06 April 2011

Public Benefit and Independent Schools

Two third parties have successfully applied to be joined as parties to the hearing in the Upper Tribunal on the Charity Commission’s interpretation of the law relating to the public benefit as it applies to fee-charging independent schools.

The two applicants, the Education Review Group (‘ERG’) and National Council of Voluntary Organisations (‘NCVO’), will attend a preliminary hearing on 18 April to argue why they should be allowed to make oral representations at the final hearing in May.

The two organisations each have a history of involvement with the meaning of public benefit in the education sector.

The ERG was established to provide independent evidence to the Charity Commission during the consultation on the Commission’s public benefit guidance in June 2007. The ERG made several proposals in their consultation response as to how independent schools should demonstrate public benefit, based on the principle that those on a low income should genuinely be capable of benefiting significantly.

The NCVO lobbied for an amendment (which was not passed) in the Charities Bill (that preceded the 2006 Act) to provide that the Commission would have to consider the effect on public benefit of the charging policy of any charity. This would of course have affected the Commission’s assessment of the charitable status of fee-charging schools.

Both organisations have filed copies of their evidence and witness statements with the Tribunal.

The ERG argues in its statement that the Commission should apply the principle of balancing the benefits to the public against the harm or ‘disbenefit’ caused by fee-paying schools. They set out the perceived disbenefits and argue that, as a result of these, fee-charging independent schools cannot rely on factors such as saving money for the state or providing well-educated citizens to illustrate sufficient public benefit. The statement endorses the other principles used by the Charity Commission to assess public benefit, and requests that these are applied equally to fee-charging schools in future.

Sir Stuart Ethington, the Chief Executive of the NCVO, submitted a witness statement in which he agrees with the ERG that account should be taken of any incidental adverse impact upon to the public of a fee-charging charity. He argues that there is an essential need for the Tribunal to provide greater clarity on the public benefit requirement, not only for fee-charging schools but for all fee-charging charities. The NCVO’s premise is that there is public confusion surrounding the distinction between the purpose of a charity, which relates to status, and the activities of a charity, which do not affect charitable status but is relevant to proper administration which is ultimately a matter for Trustees. They also argue that the Charity Commission’s existing guidance is not ‘sufficiently explicit’ at distinguishing between the minimum legal requirements and the Charity Commission’s opinion on best practice. The NCVO takes the view overall that the Commission’s guidance on public benefit and assessment reports to date have created confusion and uncertainty.

Further, the NCVO argues that fee-charging charities should be required to introduce ‘radical change’ where they do not provide benefit to more than a nominal number of persons who are unable to pay the fees. In the NCVO’s view, this is the inevitable result of the abolition of the presumption of public benefit under the Charities Act 2006.

We will continue to provide further updates as matters progress.

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