The bar set to justify charitable status needs to be higher, not lower

Fiona Millar's picture
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An important court case began in the High Court last week when the Independent Schools Council launched its bid to overturn guidance about what fee paying schools should do to justify charitable status.

A dispute about charitable status has been simmering for several years. The 2006 Charities Act removed the presumption that all charities providing education also automatically provide public benefit. The then Labour government then asked the Charity Commission to explain what that would mean in practice. The Commission drew up a new "public benefit test" which ruled that people in poverty should not be excluded from these ‘charities’  services, that their benefits should be made available to a ‘sufficient’ section of the population, be quantifiable and reported on annually.

Many schools assumed that increasing the number of bursaries would tick this box, others barely changed and in 2009, the Charity Commission put a sample five schools to the test. Two failed because they provided too few bursaries, prompting the Independent Schools Council, which oversees around a thousand private charity schools, to request leave to judicially review the Charity Commission’s guidance.

The ISC case rests on the argument that charitable private schools already educate a ‘sufficiently wide’ section of the public to a very high standard. Because they don't explicitly bar entry to anyone (technically anyone can apply ) their activities should be judged automatically 'charitable', even though most parents could not afford fees that might equal the average net earnings of some families.

At the Local Schools Network, we believe that fee paying schools offering smaller class sizes, access to the top universities, high level networks and strings to pull should not be subsidised by the rest of us unconditionally. Many actually provide a public “disbenefit”; they divide young people by race, class and family income, act as a break on social cohesion as well as social mobility.

Bursaries, many of which do not fully cover the fees and are often offered to siblings, families of alumni and staff, should not provide cover for charitable status. Most are linked to academically selective tests more likely to favour the impoverished middle classes than the socially excluded poor, while also depriving many state schools of the academic mix they need to do well,

The blanket removal of charitable status is a more complicated legal process than many assume and there are no signs that any political party will be changing charity law in the near future. However the bar set by the Charity Commission could be even higher.  The Education Review Group, which I support, has been given permission to intervene in the case next week. Its submission suggests that, rather than turfing out the Charity Commission’s guidance, we should require more exacting eligibility criteria for bursaries (I favour focussing them on those pupils most at risk of exclusion), partnerships that make a quantifiable impact on the performance of local state schools and their most needy, rather than most able, pupils and more rigorous methods of measuring that impact. Please help by letting us know what, if anything, the fee-paying schools do to help the least well off pupils in your local community

 

 

 

 

 

 
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Rob Davies's picture
Fri, 20/05/2011 - 19:49

How can tax payers subsidise the schooling of students whose parents have opted out of the free, high quality state education system. It would be a disgrace and the £100M that this would cost could be far better spent supporting those students who really need this.

A addendum to this is the conversion of failing private schools to free schools. How can this be justified whist state schools are having to make redundancies and cut essential services such as Connexions and the provision of subsidised work experience placements.

There is a very clear set of priorities being laid out here that are socially divisive and will be hard, if not impossible, to undo.

Andy Smithers's picture
Fri, 20/05/2011 - 20:17

Does anyone know how many children in England are in private education.

If all these children were to move back to the state sector how would the state sector cope ?

Are the parents of fee paying pupils actually paying twice (their choice admittedly) and therefore effectively improving state education for the rest of us.

I do not know the answers to these questions but wonder who is subsidising who.

Fiona Millar's picture
Fri, 20/05/2011 - 21:06

The ISC schools educate around 500,000 children in around 1200 schools, although not all are charitable.

The state sector would benefit from the return of these families. They would contribute to more balanced intakes in many schools, which would improve the education of the children in those schools. Society generally would benefit in ways that may not be immediately measurable. There would be a beneficial impact on social mobility since these schools provide networks that fast track their pupils into certain universities, jobs and internships, crowding out less well off children who don't have those contacts.

However no-one is suggesting closing them down, simply suggesting that they do actually engage in some real charitable activity in return for the subsidy that status attracts.

Janet Downs's picture
Sat, 21/05/2011 - 13:50

7% of UK children are educated privately - 93% are not*. Yet this 7% are disproportionately favoured in employment opportunities and higher education. The money is paying for entry into a social network which favours its own. This is recognised by the Minister for Skills and Lifelong Learning http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110304/debt...

