Four Independent Schools Fail To Meet Public Benefit Requirements Under Scottish Law
30th October 2008
The Office of the Scottish Regulator (“OSCR”) on Tuesday published the findings of its Rolling Review (Phase 1a) of thirty charities in
Four of
The Review states that “fees and charged varied significantly across the group of schools assessed as did the arrangements in place to facilitate access for those unable to pay the full fees charged. There was a diverse range of financial support (facilitated access) mechanisms in place. Establishing the impact of each of these has been challenging”.
The key conclusions of the Review are:-
- that means-tested access arrangements have the most significant impact on opening up access that is restricted due to fees being charged;
- that the extent and nature of the benefits schools provide for which there is no fee or charge was similar across the charities reviewed. Some examples of activities being carried out by the schools include forming a partnership with a mentoring and counselling charity for young children, providing teaching practice placements for students, offering the use of a school’s all-weather pitch to a local authority school at nil or reduced charge and the provision of markers for exam boards. However, in most cases, this kind of benefit was, in OSCR’s opinion, neither significant enough nor closely related to the charity’s purposes to have critical impact on the assessment of public benefit. OSCR emphasises that in this context, they take into account whether activities actually further the charity’s purposes (generally the provision of education for a defined age group); and
- that the majority of schools are working hard towards meeting the requirements of the charity test, indeed some of those who failed to meet the charity test in the Review are in the process of establishing means-tested bursary schemes or had a scheme that was in its infancy.
The four schools in question have been given three-stage Directions and a clear timetable for planning and implementing the changes deemed necessary for each of the schools to meet the test. The Directions require each of the schools to provide an assurance to OSCR within 3 months that they intend to comply with the Direction issued. The schools will then have a further nine months to produce a plan setting out how they intend to introduce the required changes so that they are able to meet the charity test and submit it to OSCR. The final stage is that the changes identified will then need to be put into place and be deemed to be effective within a further two years, so in total the charities will have three years in which to meet the test.
If a school were to refuse to comply with OSCR’s Direction, they could be removed from the Register as they would have failed to meet the charity test and would have also failed to comply with OSCR’s requirements to remedy that. There is nothing in the OSCR report to suggest what would happen to their assets which presumably could only be used for charitable purposes.
Key factors taken into consideration when assessing public benefit included:-
- The availability of information regarding tuition fees and availability of means-tested support for payments of fees from a school on request and on its website;
- The overall value of means-tested support available and the balance in favour of means-tested support over other means were regarded as positive indicators of high impact arrangements to facilitate access;
- Where fees were high the level of support offered to open up access should be proportionate to this – OSCR considered the fees charged by each school in comparison to the cost of providing education in the state sector and to the fees charge by other schools in the independent sector;
- The value of the support offered, in real terms and relative to the size of the School was taken into account. For example, OSCR decided that one of the four schools did not provide public benefit because of the low number of pupils (given the size of the school) for whom support to access was available, and the low overall monetary value of the support (again set in the context of the school);
- The targeting of means-tested support at those least able to afford the fees – not just of those that seek assistance from the school but of all potential beneficiaries;
- The contribution made by the school itself was considered to contribute positively to its provision of public benefit – fee remission offered by one school to boarders who had one or more parents in the armed forces was non-means tested and therefore did not impact on the facilitation of access to those unable to afford the fees and therefore did not contribute to public benefit;
- The specialist nature of a school (e.g. a music school) was taken into consideration when considering the level of fees i.e. it is relevant for assessing whether any fee or charge is unduly restrictive;
- OSCR also considered evidence that a school was providing other benefits in furtherance of its charitable purposes for which it made no fee or charge. However, some schools appeared to offer considerable benefits including mentoring schemes and access to the school’s facilities but this could be outweighed where fees were deemed to remain restrictive.
We have set out below a comparison of two similar sized schools which were subject to the Review, one of which passed (George Herriott’s) and one of which failed (Hutcheson’s) to meet the charity test. This is provided purely for illustrative purposes only, it goes without saying that each case will be considered on an individual basis:-
|
|
George Herriot’s Trust which meets the charity test |
Hutchesons Educational Trust which does not meet the charity test |
|
Total number of pupils (2007/8) |
1,619 32 – Nursery 626 – 961 – |
1,750 550 – Primary 1,200 – Secondary |
|
Fees charged (per annum) |
Early Years - £5,526 Middle & Upper Primaries - £6,729 |
Primary - from £6,417 Senior – up to £8,243 |
|
Total number of beneficiaries in receipt of means-tested assistance (2007/8) |
130
|
45 |
|
Total number in receipt of full-fee remission (2007/8) |
70 |
15 |
|
Total value of means-tested support |
£707,848 |
£291,552 |
|
% of the school roll receiving facilitated access |
12% in receipt of some form of facilitated access 8% (means-tested) including 4% receiving full-fee remission
|
2.8% in receipt of some form of facilitated access 2.6% (means-tested) |
|
% of school’s annual income |
Total value support –9% Means tested – 7% |
Total value support – 2.1% Means-tested – less than 2%
|
|
Other benefits in furtherance of charitable purposes |
Teacher training placements, moderation of examinations, offering use of the school’s all weather pitch to a local authority school at nil or reduced charge. Nursery participation in pre-school partnership scheme, full fee remission, free school books and maintenance allowances to the sons and daughters of widows and widowers. Awards available subject to both residential and financial criteria. Other means-tested bursaries available. |
Teacher training placements, placements for probationary teachers and the moderation of exams. Pupils team up with local secondary school on an annual basis to undertake community projects including running workshops for primary schools. |
We anticipate that the Charity Commission’s final guidance in relation to public benefit and independent schools will be published towards the end of this year. We will be holding seminars at each of our 4 offices:
In addition, we have already carried out a public benefit audit on a number of schools. If you are interested in receiving more information about this service, please contact Sarah White on the above address. The audit is provided on a fixed fee basis.
Stone King Sewell LLP
Charity & Education Team