The Independent Schools Council is a politically independent, not-for-profit organisation representing 1,270 independent schools educating more than 500,000 children. It exists to promote choice, diversity and excellence in education, developing talent at all levels of ability and from all backgrounds.

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Private Action, Public Benefit

4 December 2002

1. Introduction
This response to the Strategy Unit's report is submitted by the Independent Schools Council (ISC) on behalf of its seven constituent Associations. They are:

Association of Governing Bodies of Independent Schools
Girls' Schools Association
Headmasters' and Headmistresses' Conference
Incorporated Association of Preparatory Schools
Independent Schools Association
Independent Schools' Bursars Association
Society of Headmasters and Headmistresses of Independent Schools

Altogether these Associations represent the interests of some 1,280 independent schools where 80 per cent of the pupils in the independent sector are educated. The schools themselves vary greatly in size and in character - and therefore in the resources which they possess.

Because they know that a collective response is being submitted on behalf of their Associations, many schools may not be responding individually. That certainly does not mean that they are indifferent to the proposals, but that they fully support the ISC's submission.

This response focuses on the two issues which are of overriding concern to member schools:

- safeguarding the future of charitable status

- the implications of public benefit

2. Confirmation of the Charitable Status of Independent Schools
It is evident that the Strategy Unit took full account of the evidence submitted by ISC. Its report deals with the charitable status of independent schools in an informed and balanced manner, reflecting the fact that the Unit listened carefully to the ISC's representations. In some quarters (including some quarters in government) there has long been considerable misunderstanding about the effects of charitable status on independent schools. It has been widely assumed that these schools receive some form of subsidy from public funds. The report helps dispel prejudices of that kind.

The ISC naturally attaches great importance to the fact that the report confirms that the advancement of education should remain a charitable purpose and that those independent schools which possess charitable status - and the vast majority of ISC schools do - should retain it. The report acknowledges explicitly that these schools belong firmly in the charitable sector.

The ISC now looks to the Government to endorse this key conclusion in the most emphatic terms when it comes to announce its policy decisions next year, following the consultation on the report.

That would give ISC schools absolute certainty about their future position. They need, and deserve, that certainty so that they can plan ahead, confident in the knowledge that their long-standing legal status as charities will not be changed.

3. Public Benefit
This is the crucial issue for independent schools. There is a widespread feeling amongst them that the long-established position should be retained - namely, that they are regarded as providing public benefit by virtue of the education that they deliver without any further specific checks or enquiries being carried out. The whole community gains from the contribution which educated individuals make to it. The report itself accepts that in education public benefit involves the benefits which "the educated individual" derives from "improved job opportunities".

At the same time ISC member schools as a whole have long delivered other benefits to the wider community. ISC research over ten years has confirmed that the vast majority of its schools offer their facilities for use by their local community and/or maintained schools.

Nothing could be clearer than the extent of the benefit that pupils themselves, the education system as a whole, the community at large and the taxpayer all derive from independent schools, which make a contribution to this country spectacularly disproportionate to their number.

Benefiting Young People and Contributing to the Government's Drive for Higher Standards

A recent OECD report showed that British independent school pupils achieved the best results of any school pupils in the world - and were on average two years ahead of their British state school contemporaries.
DfES statistical bulletins for many years have shown that pupils at all levels of ability achieve better examination results in independent, than in maintained, schools.
Among the prep school age group, Key Stage 2 test results are way ahead of national standards at all levels.
84 per cent of independent school A level candidates get three or more passes, compared with a national average of 63 per cent.
In A level examinations, from a cohort representing 20 per cent of the post-16 school population, the independent senior schools produce between 42 per cent and 77 per cent of all A grades in subjects identified by Lord Dearing as the most difficult.
Many ISC schools have entered enthusiastically into partnership schemes with maintained schools - recognised by the Government as an important contribution to its drive to raise standards for the benefit of all pupils.

Benefiting the Wider Community

More than three-quarters of ISC schools undertake joint activities in the community or with maintained schools.
Nearly 2,500 separate community service projects were identified in replies to an ISC questionnaire earlier this year - an average of more than four projects per school.

Widening Access

Around a third of pupils are helped with their fees from various sources - the principal one being the scholarship and bursary funds of the schools themselves.
Schools give some £2.30 in fee assistance for every £1gained through charitable status.
The fiscal benefits of charitable status therefore allow schools to widen access to a broader cross-section of pupils with the financial assistance provided through scholarships and bursaries. It follows that the loss of charitable status would affect a school's ability to provide this support and would therefore prove counter-productive in making independent schools accessible only to those who can afford the fees.

Savings to the Taxpayer

Some £2.3 billion a year is saved by the state as a result of places in the maintained sector foregone by independent school pupils - while it receives some £2 billion from their parents in taxes towards the cost of the state school system in which they do not participate.

(a) Demonstrating Public Benefit in Future
There is in the ISC's view already abundant evidence of the public benefit delivered by independent schools - as it made clear to the Strategy Unit while its report was being prepared. However, in this area the report recommends a very important change which is widely expected to be implemented. It states that "in future all charities will have to demonstrate public benefit" (emphasis added).

