DCH 278 Independent Schools Council (Further
Evidence)
Andrew Kennon
Clerk to the Joint Committee
Scrutiny Unit, Room G10
7 Millbank, London SW1P 3JA
13 July 2004
Dear Andrew,
My letter to you dated 12 July
2004 dealt specifically with taxation issues. This letter deals
with the other issues raised by the Joint Committee, and begins
with additional evidence on the characteristics of the independent
sector.
There is a view held by some
people that the independent sector consists of a small, self-perpetuating
privileged class, and therefore should not be charitable. The
sector is neither small nor self-perpetuating, and most - though
not all - parents would be astonished to hear themselves described
as privileged. The aim of the Independent Schools Council (ISC)
is to widen access to the benefits provided by its schools. Spreading
the benefits beyond those who can afford to pay full fees is a
charitable activity, representing direct public benefit, on top
of the immense indirect public benefit of educating 440,000 UK-resident
children at no cost to the state, which is itself a charitable
purpose. The evidence given below demonstrates that the sector
is neither small, nor self-perpetuating, nor privileged.
- Size. DfES
figures over the past six years consistently show that between
18.5% and 19.5% of children at school aged 16-19+ are in fee-paying
schools. That is not a small section of the school population.
The source for these figures is David Miliband, Minister of State
for Schools Standards, in a House of Commons Written Answer on
Tuesday 22 June 2004
- Self-perpetuation. Research
from ISC and other sources consistently shows that about 40% of
parents of children at independent schools are "first-time
buyers" - i.e. they did not themselves attend an independent
school. That statistic displaces the proposition that independent
school parents are a self-perpetuating class. The most recent
research, conducted independently in June 2003 by RSAcademics,
is of 5,500 parents randomly selected from 800 schools. It shows
that 40.1% of parents are first-time buyers
- Privilege.
Some parents of children at independent schools are very well-off.
The same can be said of some parents of children within the catchment
areas of high quality maintained schools, who can achieve an excellent
education for their children at no cost beyond taxation. Anthony
Seldon made the point in oral evidence that parents of children
at Brighton College are subsidising the parents of children at
sought-after state schools. The reality is that many parents struggle
to pay fees. Three examples follow:
- Manchester Grammar School
(MGS) gives bursaries on a sliding scale entirely dependent on
income, so that, as far as possible, no child who is accepted
by the school is debarred through lack of means. For a single
child, full fees of £6,441 are paid by parents once family
income reaches £31,250. The fees in this instance amount
to 21% of gross income. Assuming two working parents, both with
personal allowances and the full starting rate band, the fees
on an income of £31,250 amount to 23.9% of after-tax income.
For a single parent with income of £31,250 the fees amount
to 25.1% of after-tax income. Parents on these incomes, paying
these proportions of their income in fees, are not examples of
privilege
- In last week's Evening Standard,
there is the example of a dental hygienist who is paying £7,000
a year to send her son to an independent school. This is not an
example of privilege
- The Joint Educational Trust
(JET), which is a grant-giving charity on its own behalf and on
behalf of other charitable foundations, makes 95% of its grants
on social needs only. It finds that schools respond positively
- giving, on average, £400 for every £100 supplied by
JET. The children who are helped will typically come from very
disadvantaged backgrounds, and a place in an independent school,
usually a boarding school, is often their only real chance to
attain their potential.
Fifty per cent of the population
would like to send their children to an independent school: the
source for this statistic is research carried out in 2004 by MORI
on behalf of the Sutton Trust. ISC schools make strenuous efforts
to widen access to children whose parents cannot afford the fees.
£210 million is given by ISC schools each year in fee assistance
to their pupils. This figure excludes fee assistance to
children of staff, and excludes discounted fees for a second
or third child at the same school. The vision of the independent
sector as monolithically narrow and privileged is not merely inaccurate:
it runs directly counter to the aspirations of the sector itself.
In the remainder of this letter
I shall deal, in order, with the questions raised in your letter
dated 7 July. For ease of reference, I shall repeat the questions
and then give our response.
1. the total tax benefits
which accrue to independent schools from charitable status - updating
the £88 million figure to include the value of any other
tax benefits such as tax reliefs to donors in the form of gift
aid and exemptions from VAT on fees etc -QQ 472-3 & 483 -
this was summarised by the Chairman at Q 634 as "the overall
tax benefits that accrue to the independent sector, and whether
the £88 million is the total".