"...we know that social networks and familial understanding are the basis on which those who are already advantaged cement their advantage. It is not aspiration or ambition but wherewithal that limits working class people from achieving what they might... Working class parents and grandparents seek exactly the same for their children and grandchildren as middle class people. What they lack is the means to achieve those ambitions because of a gap in wherewithal. They do not have the social and familial networks that understand the process by which their talents might be turned into actuality through higher learning."

"Social networks" - that is what private education buys - not necessarily a better education. OECD confirms that UK state schools outperform privately managed schools when social-economic background is taken into account** and recent research discussed on this site shows that students from comprehensive schools achieve higher degrees than students of comparable ability from independent schools. And yet there is a perception amongst many politicians, commentators and parents that the latter are always superior to the former, and those who attend the latter are somehow better than those who do not.

As Fiona says, no-one is suggesting that charitable independent schools close. However, their charitable status brings them tax advantages. Taxpayers, therefore, can reasonably expect some recompense for these advantages. And the taxpayers who are parents of the 93% in state education should be able to expect that their children can compete fairly and not be disadvantaged when independent schools provide access to the connections that Fiona highlighted.

*OECD Economic Surveys: United Kingdom 2011: Reforming Education in England

**http://www.oecd.org/dataoecd/33/8/46624007.pdf

sarah davie's picture
Wed, 08/06/2011 - 17:12

People should stop skirting around the issues with intellectual arguments and come down to the single basic point of discussion. Fiona Millar states "The state sector would benefit from the return of these families".
This is the heart of the issue. I assume Fiona Millar means by this, the return to the state sector of the offspring of aspirational middle classes whose parents are refusing to support their local state schools (the super rich will always shun state education whatever it has to offer). By choosing a private education (with accompanying tutors) for their children, these middle class families have contributed to the segregation of their children from their less affluent peers and robbed the state sector of the academic and social mix needed for it to thrive and for state education to be truly "comprehensive".
It comes down to this: if these families will not voluntarily return to the state sector, can the subsidies be removed from the private sector to make a private education unaffordable, thereby obliging them to return to their local schools. Let’s not pretend that the superrich need a subsidy of £100 million from the state to educate their children. Some of those 5% or 7% of kids in prep schools are the able children of working class families or the improvished middle class families making painful sacrifices for their children. To make comprehensive education work, these families must return to the state sector, thereby potentially raising academic standards in non-performing schools with disproportionate intakes and improving social mobility for all children.
This has nothing, I repeat nothing, to do with the cost (£100 million subsidy is clearly lower than the cost of educating these children in the state sector and a mere drop in the ocean in the state budget) it is about the perceived wider benefits to society which for some reason go unsaid. Why? Why can't everyone who believes in comprehensive education just say that - rather than pretending that this issue is about removing a mythical overwhelming burden for the taxpayer, which if removed, would go largely unnoticed (from a monetary perspective) by anyone other than the impoverished middle classes kids who benefit from it? I suspect the reason it is unsaid, or buried in intellectual arguments about appropriate access to facilities, bursaries, targeting excluded kids blah, blah, blah is that everyone knows that most middle class parents are aspirational, free-marketers and inherently selfish, they think about their own children (rightly or wrongly) before they consider either society at large or other kids who are less fortunate than their own. Is this a bad thing? I don't know and I won't judge, it’s always going to be difficult for politics to fight a natural parental instinct to do what is best for your child – as a parent that’s what we are programmed to do.

Fiona Millar's picture
Sat, 21/05/2011 - 15:54

Just to add - only 5% of pupils are educated in fee paying schools that claim charitable status. Some like Cognita schools, choose to run themselves as businesses.

Michael Brown's picture
Sat, 20/07/2013 - 10:09

'Why can’t everyone who believes in comprehensive education just say that.... “The state sector would benefit from........the return to the state sector of the offspring of aspirational middle classes whose parents are refusing to support their local state schools'

'To make comprehensive education work, these families must return to the state sector, thereby potentially raising academic standards in non-performing schools with disproportionate intakes and improving social mobility for all children.'

They can't say it because it simply is not the case.

There is no evidence to support it.

Indeed, most recent evidence points the other way.

The theory has been tested to destruction in Scotland:

'A remarkable feature of Scottish school education is its high level of
uniformity.....

This degree of uniformity is highly unusual.

In some respects it can be portrayed as positive.