The ISC will be ready to circulate advice and guidance to its member schools - particularly new members seeking registration as charities for the first time - as to how public benefit is demonstrated. For some years the ISC has been active in collecting and publicising detailed information from member schools documenting particular public benefit activities highlighted in the Strategy Unit's report - particularly the sharing of facilities with the wider community, scholarships and bursaries to widen access and partnerships with maintained schools - which stem directly from the ethos which they possess. That information, much of which has been made available to the Strategy Unit (key points are summarised above), shows that what the report recommends as a future requirement is already well understood, and indeed practised, among ISC schools, as the Unit itself has acknowledged.
It needs to be borne in mind, however, that some conflict of interest may arise for trustees in that the opening of facilities to the local community may not necessarily be compatible with the maintenance and preservation of the assets of the charity for its primary purpose of providing education.
ISC would wish to work with the Charity Commission on producing its advice and guidance on public benefit for member schools.

(b) Public Benefit and the Law
The report puts forward two options: a statutory definition, or the continuing use of case law built up over the centuries. The report itself commends the latter approach on the grounds that "it takes account of the huge diversity of the sector and has the flexibility to evolve over time". We strongly agree.

A statutory definition would be a major retrograde step, for it would cast aside 400 years of the development of charity law on a case by case basis. Any statutory definition would itself require definition through the courts de novo. Case law will undoubtedly evolve further now that there are to be ten heads of charity, and should be allowed to do so.
What individual schools can actually deliver as regards wider public benefit (beyond the education they provide) will depend on a number of factors - particularly size, resources, location and the attitude of local maintained schools and LEAs towards them. There are examples of schools offering facilities to their LEAs, but not being accepted. Similar problems can arise with other publicly funded bodies. Flexibility is therefore crucial.
A statutory definition of public benefit is simply incompatible with the flexibility required by the diverse circumstances in which ISC schools find themselves. In addition, as the report notes, any attempt to define public benefit in law "would not be straightforward" and "would create uncertainty".
Apart from other major considerations (see below), it is hard to see how a definition could be constructed which would be fair to both a large, long-established, well-endowed school and to a small rural independent preparatory school. The diversity of independent schools is therefore a major impediment to the construction of an acceptable statutory definition.
The great diversity of schools within the independent sector also means that a requirement to devote a fixed proportion of fee income to public benefit activities would be completely inappropriate. What large schools might be able to accommodate in this respect could drive small schools out of business.
The problem goes wider than that - for a statutory definition would have to encompass hospitals, universities and other different types of charities as well. From such complexities huge further problems are bound to spring.
We understand that the Charity Commission in its response to the Strategy Unit's report (published on its website) has supported the view that "any duty to review the public character of charities should be clearly defined in legislation" with specific criteria being laid down that would subsequently be applied to all charities: but it has failed to address any of the major problems that such an approach involves, which have been set out here. In our view these problems cannot be satisfactorily resolved. It is essential that adequate and sufficient flexibility be provided.
ISC therefore strongly opposes a statutory definition of public benefit.

(c) "High Fees"
The report recommends that the Charity Commission should undertake a rolling programme to check that schools which charge "high fees" make provision for wider access on the part of those who cannot pay full fees, adding - significantly - that "the majority probably do so already".

No definition of "high fees" is provided in the report. It is a crucially important issue for ISC that an acceptable approach to the question of "high fees" be achieved. ISC would wish to work with the Charity Commission to arrive at appropriate and realistic figures on a basis agreed between them exercising their professional judgements. This should involve careful consideration of the full costs of educating pupils in the maintained sector, which are higher than is often suggested - as some important recent research has shown. Standard spending assessments for maintained sector pupils exclude capital spending and the relevant LEA and DfES costs necessary to provide services to schools. Independent schools have to fund all their own activities, including services provided centrally in the maintained sector, from fee income. In the maintained sector these costs are disregarded in the published figures for spending per pupil. These points would all have a bearing on the task of working out an acceptable definition of "high fees" in the independent sector.
Other factors that will have to be taken into account will include the location of the school and its catchment area. For example, many more parents in a large city, where salaries are high, may be able to afford the fees than in other areas of the country where other factors may come into play. There will be a need to look at the services provided by a school. While a boarding school's fees may appear high, they are in some cases simply substituting costs that parents would in any case have to meet if their child lived at home.
It would therefore be quite wrong to choose an arbitrary figure for the definition of "high fees". A wide range of factors must be taken into account. The ISC would propose to co-operate with the Charity Commission in agreeing appropriate guidelines.
A short return would be completed by schools charging "high fees". A draft for such a return has been produced by the Strategy Unit in consultation with ISC and the Charity Commission. The Strategy Unit has stated (in its paper "Charitable Status" accompanying the main report) that "for those that are sent a return, the degree of access expected will be proportionate to the particular circumstances and means of the school". That is extremely important - so too is the inclusion in the draft return of the provision of bursaries and scholarships. Some refinements of the draft return will be needed: for instance it should include details of those schools which look after significant, nationally important buildings. Some schools not only maintain historic buildings but also make them available to the general public. There are other factors which would also need to be taken into consideration: some schools in rural areas are the principal local employers (in certain cases indeed the only major employer) and by virtue of this fact deliver very significant public benefit. In addition note would need to be taken of the continuing efforts being made by ISC to find a way in which publicly funded places in ISC schools might become politically acceptable.
ISC would want to work with the Charity Commission to produce a final version of the return. In the meantime it will circulate the existing draft to ISC schools so that they can see what is being proposed and offer comments on the draft prior to the finalising of the text with the Charity Commission.