- This question has been fully
answered in my letter to you dated 12 July 2004, which was prepared
with help from PriceWaterhouseCoopers and from Hays Macintyre.
In oral evidence I said that I thought that gift aid was excluded
from the £88 million. It is in fact included. It is worth
repeating here that any supply of education, whether by a charity
or not, is exempted from VAT under European law and is not a matter
that depends on or is affected by charitable status.
- what percentage are selected
by academic ability when it comes to the disbursement of independent
school resources either in the form of scholarships or bursaries-Q509-
some break down as to the proportion of children going through
some kind of entrance examination - Q513 - [I understand your
answer that you could not collect new information on the types
of examination at this late stage of the academic year, but the
Committee would appreciate any information that is readily available
on this point]
- Scholarships and bursaries.
There is an important distinction between scholarships (not means-tested)
and bursaries (means-tested). Scholarships are for children who
have academic or other talents, and are paid irrespective of the
means of the parents, which may be anywhere from very modest to
very substantial. Bursaries are means-tested, and are given to
children who meet the entry criteria of a school (discussed later
in this answer). The trend in the independent sector has been
strongly in the direction of moving funds away from scholarships
and towards bursaries, so that parents of children with scholarships
who can afford to pay full fees do pay full or nearly full fees,
with the money thereby "saved" paid in the form of bursaries
to children whose parents need help with fees. One of the case
studies given below is of a school which, from 2005, is limiting
scholarships to a maximum of 10% of fees. Many schools would like
to follow suit. Any concerted move in this direction would be
seen by the Office of Fair Trading as anti-competitive, because
the OFT view is that scholarships are a competitive tool to attract
pupils. If the OFT were able to approve discussion of moving funds
from scholarships to bursaries, that would help schools widen
access further and more quickly, which is their wish
- Entry criteria.
The independent sector is very diverse, and each independent school
will have its own criteria for entry. Within ISC schools there
is a continuum throughout the ability range. A small minority
of highly academic schools select on the basis of high ability
or aptitude. The majority of ISC schools go well below the range
of ability necessary for a state grammar school, and many go below
average ability and a long way below that. Nearly one child in
eight in ISC schools has special educational needs, and some ISC
schools cater solely for children with disabilities or special
educational needs. Entry criteria are highly variable. Because
most independent schools are now closed for the summer holidays,
it is not possible to conduct research across the sector. We have,
though, been able to contact schools representing a variety of
types, and their responses are given at the end of this answer.
Because they contain information which the Office of Fair Trading
would regard as commercially sensitive, their answers, to comply
with OFT guidelines, cannot contain the names of the schools
- Selection.
In the MORI research conducted for the Sutton Trust in 2004, 50%
of parents agreed that pupils should be selected by an entrance
test at the ages of 11 and 12 to go to different types of private
or state secondary schools, with 35% disagreeing. Views on any
type of selection are strongly held, with powerful arguments in
each direction. ISC schools are on a continuum from highly academic
to not academic at all, and they admit pupils on their own very
different criteria. The MORI research shows that this is in line
with the views of the majority of parents who express a view
- Figures.
The most recent detailed financial information comes from an ISC
survey undertaken in 2000-01. The £219 million disbursed
by schools was made up as follows:
- Trends.
The following Chart shows the trends over the past ten years in
scholarships and bursaries, plotted against the fiscal benefits
from charitable status:
Admissions and awards policies:
case studies
A. Co-educational urban day
school, South coast town.
The school admits mainly at 11,
using its own entrance exam, but also admits at 13 using the Common
Entrance as well as its own exam, and at 16. The primary purpose
of selection is the identification of natural ability. At 11,
the school requires a 'pass' in at least one of its maths, English
and Verbal Reasoning tests; its pass mark for Verbal Reasoning
is 111 - significantly below the average level for a state grammar
school. The school makes about 30 admissions awards a year, evenly
split between Years 7, 9 and 12, on the basis of performance in
admissions tests. They are all means-tested, using the standard
form prepared by the Independent Schools Bursars Association (ISBA),
and can be worth the full value of fees.
B. Co-educational boarding
school, Midlands.
Admission is normally at 13,
using the Common Entrance, but some pupils are admitted at 11
and at 16 using the school's own entrance test. The primary purpose
of the admissions process is the identification of natural ability
and assessment of prior attainment. The school's normal requirement
is around 55% in the Common Entrance, admitting an ability range
assessed at Verbal Reasoning score 110 and above. Awards (mainly
on the basis of performance/audition): Two in Year 7, 32 in Year
9 (19 academic, 3 art/design/technology, 2 music, 1 sport) and
a further 12 at sixth form level. From 2005, all awards above
10% of fees will be means-tested, using the ISBA form.
