INDEPENDENT schools are to be forced to provide free or subsidised places for children from poorer backgrounds in return for keeping tax breaks worth £100m a year.

The Charity Commission will set out the ground rules for fee-charging schools that want to retain charitable status in a consultation paper to be published on March 7.

Until now, independent schools have been automatically eligible for tax breaks because as educational institutions they qualify as charities. But Labour’s new charity law has introduced a test of “public benefit” that will require them to demonstrate they are not simply providing education for a privileged group.

While the rules are not as tough as some left-wing Labour MPs had wanted, they are likely to be controversial. Most schools can provide free or subsidised places only by raiding income from other fee-paying parents. “Our parents already pay taxes for state education that they don’t use, so they may resent higher fees to pay for other children,” said a school bursar.

It now costs about £250,000 to send two children to board at leading public schools such as Eton, Winchester or Radley for five years. Middle-class parents already struggle to pay fees. Recent figures from Halifax Financial Services show public schools have become significantly less affordable over the past 20 years.

Fees for boarding and day schools have risen by an average of 43% since 2000 — more than three times the rate of inflation. As a result, many professionals struggle to educate their children privately.

An expert who has been consulted privately by the Charity Commission believes most schools will be able to comply with the rules. “It will be a wake-up call for some schools that have made no effort so far and think educating their own pupils is enough. It won’t be, but they will have time to make changes,” he said.

“There will be hard cases. Schools that can’t offer facilities [such as opening up playing fields and providing master classes for state schools] or subsidised places will be hit.” Girls’ schools are likely to be hardest hit because few have significant endowments.

Some schools have taken preemptive action by reducing the value of scholarships — awarded on academic merit regardless of income — and using the money for means-tested bursaries.

Schools that charge the highest fees will face the toughest test. They will be expected to produce an audit of the value of their tax breaks alongside an account of the money spent on providing “public benefit”.

The Independent Schools Council (ISC) believes the tax breaks for schools are worth £100m a year. However, schools spend £270m on helping parents with fees. They educate about 7% of the population, which the ISC estimates is an annual saving to the Treasury of more than £2 billion.

At Tonbridge school in Kent, where annual boarding fees are £25,212 and a day place £18,279, more than £1.6m a year is given in scholarships and bursaries. Scholarships are now worth only 10% of fees.

However, Tim Haynes, its headmaster, believes independent schools should not be forced to provide places. “We have a broad social mix, but schools like this have other contributions to make. We are sponsoring a city academy and will give advice and assistance to that school.”

Martin Stephen, high master of St Paul’s school in Barnes, west London, who has launched an appeal to raise funds to pay the fees of clever boys from poor homes, objects to the government setting rules for private schools.

“The provision of education should be considered charitable,” he said. “The attempt to regulate undermines the independence of schools.”

At Radley college in Abingdon, Oxfordshire, where fees are £24,075 a year, funds have been raised to provide six full free places next year.

Haileybury in Hertford, where boarding fees are £23,085 a year, has a tradition of taking the children of clergy. Stuart West-ley, the master, said: “We think we can raise more funds for bursaries, but the sums required are enormous.”

Few schools will be able to emulate Eton College. The school intends to raise £50m to subsidise fees for a third of its pupils, potentially transforming the social mix of the school.

The Charity Commission is to set up an independent tribunal that will hear appeals from schools and other charities that lose their charitable status as a result of the new rules on public benefit.

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