The 2007 report by the OECD on Scottish education commented favourably on the fact that the quality of Scottish schools was highly consistent although their outcomes varied greatly, largely because of the low success of the system in dealing with problems of disadvantage.'

Confirmation that a comprehensive system of education does not solve the specific problem that was its original aim and purpose.

That is why emphasis has now switched internationally away from uniformity towards diversity:

'However, there is also a vitally important negative consequence of this lack of
variety.

Scotland’s school system has only a limited capacity to learn from its
own experience because that experience lacks genuine variety.

A true learning system requires variety and that variety now has to be
consciously cultivated.'

http://reformscotland.com/public/publications/bydiversemeans1.pdf

Rob Davies's picture
Fri, 20/05/2011 - 21:10

With falling roles across the country I think the system would cope just fine... You make the key point yourself in that it is about choice. Those parents make a choice to turn their back on state schools. What is interesting is that the space left by parents taking the children elsewhere is not as beneficial as having a school with a true cross section of society, high aspirations and parents who are prepared to make their local school work for them - it is what all good headteachers want from their parents. This is not anything like choosing a private option and then having tax payers support the smaller class sizes...

Andy Smithers's picture
Sat, 21/05/2011 - 14:47

I am sorry I do not get the falling roles point.
Across the south east it is the opposite, massive increase in primary which is beginning to feed into secondary.
I do not educate my children privately but I fully understand why some choose to. I also understand the logic that says they also financially contribute to the sate sector.

Janet Downs's picture
Sat, 21/05/2011 - 15:18

They benefit from the state sector by claiming charitable status. This brings tax advantages so it is difficult to see how they contribute financially to the state sector.

Andy Smithers's picture
Sat, 21/05/2011 - 16:23

500,000 pupils who would cost approximately £5000 each to educate in the state sector per year. That is the logic Janet, it's a £2.5 billion per year saving to the Education budget per year.

Nigel Ford's picture
Sat, 21/05/2011 - 22:07

Surely the marginal cost to the state sector of having to accommodate the extra 7% of pupils who are privately educated would work out less than £2.5 billion as that figure is based on the average cost of educating a pupil.

The other thing to note is that fee paying parents would spend their money in more productive parts of the economy if they weren't paying school fees so GDP would rise and the gov't would have more money in the treasury coffers to spend on education.

Janet Downs's picture
Sun, 22/05/2011 - 09:00

Evidence by the Education Review Group (see Fiona's post) dismisses the argument about saving money for the state:

"Private schools have significant “disbenefits” to society: for example,
by removing able and committed pupils from the state sector and by
being one of the most significant barriers to social mobility. For this
reason they cannot show public benefit by pointing to debatable or
nebulous wider benefits, such as saving money for the state or providing
well educated pupils. Further, these disbenefits should be taken into
account by trustees when they make decisions about furthering their
charitable purpose."

Nigel,

You say the marginal cost to the state sector to accommodate the extra 7% of pupils would be less than £2.5bn as that figure is based on the average cost of educating a pupil. The only way that the marginal cost would be less than the average cost is if average costs would fall as the number of pupils increased. Is there any evidence that this would be the case? Are there more economies of scale to exploit? Isn’t it just as likely that if these pupils were in the state sector then schools would be bigger and/or LEAs would be bigger and there might well be diseconomies of scale (all the qualitative impacts of bigger schools or managing bigger departments) implying that the marginal cost would in fact be greater? Also, the implication of your argument is that the government could then give less money to schools per pupil as the cost of educating each one had fallen. I don’t think that would be healthy.

You also say that fee paying parents would spend their money in more productive parts of the economy. That implies that expenditure on education is not productive, or at least not as productive as other parts of the economy. You might have a point if you could say that the extra that independent school parents pay doesn’t bring bang for their buck (at this point I should remind Janet that her statistics about state school success at university only imply that students graded of equal ability after a number of years of common education at a university would have worse A levels if they had gone to a state school), but even so that implies that you are happy with the current amount spent per pupil, so, presumably, you would oppose any increase in education expenditure?

Finally, a switch of expenditure wouldn’t cause GDP to rise. Most consumption expenditure will include an element of imports which is an outflow of money from the economy (leakages). Education must be one of the least leaky sectors there is.

Fiona Millar's picture
Sun, 22/05/2011 - 06:13

I think these arguments miss the wider point about the benefits to all schools, and society more generally, of not dividing children up in this way.