C. Girls' day and boarding
school, Greater London
The school's main age of entry
is at 11 but girls enter at all ages when places are available.
The school has its own entrance exam, which aims to identify natural
ability and diagnose needs, and sets ad hoc papers for overseas
students. Pupils from a broad band of ability, from IQ level of
95 and above. For sixth form entry it demands five GCSE at Grade
C or better. Only two academic scholarships are awarded, but the
school also has two means-tested "assisted places" worth
up to 90% of fees available for girls living in the immediate
locality. Other awards are made for music, sport and art; the
school also has limited funds for offering bursaries to existing
pupils whose domestic or financial circumstances change.
D. Co-educational rural boarding
and day school, South East.
The school, where some 40% of
pupils have special needs, admits about 35 pupils at age 11, with
a further 25-30 joining at 13; some 10-15 join the school at 16.
At 11 the school uses its own assessments (non-verbal reasoning,
reading comprehension, maths, spelling etc). At 13, while some
pupils sit the Common Entrance, the school does not rely on the
results. The school, which has a dyslexia support department,
also takes account of educational psychologists' or other specialists'
reports. The main aims of the admissions procedures are the assessment
of ability and diagnostic. The school admits a broad range of
ability from about IQ level 90 and above. It offers 8-10 scholarships,
on the basis of performance, but gives many more means-tested
bursaries. At present some 25% of all pupils receive bursary help.
E. Co-educational urban day
school, northern city.
The school admits mainly at 11,
but also some at 13 and 16, using its own entrance exam but also
taking account of reports from feeder schools, psychologists'
reports etc. Aiming to identify potential and ability, the school's
MidYIS assessments suggest that it recruits from all but the lowest
quartile. The school awards no scholarships but gives a varying
number of bursaries - which can be worth up to the full value
of fees - each year, assessed on the basis of family income, reports
from feeder schools, community background, family circumstances,
etc.
F. Co-educational day school,
Greater London.
The school's principal intake
is at 11, using its own entrance exam, but also recruits at 13,
using Common Entrance, and into the sixth form, requiring 4 B
grades at GCSE. The main purpose of admission testing is diagnostic
but admits mainly from the upper quartile of ability. It awards
10 scholarships a year on a competitive basis, worth up to 25%
of fees, and an equal number of bursaries on the basis of means-testing
and family circumstances, using the ISBA form, occasionally supplemented
by home visits.
G. Girls' urban day school,
Yorkshire.
Pupils are admitted mainly at
the age of 11, using the school's own entrance exam, but also
at 13 and 16 (on GCSE results). The school aims to identify natural
ability and admits a broad range of ability from non-verbal reasoning
scores of 90 and above. It offers six scholarships a year (two
academic, one music, one drama, one art and one sport), worth
a maximum of 25% of fees, and a varying number of bursaries, assessed
on the basis of the ISBA form.
H. Girls' urban day school,
Greater London.
The school admits at 11 - using
the entrance examination agreed by a local consortium of girls'
schools - and at 16, and aims to identify both natural ability
and potential. Pupils accepting places at the school, which is
always highly-placed in A-level performance tables, come from
the top 40% achievers in the entrance exam. Means-tested bursaries
equivalent to seven full places, and scholarships equivalent to
6x50% (one for music), are awarded each year; in practice more
pupils than this actually receive assistance. In 2004, for example,
16 bursaries were offered.
3. the Committee returned
to this at Q 564 and asked for information on (a) the difference
between entry exams which apply aptitude tests from those which
are called attained knowledge and (b) what proportion of bursaries
and scholarships follow that pattern - of the 31 per cent getting
bursaries or scholarships, what proportion of the fees do those
bursaries or scholarships amount to - Q 564.
We do not have this information
in this form. However:
- It is clear from the case
studies given above that schools admit children through a variety
of methods, most of which look for aptitude (i.e. potential) as
well as attained knowledge
- The amount given in bursaries,
which are means-tested, exceeds the amount given in scholarships,
which are not - though some children with scholarships will be
from economically disadvantaged backgrounds. Bursaries are given
to children who meet the entry criteria for a school but whose
parents are not able to afford the fees
- The proportion of fees given
to children with scholarships is, as noted above, decreasing
- The proportion of fees given
to children receiving bursaries will depend on the means of their
parents. At Manchester Grammar School the average bursary is 80%
of the fees. In many cases it is 100% of the fees. In terms of
indirect public benefit, the maximum benefit to the exchequer
will come from giving just enough in the form of a bursary to
enable the parents to meet the cost of the remaining fees.
