Public schools need only 'consider' people who can't afford fees, argues ISC 3

Governance | Tania Mason | 18 May 2011

The key difference between the Independent Schools Council and the Charity Commission over the Commission’s guidance on public benefit, is the extent of the obligation that fee-charging charities owe to those that can’t afford its fees, the ISC’s lawyer said yesterday.

Continuing his representations to the Upper Tribunal judges hearing the ISC’s judicial review of the Commission’s guidance after lunch on day one of the case, Nigel Giffin QC said: “The critical difference between us and the Commission is that we accept and acknowledge an obligation to consider how to deal with those who can’t afford the fees, whereas the Commission and interveners argue for an obligation of a result.”

The ISC also disputes the Commission’s view of what constitutes a “sufficient section of the public” that the law states must be able to benefit from a charity’s services in order for that organisation to be deemed to be providing public benefit.

Giffin said: “In the guidance the Commission’s rationale for its approach was that if people who can’t afford fees are excluded from getting any benefit from the charity, then that means that those who do benefit are not a sufficient section of the public.

“In the course of the litigation a second strand of reasoning has appeared, it goes this way: The Commission says that people who can’t afford fees are potential beneficiaries of the charity in the sense there is nothing in its objects that formally excludes them. It then says that the trustees are under a duty to exercise their discretion and apply the assets of the charity for the benefit of the class of potential beneficiaries considered as a whole.

“And therefore they say that if in practice you operate in a way that means the subclass of people unable to pay the fees isn’t getting a look-in at all, the trustees are not operating for the potential whole class of beneficiaries and therefore are operating in breach of trust.”

The ISC is sure this is a “fundamentally legally misconceived approach”, Giffin contended. “There is no requirement that all those that might conceivably benefit from it, whether considered as individuals or as a sub-class, should get a look-in. There is absolutely no authority that begins to support that position.”

The Charity Commission is expected to begin its representations to the Tribunal later today.

Directory: Charity Commission

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Ian
Accountant
19 May 2011

In my experience if one looks at the accounts of most private/public school charities they are effectively businesses providing the service of teaching those children whose parents can afford it.

How this is charitable in the accepted use of the word I do not know.
Each year each school will generate a profit from their fee paying pupils from which they do not have to pay any Company Tax.

That profit can be used to buy new property and other assets. They could also receive discretionary relief from business rates as a registered charity.

If we are saying that all education is charitable then where is the difference between a public school as a so called charity and perhaps a freelance music teacher who will pay tax on his or her earnings ?

[Reply]

Nigel Edward-Few
CEO
18 May 2011

Private schools should not be able to be registered as charities, period.

If they are to get any benefit at all, it might be in some measurable form such as tax breaks or whatever based on the percentage of non-paying 'scholarship' students on their school's roll.

For instance, if 10% of their students are completely non-fee paying, then they might be granted 10% of their profits as a non-taxable allowance, and/or they could receive a similar allowance of 10% of their capital costs such as the provision of equipment/buildings etc.

Perhaps the current governors of such schools should be reminded how and why they were set up in the first place; to provide education and training to the poor, not those who could afford it, let alone to get extra charitable benefits in doing so!

[Reply]

Ed
18 May 2011

Does anyone know if any of the Upper Tribunal judges presiding over this case have been the beneficiaries of a fee-charging private education?

[Reply]

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