Jul 2009 14

The Charity Commission's drive for elitist private schools and bankrupt state schools13

The Charity Comission, which is meant to have the kind mission of assisting good causes, has gone a bit Dr Jekyll and Mr Hyde all of a sudden. Its new, aggressive drive against independent schools threatens to make private education more elitist and place an unsustainable burden on the state education sector.

Most independent schools have charitable status. This gives them valuable tax reductions, allowing them to provide better facilites and lower fees. A new review just started by the Charity Commission, though, has explicitly set out to disqualify large numbers of such institutions from charitable status, and thereby hike their tax bill.

The Commission, led by career quangocrat Dame Suzi Leather, claims that the schools do not offer a public benefit, so should not be charities.

(Before dealing with that specific argument, it is worth pausing a moment to consider the bizarre career of Dame Suzi. As a career quangocrat, she has a track record of leaping into quango jobs that are utterly unrelated to her previous experience - Chairman of an NHS Trust, Deputy Chairman of the Food Standards Agency, Chairman of the Human Fertilisation and Embryology Authority, Chairman of the School Food Trust and latterly the Chairman of the Charity Commission.

Amazingly, when she took over the responsibility of regulating the UK's huge charity sector, she said “I have no experience personally of working for charities. I don’t think I had a very well developed sense of what the Charities Bill was going to do, so I can’t describe myself as a charities expert in any sense.” She is, you could say, an expert in regulating things as the Government likes, which is not necessarily the same as regulating them in the best way for an industry or for the public.)

But back to the issue at hand. The Charity Commission has apparently decided that any school that does not offer over 5% of its income in full bursaries to those that can't afford the fees should be disqualified as a charity.

As the Independent Schools Council is right to point out, that is an absurdly crude measure by which to assess whether an organisation is of public benefit or not. Providing free education is a charitable and beneficial activity, but there are plenty of other clear public benefits of these independent schools, too.

There ought to be two simple tests of whether an organisation is of public benefit and should be given charitable status:

a) what would happen if they didn't exist?

Without the 1,280 schools of the independent sector their huge number of pupils would have to be educated in the state sector at taxpayers' expense. This would cost £3 billion, and would require 500,000 school places. Given that the state sector is currently struggling to find space for its existing pupils (witness the Government's desperate £200m bailoutto provide extra spaces in primary schools this week), it is ludicrous to imagine that this could be done. Moving these kids into state schools would bring no extra tax revenue, either – their parents have already paid for their state education through taxes, but by opting out have allowed their money to be spent on other children.

As well as this huge extra burden on the state education system, there would be a loss to local communities in terms of facilities. My own school, RGS Newcastle, used to provide its sports and science facilities for local sports clubs and state schools in the area to use, and I assume it still does so. Disgracefully, having said they would take this into account the Charity Commission has instead downplayed and sidelined it as a public benefit.

There is a clear inconsitency in the fact that an organisation that provided sports facilities or science facilites alone, without using the money of fee paying pupils to do so, would presumably still be eligible for charitable status but for schools it doesn't seem to count.

b) what would happen if they didn't have charitable status?

Losing charitable status would have several effects:

i) Fees would rise. Ironically, if the Charity Commission removes charitable status from independent schools to punish them for being too economically exclusive, the first effect would be to push up fees and make them less accessible to people.

ii) As a result of the fee increase, many financially borderline pupils for whom private education is only just affordable - including those poorer pupils on 25%, 50% or 75% bursaries – would have to leave. This would lead to an exodus of pupils into the state sector, which has no room for them.

iii) Bursaries would be cut back. The Charity Commission may want there to be more bursaries available at independent schools, but removing charitable status is hardly the way to do it. Since the Government's sickening abolition of the Assisted Places Scheme, which helped large numbers of less well off children to access fee paying schools, the sector as a whole has been struggling to fill the gap by raising hundreds of millions of pounds for bursaries. Removing charitable status would increase the schools' running costs, reducing the amount of money left over for bursaries, and remove the benefits of Gift Aid and reassurance of charitable status that encourages many donors to give money to bursary campaigns.

iv) Facilities would be charged for. With a hefty tax bill to pay, the previously free provision of sports and teaching facilities to the local community would undoubtedly come under threat. If your outgoings go up, and you have assets that are currently being offered (charitably) for free then those assets would become the first place to look for added income.

v) Some schools, faced with higher costs, and falling pupil numbers, will have to close.

