Dame Suzi Leather at war with private schools

On its peaceful hillside above the market town of Bakewell in the heart of the Peak District, St Anselm’s is the epitome of the traditional English prep school.

Last winter, however, the tranquillity of its 18 green acres was disturbed when a car carrying three inspectors from a quango in London came up the drive.

The delegation, sent by Dame Suzi Leather, chairwoman of the Charity Commission, was there to grill staff to establish whether the school conformed to Labour’s new legal definition of a charity.

The verdict, finally delivered last week, appalled the school. “St Anselm’s . . . is not currently operating for the public benefit,” reported the commission. It faces a year of negotiating a plan with the commission to put itself in order. If this fails, it risks having its trustees sacked, being merged with another charity, or even losing charitable status with its tax breaks.

“They were very poker-faced about the whole thing,” said Simon Northcott, the headmaster. “They did not even want to look around the school . . . at the end they just jumped in their car and zipped off again.”

To the noise of class war drums striking up on the left and right, St Anselm’s, along with Highfield Priory, a prep school near Preston, Lancashire, became the first charities (along with two care homes) to fail inspections under Labour’s 2006 Charities Act.

The decisions have ramifications for more than 1,000 independent schools that are registered charities. They, too, will have to prove to Leather that they provide “public benefit” in the form of generous bursaries for poor families, lending their facilities to state schools and generally behaving as good local citizens.

The perverse consequence of the changes — trumpeted as a move to fairness — could be the raising of fees and the loss of thousands of pounds in support for middle-income families which can make the difference in deciding whether their sons and daughters are privately educated.

Some see the changes as a vital way to promote fairness. Others see Leather, a long-time Labour activist, as the chosen instrument of a policy designed as a concession to left-wingers who would rather private education were killed off altogether. What is certain is that at the heart of the policy is deep confusion.

Schools had the status of charities since at least 1601 when Elizabeth I made the first attempts to regulate them.

For the next four centuries they were simply assumed to be charities, whatever fees they charged. This meant they could benefit from a range of tax perks — from business rate exemption to income tax concessions, now estimated to be worth at least £120m a year.

Breaking down the privileges conferred by private education was a typical new Labour compromise — appease the left by doing something to root out elitism but do not go all out for closing private schools, so scaring middle class swing voters.

Now, instead of education automatically being assumed to be a charitable activity, schools must prove they offer public benefit. This means doing as much as they can for the local community — opening their swimming pool to local children, lending science teachers to comprehensives or sponsoring one of the new city academies, for example.

Another factor is the provision of bursaries to the children of the poorest families — defined as those on less than 60% of the median income, or £12,272 per year.

The enforcer of the new law is Leather, 53, a veteran quangocrat who is a highly divisive figure. When she led the Human Fertilisation and Embryology Authority she gained notoriety by describing the idea that

a child needed a father as “anachronistic”.

Opponents charge Leather with hypocrisy: she attended St Mary’s Calne, an independent school charging almost £28,000 a year. More than half her board of commissioners are

privately educated and she and John Wood, a City lawyer, have sat out of some discussions because they were paying school fees.

Other critics accuse Leather of pursuing an anti-independent school agenda, a charge her officials call “outrageous personalisation”.

Private schools have been left confused by the events of the past week. Northcott says St Anselm’s has tried hard to reach out to state schools. It offered Greek teachers to try to keep the classics alive, but had no takers. Its cricket coaches received a better reception but, surprisingly, the offer of use of the school’s swimming pool was refused. However, said Northcott, “what (the commission was) really keen to find out was how many bursaries we were offering”.

The schools that failed complain that the commission has given them no idea about how many bursaries they need to offer to pass the test — and worry that there are simply not enough children from poor families who want to attend their schools. Last year, despite widespread advertising, only two families applied for the single bursary then on offer.

“We are fumbling in the dark,” said Northcott. “We still don’t know what we have to do to pass the tests. If you look at the Scottish system (which is administered by a separate commission) then they seem to have set the threshold at about 6% of fee income. If that had been the test applied I would not have been surprised that we failed. But they say they are not following or applying the Scottish threshold.”

Highfield Priory, the other school that failed the test, is cheap by private school standards, charging £5,985 a year. David Williams, the headmaster, said the school’s low fees were now working against it because it meant margins were thin and there was no spare money for bursaries.

