Independent Schools v Charity Commission - and the winner is?
Depending on what websites/newspapers you read and who you speak to, you would be forgiven for still being uncertain as to who won the heavyweight bout that was, in the blue corner, The Independent Schools Council (ISC) and, in the red corner, the Charity Commission for England & Wales (with the referee for the event, the Upper Tribunal (Tax and Chancery) Chamber). The fight went the full distance with both contenders trading blows – the ISC claiming that the Charity Commission was guilty of “micro-managing” individual charities. The Charity Commission came back, claiming that its guidelines are clear and only provided “supportive assistance” to help charity trustees to keep their charitable status.
At the final bell, the three judges of the Upper Tribunal held aloft the arm of the victor and the winner is …
Under new rules, brought in in 2006, independent schools had to prove their wider public benefit to retain their charitable status. They could not claim the benefits of being charities just because it benefitted the public that they gave an education to the children going there. The ISC, representing 1,260 schools, argued at the Tribunal that the Charity Commission’s guidance (which it described as ‘prescriptive’ and ‘interventionist’) placed too much emphasis on the extent to which independent schools offered bursaries and free places to poor children. The ISC sought a judicial review to quash certain guidance issued by the Charity Commission, on the basis that the guidance included errors of law in respect of the public benefit requirement, particularly as applied to fee charging independent schools. One of the main issues to be decided by the Tribunal surrounded what a school actually needs to do to be seen as operating for the public benefit.
What the Tribunal said:
In its ruling, the Tribunal confirmed that those independent schools, which are educational charities, have to demonstrate a wider public benefit, beyond that to their own pupils and, which is “more than a token benefit” to those less well off. One-Nil to the Commission!
However, the judges said it was for the schools themselves and not the Commission to decide how they should meet their legal obligations. They went on to say that schools did not have to only offer free or subsidised places to poorer children to satisfy the public benefit criteria; by sharing their facilities with state schools (eg. playing fields, swimming pool, sports halls etc), sharing teachers and teaching facilities and by inviting state pupils to join classes in subjects not taught in their own school, independent schools could still satisfy their legal obligations in respect of providing public benefit.
To quote from the decision of the Tribunal, “Once provision is made for the “poor” which is more than de minimis or merely token, we see no reason why an identified wider benefit should not be taken into account in deciding whether, overall, the way in which the school is being operated is for the public benefit..”
What the ISC said:
The ISC have claimed victory, declaring that the Tribunal overruled the Charity Commission’s approach to public benefit by handing back responsibility to school governors. It goes on to claim that the Commission’s former approach of reducing the public benefit of independent schools to, “a crude calculation of fees and bursaries” is now discredited and will allow an independent school to best determine how it will fulfil its charitable objectives to public benefit, “free from the threat of intervention by the Commission”.
What the Charity Commission said:
The Charity Commission have claimed the judgement a draw, conceding that some parts of their guidance “did not explain the law clearly enough”, something that they are already in the process of remedying. However, the Commission appears satisfied that the judges agreed with their view that that to meet the public benefit requirement, independent schools need to give “more than a tokenistic benefit to the poor.” It went on to say that the ruling provided important clarification of what independent schools must do for the poor.
What does the ruling actually mean?
With both parties claiming victory of sorts and the dust starting to settle, where does the Tribunal’s decision leave things?
The Tribunal admits in the final paragraph of its 116 page judgement that their decision will not “..give the parties the clarity for which they were hoping”. It was probably wishful thinking to expect the Tribunal to draw a line in the sand and to proclaim a school that sits on one side should lose its charitable status and a school sitting on the other side can sleep easy and continue as before. What the decision did do was provide assistance to thousands of school governors by clarifying what can amount to public benefit, and to remove the notion that the Commission can strip an independent school’s charitable status if they feel the school is not doing enough to meet its public benefit requirement.
In light of this landmark ruling, both parties are now expected to sit down together and thrash out what relief should be granted to the ISC. A failure to agree a form of wording could lead to further submissions being made to the Tribunal.
Published: 4 Dec 2011