These schools are clearly of public benefit, in the burden they lift from the state sector, the education they provide on a not for profit basis, the bursaries they distribute and the facilities they offer to their local communities. Such enterprises should be encouraged with tax breaks, not penalised.

The Charity Commission, in seeking to purge schools from the charity register, are going to harm millions of people. The Government may have a natural class-war bias against independent schools, but this attack – like the abolition of the Assisted Places Scheme – will further limit the opportunities available to poorer children and withdraw the provision of playing fields and school facilities across the land. The super-rich will still be fine, but the kids who relied on bursaries to access top-flight education will be stuffed. This measure won’t harm the tail-coated toffs the government might like to imagine, but it will hurt those at the bottom of the pile.

I remember vividly when I was at school, and the Assisted Places Scheme was closed. A good friend of mine from a deprived background had an Assisted Place, as did his younger brother. Their youngest brother, though, was just about to apply when Tony Blair closed the Scheme. The opportunities available to his older brothers were denied to him by the Government purely on the basis of their dislike of the independent sector. In the last 12 years, that door of opportunity has gradually been opened again slightly thanks to the generosity of charitable donors and the hard fundraising work done by the schools. Now, the Charity Commission intends to slam the door once more.

By her own admission, Dame Suzi knows nothing about charities. Sadly, her ignorance is going to deprive many of educational opportunity and critically overload the state education system.

The Tories must now recognise the social benefits of independent schools and guarantee them charitable status. There can be no political loss to them of helping keep the door of opportunity open to the poor – whereas this new policy will ensure they are only accessible to the rich.

Related Posts

  • Nice Boy Nigel

    Oh dear, give people enough rope….
    “Moving these kids into state schools would bring no extra tax revenue, either – their parents have already paid for their state education through taxes, but by opting out have allowed their money to be spent on other children”.
    Before now, I hadn’t realised what philanthropists those chosing to pay for their children to have a superior education were! I’m sure those attending sink schools in Hackney are eternally grateful. Do you think Beatification might be appropriate?
    Charitable status brings with it many advantages and independent schools should be made to sing for their supper.
    Of course, anything that might even slightly go against the interests of private schools (which you and your donors quite possibly attended) is bound to get the knees jerking and mouths a foaming at the TPA offices!!
    I’m not actually altogether against independent schools but, as usual, your reports don’t even make a passing nod to balance and fairness. Hence my attempts to put things in perspective.

  • http://www.taxpayersalliance.com Mark Wallace

    Ah, I wondered how long it would take for someone to drag out that lazy canard. Nigel, you win the prize!
    I’m perfectly happy to acknowledge that parents send their kids to these schools out of self-interest. However, these charities are harnessing that self interest to do a good thing. If your ideological zeal means you would throw away those social benefits out of spite then that suggests it is you that’s foaming at the mouth!
    If a not for profit produces a product and sells it, then uses its income to provide free education and facilities to those who are less well off, that sounds pretty deserving of charitable status to me.

