Private schools will be judged annually on whether they are doing enough for the poor in order to qualify for tax breaks worth £100 million a year, the charities regulator has told The Times.

Dame Suzi Leather, the chairwoman of the Charity Commission, suggested that the threshold to qualify schools for charitable status would be raised every year to ensure that they provide the maximum possible public benefit.

She indicated that independent schools could provide more subsidised places for poor children than they do at present. Larger schools would be encouraged to move towards “needs-blind” admissions systems, offering places purely on merit and regardless of parents’ ability to pay.

But Dame Suzi predicted that the new regime would meet stiff resistance from public schools and would almost certainly face legal challenge.

For more than 400 years, public schools have benefited from a presumption in law that education is a charitable activity. But under the terms of the new Charities Act, which came into force last year, charities that charge high fees must prove that they are of “public benefit” to justify their tax breaks. New guidance on the principles of public benefit will be published in October, with further guidance for private schools next year.

Tax breaks are on average worth £225 per child a year to independent schools, or just under 2.5 per cent of their annual turnover. If a school were to lose these, fees would rise. Two years ago Eton, where fees are more than £26,000 a year, received tax breaks of about £700,000, the equivalent of £500 for each of its 1,400 pupils. But the true benefits to private schools go further than that as charitable status boosts their public standing and attracts tax relief to donations and legacies, helping their fundraising efforts immensely. Many smaller schools would struggle to survive without these benefits.

Dame Suzi’s comments come amid growing concern about the attainment divide between schools in the private and state sectors.

In the past decade private schools have seen a 16.3 per cent increase in the proportion of A grades at A level, compared with only 5 per cent at comprehensives.

Many education experts fear this academic divide will get wider, bringing with it increased social divisions.

Dame Suzi said she thought that many private schools, particularly the larger ones with sizeable charitable endowments, would welcome the chance to do more for social inclusion. She cited the example of St Paul’s School for Boys in London, which has announced it intends to go completely needs-blind within 25 years. “[Schools] will be keen to demonstrate their accessibility to people on low incomes,” she said.

She added, however, that the commission would require hard evidence and that schools would have to do much more than simply open their playing fields or science laboratories to local comprehensives if they want to retain their charitable status.

“It’s difficult to see how opening up a school playing field for one Sunday afternoon a year could in any way come close to justifying charitable status. So in a sense [that’s] a no-brainer,” she said.

She added that not all schools would comply willingly and the commission was prepared to take legal action if necessary to enforce its decisions. “It’s going to be a difficult and contested territory, which will go inevitably, to the charity tribunal,” she said.

She emphasised, however, that the commission would not set out to push any charities off the register and that it would not adopt a “big bang” approach. Rather it would adopt an incremental approach allowing charities to make bigger adjustments each year.

In a bizarre twist, Dame Suzi, a respected and high-profile public figure who was appointed to the commission last year to steer through the politically sensitive charity reforms, admitted that she herself had decided to absent herself from all decisions regarding the charitable status of schools. As she had a daughter at private school, she felt her involvement might constitute a conflict of interest.

Stuart Etherington, chief executive of the National Council for Voluntary Organisations, Britain’s leading charity organisation, which lobbied hard for the reforms, said that he found her decision disappointing and odd.

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