4. how many bursaries,
by number and value, go to children of staff as part of their
employment package - Q578
- Bursaries or other fee discounts
to children of staff are not included in the figures which ISC
collects for bursaries, because staff discounts are seen as an
employment benefit and not as a means of widening access. The
evidence from the Girls' Day School Trust (GDST), which forms
the largest grouping of independent schools within ISC, is that
their 25 schools do not give staff discounts. There will be a
wide range of practice among ISC schools
- Also excluded from the ISC
figures for bursaries are discounts given to parents who already
have a child at the school. Again, these discounts are not seen
by ISC as a means of widening access and therefore do not count
as bursaries.
5. It would be helpful
to know whether the number of overseas students that the schools
took is growing or falling to compare with the point in Q543.
- The number of overseas students
is broadly static. Just over 8,000 new students arrive in ISC
schools (charitable and non-charitable) in the average year, staying,
again on average, for just over two years. Some children will
stay for only a year, in order to improve their English. Others
will stay for several years. The total number of overseas students
in ISC charitable schools is about 16,000. That is less than 4%
of the total.
6. the percentage of independent
schools with charitable status which make curriculum facilities
available to (a) state schools and (b) private companies - QQ586-7.
- The great majority of ISC
schools are charities, and the figures (which are for all ISC
schools) will therefore, because of the weight of numbers, be
very nearly accurate for ISC schools which are charitable. Figures
are collected separately for use of facilities by maintained schools,
community groups, and private companies
- "Curriculum facilities"
are classrooms, science laboratories and music rooms. For reasons
that Sir Ewan Harper set out in his evidence to the committee
(at Q486), there are obvious limitations on the sharing of a school's
classroom facilities with another school during the school day.
That is why there is greater use by community groups, who can
use classrooms in the evenings
- Use of school facilities
by private companies was a category introduced into the survey
for the first time in 2003. This was to identify separately those
arrangements with private companies which could not be guaranteed
to offer additional facilities to the wider community (e.g. privately-run
summer play schemes and summer schools). Most use of curriculum
facilities by private companies is out of school term time
- Maintained schools.
Just under a third of ISC schools (32.6%) make curriculum facilities
available to maintained schools. This figure shows a sharp increase
from 13.2% in the previous (1997) survey. More than half of ISC
schools (51.1%) make sports and/or PE facilities available to
maintained schools. This is an increase from 31.6% in 1997. More
than a third of ISC schools (37.5%) make other facilities available
to maintained schools. This is an increase from 16.9% in 1997
- Community groups.
Nearly two-thirds (63.2%) of ISC schools make curriculum facilities
available to community groups. This figure shows a sharp increase
from 46.6% in 1997. The great majority (85.6%) of ISC schools
make Sports and/or PE facilities available to community groups.
This is an increase from 64.1% in 1997. More than two-thirds (68.2%)
of ISC schools make other facilities available to community groups.
This is an increase from 66% in 1997
- Private companies.
Two-fifths (40.4%) of ISC schools make curriculum facilities available
to private companies. There are no comparisons with previous surveys
because this information was not separately listed. Just under
two-thirds (63.7%) of ISC schools make sports and/or PE facilities
available to private companies; and just over half (52.8%) make
other facilities available to private companies. Again, there
are no comparisons with previous surveys
- Summary.
Use of facilities within ISC schools by maintained schools and
by community groups increased dramatically between 1997 and 2003.
For maintained schools the great majority of use is free or at
nominal cost. For community groups the majority, though a smaller
majority, of use is free or at nominal cost. For private companies,
the majority of the use is charged at a profit. As we said in
evidence, charging at cost or above is not charitable; charging
at below cost, or making no charge, is charitable
- The Chairman noted (at Q589)
that the percentage of ISC schools making facilities available
to outside users had apparently fallen from 92.6% in 1997 to 88.75%
in 2003. The reason is that some schools in 1997 mistakenly counted
some shared activities (for example sports fixtures) as allowing
use of facilities by outside bodies. This was corrected in the
2003 survey, and explains the slight fall in the overall figure.
The intensity of use by outside bodies has increased very substantially
between 1997 and 2003, as noted in the earlier part of this answer.