  • Ben

    Some thoughts…
    I don’t see what place ‘what would happen if they didn’t exist’ has as a separate head in this question. The fundamental question when we consider the rights and wrongs of charitable status is surely whether the institution’s function and effect is of public benefit to such an extent that it should be assisted via tax break. That question inevitably involves an analysis of whether removing the tax break would completely remove the institution in question, and what implications that would have. I feel that as used in your post, the scenario presented is somewhat misleading – where is it suggested that such a turn of events would result from removing charitable status, even from every independent school, never mind the ones who don’t give more than 5% of income to bursary.
    On one point, I agree, that a blunt quantitative assessment based exclusively on % of income to bursaries cannot be an adequate measure of public benefit. I’m interested to know, however, are you against quantitative assessment in itself, or just the fact that it relates only to income and bursaries? Where would you set the thresholds otherwise, and on what list of factors? Because it is hard to see how a more hands-on, qualitative approach sits with the TPA’s position on quangos – who would decide on a nuanced individual basis whether the school deserves the tax break? And who would pay for that assessment? And would that expense be worth the added societal benefit that independent schools bring in the current context, as against a system where they are treated as private institutions? In reality all of this I think is a moot point, as the legal position as to whether the practice of the institution is a matter for the Commission to examine on a case by case basis or not (as opposed from strictly dealing with the institution’s purpose) is not clear.
    Back to community access though, to what extent do schools like the Royal Grammar School actually allow usage for communities? I would be interested to see not only specific statistics on how much they provide, but also to know how such access relates to geographical proximity, or informal social connections. In the case of Newcastle RGS, for example, the local community is primarily extremely wealthy. It would be interesting to see an analysis of where private schools are generally placed in terms of the economic wealth of surrounding communities, as against the city or area more broadly, and to what extent free access was practically open to or utilised by those from less economically wealthy areas. To put my scepticisms back in the context of Newcastle, I would be surprised to see coaches coming from Byker, but less surprised to see West Jesmond Primary using the Rugby pitches. I am, however, uninformed on this point and so would be interested to see specific information.
    This leads to a broader issue, of culture and context. It seems to me that a key question in understanding the genuine public value of these institutions is the openness and breadth of their provision of services of broader public interest. So apart from community access, to what extent do independent schools admit children and award a bursary who do not fit the cultural mould that the school preserves? Presumably interview and some kind of cultural assessment is in a key part of the admissions process in most independent schools? And (perhaps this is besides the point, but I can’t help but feel it to be relevant) past that stage, to what extent will a school then continue to include, encourage and further a child who does not fit with the school’s culture and outlook? Not just in terms of the way children are dealt with top-down, but how they relate to the cultures that continue to thrive in many of these schools.
    Finally (for now!), ideology … I think it would be misleading to suggest that ideology is only playing a role on one side of this debate – the idea that really this is about cool-headed rationality against rabid ideological crusading (this is perhaps more relevant to articles I’ve seen elsewhere). We debate the specifics, yes, and the practical considerations of harm and benefit. But ideological allegiance permeates every discussion I see on it. To pretend that it isn’t there, or downplay it I think is a sleight of hand.

  • Nice Boy Nigel

    I can assure you Mark that I never foam at the mouth! Or at least not often.
    Whilst it does not sit comfortably with me that parents can purchase a better education for their children, I’m not in favour of abolishing independent schools, so your comments about ideological zeal seem rather harsh. Believe me, I’m no leftie!
    My point was that if an independent school is granted charitable status and enjoys the benefits that such status brings, it doesn’t seem altogether unreasonable for the state to measure just how much that independent school “puts back” into the community.

  • Henwood, Herefordshire.

    As the indepedant sector educates only 7% of the nation’s children, what is the fuss about? As usual, excellence is to be decried by those who can only aspire to it.
    It is interesting to note that other countries so admire the standards of education available through the public school ethos that they have adopted them in their own country. Thy have not, as far as I am aware, adopted the mantle of the comprehensive system.

  • CSP

    A few points.
    Mark Wallace states “If a not for profit produces a product and sells it, then uses its income to provide free education and facilities to those who are less well off, that sounds pretty deserving of charitable status to me.”
    Quite right. That is exactly how a number of charities operate. A good example would be St John Ambulance and the Red Cross, who sell first aid training profitably to private clients in order to raise revenue for charitable activities.
    Secondly, the argument about private schools being an unfair advantage. If people have a problem, they should take it up with the state sector and their standards rather than trying to bring the private down. Surely that is more constructive.
    Finally, we should also take into account that many private schools are selective. Far from conveying an unfair advantage, the pupils at these schools have already displayed that they are a notch above. Why not encourage that success. The real shame is that there are no state grammar schools for them to go to! Again, that is the fault of central government with their comprehensive ideal, and that is where the ire should be directed.
    Too much criticism of the private sector seems to be motivated more by the green-eyed monster than any genuine desire to improve the education of our young.

  • Kevin Elks

    The word ‘Public’ when attached to the word ‘School’ is a perversion of the English language peculiar to the UK and a confusion to every other country in the world. They were originally set up when the ‘public’ was exclusively the ruling classes and the rest of us (much like now) were non-persons and slaves in all but name.
    The real downside to these establishments is the inability to produce copious quantities of technically qualified people, but, rather teach the students how to convince others of how they might be superior. Top civil servants are traditionally drawn from these schools and to the disadvantage, even exclusion of those that are far better qualified but lack the social class, this is why Lord Digby Jones said ‘half of civil servants deserve the sack’, he was of course referring to the top jobs. These people that convince others that their excrement does not smell are the main reason why our country is going down the pan.
    I was once offered a job in the ministry inspectorate until the ‘door knob’ or exit question, “by the way Mr Elks, where was you educated?”. Needless to say, in spite of all the “qualifications and experience we (they) could possibly wish for”, I received a letter saying I was too qualified for the job.
    Public Schools are a menace to real achievement and hold this country in a time warp of privilege, they should be excluded from any charitable status, they damage us as much or more than the Masons.
    Kevin Elks.