Fiona Millar's picture
Sun, 22/05/2011 - 08:29

It is worth taking time to read the Education Review Group's submission to the Court tomorrow. It shows, amongst other things, how private school fees have risen above the rate of inflation. The graphs demonstrate clearly that these schools are beyond the reach of most families, a fact that is also reinforced by this article in today's Observer, suggesting that median real income will fall over the next five years, presumably while private school fees continues to rise?

Nigel Ford's picture
Sun, 22/05/2011 - 09:25

I think there maybe evidence that there are more economies of scale to exploit within the state sector of education due to the falling UK birthrates in the 1990s which is now impacting on pupil roll numbers. On that basis state schools could accommodate extra numbers from the private school sector without having to proportionally increase the cost of capital and human resources
http://www.telegraph.co.uk/news/uknews/7790539/Teenage-population-to-fal...

I take your point about imports having a negative effect on GDP ( and the circular flow of income) but to counter that there will be a multiplier effect on other expenditure in the UK which doesn't involve imports.

Janet Downs's picture
Sun, 22/05/2011 - 08:54

And it's worth noting these two paragraphs at the start of the submission by the Education Review Group (ERG):

"Members of the ERG have accumulated knowledge and experience of all areas
of education provision, including the state sector of education provision – which
represents provision for 93% of pupils. The group also includes lawyers, people
with experience in voluntary sector management and experts in social and
education policy.

8. The ERG takes the view that charitable status is not a right for independent
schools but a privilege to be “earned”."

Nigel,

You are absolutely right that if there is spare capacity in the state sector then it could accommodate students without increasing its costs, but that does presuppose that the state sector is not already suffering from diseconomies of scale i.e. that some schools are not too big and that as a whole the organisation of state education is being handled efficiently. I’m just pedantically making the point, I’m not saying that there are diseconomies or not.

The multiplier effect that you cite will also be present as a result of spending on private education. Teachers and other suppliers will spend a proportion of their income as much as any other recipient of the initial expenditure would, possibly a greater proportion. If you consider that a likely substitute to private education might be more (or any) foreign holidays then you can see that the multiplier effect of expenditure on private education is likely to be much higher than the alternatives.

Andy Smithers's picture
Sat, 21/05/2011 - 23:10

Nigel,

The parents who pay fees generally par at least 40% tax anyway and therefore pay at least their fair contribution. so what is your point ?

Fiona Millar's picture
Sun, 22/05/2011 - 06:21

I am glad to see someone pointing out that parents who pay school fees are generally higher rate tax payers, nailing the myth ( pedalled by the ISC and others) that they take in a lot of deprived children. Many private schools offer bursaries to pupils whose parents have incomes of £40000 a year, which is well above that of an average family.

Sorry Fiona, at least one of us is having a logic bypass. What does the marginal tax rate of those parents who actually pay fees have to do with number of children offered bursaries?

Fiona Millar's picture
Sun, 22/05/2011 - 15:49

Two separate points. In my many debates with the ISC and others over the years, they like to argue that private schools take in pupils from a wide range of backgrounds, including those from average income families, often using generalised information about the postcodes in which their pupils live. This is highly misleading since many urban postcodes ( Hackney for example) contain pockets of wealth amid concentrated poverty. On several occasions I have requested information from the ISC and representatives of the HM Conference about the numbers of pupils eligible for FSM in the fee paying sector. They claim not to have it, I suspect because there are none. Andy Smithers pointed out that most fee paying parents were in the top tax bracket, which I would agree with.

Bursaries are used by many fee paying schools as justification for their charitable status. If they are available to people earning £40,000 a year clearly they won't necessarily reach people in poverty, which was one of the tests set by the Charity Commission, especially if they are linked to selective entry tests in which a candidate's chances of passing are enhanced by private tuition.

In fact , while I am on that subject, I am amazed by the number of young people I know in private schools who also have private tutors. Is that because their parents find the standard of teaching not good enough?