7. any specific proposals
you may have for amending the draft Bill - Q591.
- We consider that the Draft
Bill provides a secure mechanism for ensuring, on a case by case
basis, that charities, including independent schools, provide
enough public benefit to justify their charitable status. We believe
that the Bill as drafted gives the Charity Commission the necessary
powers to regulate. We are of the same view as the Charity Law
Association, Christopher McCall QC and the Home Office in believing
that the line of cases (Lonsdale etc) put forward by the Charity
Commission will not impede the Commission in its function as regulator.
Put briefly, any judge would need only four words: "Society
has moved on" to return Lonsdale to the obscurity in which
it has existed since 1951, and from which, briefly, it has emerged.
We believe that the principles set out in Re Resch would
undoubtedly prevail, and we are aware that this view is shared
by the Director of Legal Services at the Charity Commission. The
principles in Re Resch are the principles which the Charity
Commission would seek to apply, and in doing so they have our
full support
- In common with other witnesses
we would support appeals to the Tribunal being available on all
issues.
8. your considered response
to the suggestion put at Q 634 by Lord Campbell- Savours that
"public schools should be completely removed from the area
of charity status because they are complicating the whole issue
of interpretation of the word "charity". If it is that
there is a need to subsidise them, they should be subsidised elsewhere
within tax law under a completely separate category. Would you
consider that as a proposition?"
- Education is a charitable
purpose, as it has been for 400 years. It would, as we said in
oral evidence, be startling to say that education remained charitable
unless it happened to be provided by a school. Charitable status
is, for many schools, far more important than the fiscal benefits,
which in most cases are very small, and which are outweighed by
direct fiscal contributions in fee assistance from the school
- Charitable status gives schools
a social purpose which informs their activities: leading them
to widen access; to raise funds to widen access further; and to
be involved with the community. We believe that most people would
prefer schools to be charitable - with all surpluses used for
charitable purposes - rather than being run for profit. Charitable
status helps schools be more inclusive, and to do more for the
public benefit
- Many teaching staff, both
in the maintained and independent sectors, are there because they
themselves have a social purpose. Employment by a charity is significantly
different from employment by a company run for profit. It is highly
likely that loss of charitable status would impair the recruitment
of highly-qualified staff into the independent sector. Many independent
sector staff, at some stage in their careers, move from the independent
to the maintained sector: ISC is actively engaged in promoting
a scheme for independent sector teachers to achieve Qualified
Teacher Status, which enables them to move to the maintained sector.
The independent sector, as currently constituted, is therefore
a recruiting sergeant for the education sector in general
- The effects of this suggestion
are therefore likely to reduce access, increase barriers between
the maintained and independent sectors; impair the social ethos
of schools; and impair recruitment
- It is also fair to make the
point that subsidy flows from the independent schools sector to
the state, rather than vice versa. ISC schools which are charitable
educate 440,000 UK-resident children, whose education would otherwise
cost the state £1.98 billion. Additionally, ISC schools which
are charitable, unlike maintained schools, bear irrecoverable
VAT, amounting to £170 million. These sums far outweigh the
fiscal benefits of charitable status.
9. a considered response
to the point put at Q 634 by the Chairman, arising from the written
evidence, that "what differentiates both independent schools,
hospitals and clinics (and I say this without in any way being
in favour or against this argument and I think it needs a response),
the activities which you, independent schools, deem charitable,
your good works, are actually rather peripheral to your main business".
- The core activity of independent
schools is educating children. That is a charitable purpose. The
proportion of their time and activity devoted by independent schools
to charitable purposes is about as high as is possible in any
charity, in that virtually all time and effort is spent on the
core charitable purpose of education
- All
charities, including independent schools, have to pass two hurdles.
The first is the charitable purpose, and, for independent schools,
the charitable purpose is education. The second hurdle is public
benefit. On a case by case basis, each school must be able to
demonstrate that it operates for the public benefit: i.e. that,
taking the sum of the activities of the school, it delivers sufficient
benefit to be a charity. Bursaries, partnerships, sharing of facilities,
sharing of teaching and curriculum facilities, and other community
activities can all demonstrate public benefit. These "good
works" are an important part of the role of a school in engaging
with the community and with maintained schools. However, if you
take these "good works" activities" and say that
only these are charitable, that is to ignore the main educational
and charitable activity of the school.
Yours sincerely,
Jonathan Shephard
General Secretary
Independent Schools Council
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