  • CSP

    I haven’t got every job I went to an interview for either, even though I was qualified. I didn’t assume it was down to where I went to school though. Maybe the some other guy they interviewed just did better?
    Can’t really see what’s so privileged about having to pay for your education, either. Sounds like quite the opposite. I tend to think of freebies as a privilege…
    I think there is a huge, oft-incorrect assumption out there that all independently-schooled people had rich parents. Experience tells me different. I guess my folks chose not to spend their money on booze and fags. Maybe that was my privilege.

  • Kevin Elks

    The last poster has not read my post properly, most irritating.
    Read again please and note I was OFFERED the job “I was once offered a job in the ministry inspectorate until the ‘door knob’ or exit question,..” and why would I receive a letter saying I was “too qualified for the job” if someone better did in fact come along? What about the comments of Lord Digby Jones (try reading his full comments to MP’s. Ever seen the comedy ‘Yes Minister’, comedy is often just a slight exaggeration of the truth, it is in fact a reality for the civil service.
    We need change where ability and common sense rules, not social class or privilege. Perhaps the Tax Payers Alliance is not ready for such a concept of change and is just another version of the same old entrenched thinking, not something I can subscribe to.
    Poster of the previous message, you are too quick to dismiss and put people with opposing or different views down, you do the TPA and yourself a disservice.
    Kevin Elks.

  • Graham L Tasker

    Independent schools is not the only area this quangocrat is attaching. I am a member of a re-enactment society which is registered with the Charity Commission. They are making a blatant attempt to strip us of our status. We provide support to schools with our educational team and place groups into houses and castles to do display. As we are not seen as ‘PC’ we are to have our status removed. Of coarse we will fight it all the way.

  • CSP

    No intent to put anyone down Kevin.
    That said, your story doesn’t ring entirely true. Offered a job, you say? It sounded more like you were at the interview stage. I wouldn’t consider myself subject to an offer until I had received it in writing.
    Did you have it in writing?
    It sounds more like you had a late-stage interview that went very well (in your opinion) that ultimately didn’t work out. It happens. Very irritating when it does though, I must admit. Had a couple like that I thought were dead-certs back when I was starting out.
    It also looks like you didn’t read my post carefully either, though. I pointed out (from very personal experience) that the assumption of independent schooling = class and privilege is wrong. Please don’t bang on about it when you know it isn’t the case. Many of us went without to get the education we deserved.
    Funnily enough, none of my old primary school friends envied me when they saw the piles of homework, enforced attendance and full timetable I worked to while they went to the local comprehensive. They weren’t bitter that I was getting a better secondary education; if anything it was more a case of “rather you than me mate”.
    Graham – what are you re-enacting? Please don’t tell me it’s something with Cromwell in it! Our current lot of ultra-PC zealots would never go for that!

  • Kevin Elks

    CSP wrote:
    “That said, your story doesn’t ring entirely true”
    So you are calling me a liar now!
    I will not support any organisation that is not 100% for equality and merit based appointments; this campaign to support privilege and fraudulent claims for charitable status is in my opinion misguided and inappropriate. The article squirms to find excuses to support a system of privilege that has failed this country and keeps us in a time warp. If the Tax Payers Alliance is prepared to waste time and effort on such a campaign as this then I want nothing to do with the organisation.
    Kevin Elks
    (please note a real name and accountable.)

  • CSP

    “So you are calling me a liar now!”
    I’d like to think you were only exaggerating or interpreting creatively for dramatic effect.
    As for your comments about TPA and independent schooling, I find it somewhat strange of you to criticise others for perceived privilege when you earlier told us you attempted to get a cushy job in the cushiest part of the cushy public sector – a job and pension that would have been funded by confiscating money from private individuals and businesses.
    But feel free to have nothing to do with the likes of me. That is your right.
    All the best.