“We try to keep fees to a minimum,” said Williams. “We have families with both parents working very hard to afford the fees. The commission have not told us what the test we have to pass is.”

Andrew Hind, chief executive of the Charity Commission, said its judgment on St Anselm’s, Highfield and the three schools that passed its inspections — including Manchester Grammar — was based on “all the things these schools have done to benefit society and communities”.

He made it clear, however, that bursaries were the decisive factor. “In the case of these two schools, Highfield have absolutely no bursaries whatsoever and St Anselm’s have two bursaries in a school of 240 pupils,” he said.

He contrasted the two with Moyles Court, in Hampshire, a prep school that passed. “They have a bursary scheme that is about 5% of total fee income,” said Hind. “They demonstrate this is what you can do even if you are not a particularly rich school.”

Schools are now poring over the minutiae of the Charity Commission’s findings and wondering when they will be up for inspection. No schedule has yet been announced.

Passing an inspection is not the end of the matter. The commissioners wrote to Pangbourne College, a school in Berkshire famous for its naval heritage, saying that, even though it had passed the test, it might rearrange its bursaries so that more money went to the poorest families rather than those on middle incomes.

Ironically, the richest institutions such as Eton, Winchester and Rugby, with their large endowments and wealthy old boys, may find it easiest to offer generous bursaries to pupils from poor families. They are already moving away from traditional academic scholarships — in which the brightest children win big fee discounts regardless of family income — towards awards that are virtually all means-tested. Winchester has added an extra levy to its fees to subsidise bursaries.

There are fears that the main victims of the new regime will be small schools such as Highfield and St Anselm’s and that middle-income families may lose out. Soaring fees in recent years have led to fears that more and more families will be shut out of private education and, to compensate, many schools have expanded their financial help for parents on middle incomes. This policy could now be jeopardised by the Pangbourne advice.

John Claughton, chief master of King Edward’s, a boys’ school in Birmingham charging £9,390 a year, described Leather as “scary”. He said he would be particularly concerned if the commission tried to force his school to increase the large amount it already gives the poorest parents and so deprive those on middle incomes — families on £50,000 a year, for example, currently pay only half fees.

“For 30 or 40 years, this school was excluding people like policemen, teachers and local government officials,” said Claughton. “We are not here to benefit only the poor.

I want everyone in Birmingham to be able to send their sons here.”

Others worry there will be far less scope for helping individual families in difficulty, forcing hard decisions about pulling children out of school.

Vicky Tuck, principal of Cheltenham Ladies’ College, said: “We have to deal with absolutely heart-rending cases where I feel a moral and emotional commitment to the girls. Will I be allowed the discretion to help them? I think it is inevitable \.”

David Lyscom, the chief executive of the Independent Schools Council, has tried, without success, to convince Leather that billions of pounds of taxpayers’ money that is saved by schools educating children privately is a “public benefit” in itself.

He said: “This will inevitably lead to fee increases for the vast majority of parents, putting independent education beyond the reach of a greater number of children.”

Some schools are now worried for the future. “Numbers are holding steady but I am touching wood here,” said Williams. “Our governors will look at raising fees to set up a bursary system.”

Hind said there were alternatives, although these are likely to be almost equally unwelcome to parents: “There will be cases where increasing class sizes while keeping them at acceptable levels will be a way of generating additional funds for bursaries without raising fees.”

Some schools have studied the possibility of abandoning charitable status, but found that it is so fraught with legal difficulties as to be impractical. If they created profit-making businesses, for example, they would have to buy their buildings from the original charity.

A YouGov poll for The Sunday Times showed that the public was sympathetic to the private schools’ defence: that they ease the burden on the taxpayer by taking children out of state education and should therefore be encouraged. In the poll, 37% agreed with this, against 23% who said independent schools allowed parents to buy a better education for their children and should be discouraged; the remainder did not have a view.

Despite this, 55% of people thought it was right for the Charity Commission to put pressure on schools to subsidise more places for pupils from poor homes, against 24% who thought it was wrong.

The commission, meanwhile, is lining up other bastions of traditional privilege for scrutiny: the colleges of Oxford, Cambridge and Durham universities, which now have to register as charities.

Current thinking is that they will have little difficulty proving that they provide public benefit. If they are successful in their efforts to raise students’ tuition fees, this may change.

“When we put up our fees, it will be interesting to see how the Charity Commission weighs the dons’ wine cellar on the scales of public benefit,” said one Cambridge academic.