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

July 14, 2009 3:24 PM

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.

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.

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