Allan Beavis's picture
Sun, 22/05/2011 - 08:34

An essential requirement of all charities is that they operate for the public benefit and independently of government or commercial interests. Private schools that benefit from charitable status therefore have to demonstrate what public benefits they are giving, in return for the generous tax benefits they enjoy, at the cost to the tax payer. So, it is the tax paying general public who help to support school charities and it is this same public who reasonably see charities as broadly philanthropic concerns. Offering too few bursaries or bursaries to the already advantaged would not justify public trust and confidence in schools and it is therefore the Commission’s role to uphold such confidence and to ensure these schools are open and accountable and that their charitable status is justified and not just a ploy to enjoy tax benefits.

It is interesting to read the digressing comments here that effectively say state schools should be grateful to private schools as they are not further burdening the education budget as if this were enough justification for them to be left to get on with it. There is a growing tendency for the new state schools – Academies and free schools – to not only openly promote the mores of private schools as part of their ethos but to actively engage with them. If private schools are now selectively colluding with them, and not with all state schools including LA maintained ones, then there is the suspicion that they are doing it to prop up their arguments to retain charitable status. But the association reflects much worse on free schools and academies as it shows they are pitching camp with educational institutions that continue to favour the already socially, academically and financially advantaged and are going to court to uphold this.

Francis Gilbert's picture
Mon, 23/05/2011 - 17:55

I think you're right Fiona about the point that bursaries in the private sector overwhelmingly favour people in the top income brackets. About three quarters of the parents I know who educate their children privately (and I know quite a few) hire private tutors. The teaching in these schools is sub-standard and relies overwhelmingly upon "pushy" parents to goad, bribe and blackmail their children into passing the relevant tests, of which there are many.

Nice. I didn’t know we were allowed to generalise like that. LEA controlled state schools are rubbish - Ofsted says some are failing. While I’m on the subject, LEA controlled state schools are great - Ofsted says some of them are outstanding.

Hmm, wait ... could it be ... perhaps ... yes!! I think the conclusion is that sweeping generalisations are utter garbage. Hopefully responsible teachers are passing that message on to their pupils; it is a basic thinking skill after all!

It is utter hypocrisy to lambaste people for denigrating state sector education based on their own personal experiences and then to do exactly the same to independent education.

Andy Smithers's picture
Mon, 23/05/2011 - 19:22

Francis,

Not sure how you can make your last statement without feeling rather hypoctitical.
After working in state schools for many years you chose to send your children private.
So when you went to your open evenings at your son's private school did you tell them that all their teachers were sub standard ?
Did you explain that the only reason your son was doing ok was because you as a pushy parent bribed and blackmailed him.
Also if the teaching is so sub standard how do both explain how these schools get excellent results ? It cannot be down to selection alone.

Unbelievable. Are you going to say about grammer schools teachers as well tomorrow morning?

Allan Beavis's picture
Tue, 24/05/2011 - 08:07

Interesting that the original point of Fiona’s post - that private schools must show they provide a "public benefit" to justify their tax-free charitable status – has been hijacked and twisted into arguments promoting the idea that we should be grateful private schools exist as they are generally good for the economy or, if they no longer existed, how they might burden state schools. I can’t help but feel that these are deliberate distractions (Fiona did not advocate the closing down of private schools, just that their charity status be properly accountable) in order to take the heat off the conduct of ISC and the schools it represents and that the contributors doing so here are those who are in favour of selective education. Their comments fuel the suspicion that the recent interest shown by private schools in assisting academies and free schools (and not comprehensives) is leading to a segregation of schools and that this segregation is not just academic, but class conscious and elitist. It really does free schools and academies no favours when they argue they are popping up to provide inclusive education for all. In fact, it comes close to demolishing their argument.

I don’t think state schools (not even grammars!) have been caught in the cross fire of accusations involving exclusive pursuits such as hunting, beagling and dressage. According to the Evening Standard http://www.thisislondon.co.uk/standard/article-23952545-private-schools-...
Lawyers for the The Education Review Group gave evidence at the High Court yesterday, said that many private schools are providing children from rich families with "gold-plated services" including hunting, shooting and fishing - as well as golf, beagling and dressage - at taxpayers' expense. So yes, the bar must MUST be raised, not lowered, if these schools are to justify their charitable status and the benefits of tax cuts. Nobody could justify that hunting and beagling are tax deductible benefits when few bursaries and given to children from low income families. Unless the ISC agree that their position and their practices are untenable we have to end the pretence that private schools are charities and are just in the business of educating the children of an elite. If the ISC get their way, I wonder whether dressage, hunting and other aristocratic pursuits will sneak into the curriculum of free schools?

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