global economic downturn in living memory - but a wholesale collapse in the sector does not seem imminent.

Right now, parents appear to be deciding that cutting back on other aspects of their spending is more important than letting the recession interfere with their children's education.


The number of pupils who have to be withdrawn from schools for financial reasons represents 0.2 per cent of total pupil rolls, says the Headmasters' and Headmistresses' Conference.

Demand for places at 13 is up by 7.5 per cent on 2008; the figure for sixth form places has increased 8.2 per cent on last year. There are more than two applicants for every place available for 11-year-olds.

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