Tribunal ruling on public benefit brings mixed reactions

Charity lawyers talk variously of a victory, a defeat and a score draw

Stephen Lloyd, head of  charity and social enterprise at Bates Wells & Braithwaite
Stephen Lloyd, head of charity and social enterprise at Bates Wells & Braithwaite

Charity lawyers are divided over the implications of last week's landmark ruling on private schools and public benefit.

A decision published by the Upper Tribunal on Friday said the Charity Commission had been too proscriptive about the ways in which fee-charging schools should demonstrate that they offered benefits to those who could not afford the fees.

The tribunal also ruled, however, that it did not accept the argument put forward by the Independent Schools Council that charitable fee-charging schools should not be obliged to offer benefits to people in poverty.

"I don’t think anyone really won," said Stephen Lloyd, head of charity and social enterprise at Bates Wells & Braithwaite. "I think it’s a score draw, and one that left many confused about what happened."

He said that the Independent Schools Council was vindicated because considerable criticism was attached to the Charity Commission guidance. But he also said the commission’s principles had been largely upheld.

"Trustees have been left with the clear idea that the exclusion of the poor is not permitted," he said. "It’s not enough that they are merely the object of the trustees’ discretion. There must be a defined benefit to them that is not just tokenistic."

Tom Murdoch, a solicitor at Stone King, said the judgement no longer left the commission with the option to de-register a school if it was not providing public benefit; but it still retained considerable power over trustees.

"The commission had maintained it was for them to decide what was a reasonable and appropriate public benefit, but it’s now really for the trustees to decide," he said.

Ros Harwood, head of charities at Dickinson Dees, said the judgement offered trustees more freedom about how they provided public benefit. "It will be a relief to many who had feared that the Charity Commission’s guidance would straightjacket them into finding funds to award bursaries up to a predetermined level," she said.

Simon Weil, a partner at Bircham Dyson Bell, said his view was that the tribunal had used a wrong interpretation of the law. "These aren’t charities for the relief of poverty," he said. "To be for the public benefit, it’s enough that your beneficiary class is sufficiently large. These charities are used by seven per cent of the population. It seems to be sticking your neck out to say that this group is too small."

Francesca Quint, a barrister who represented the NCVO in the case, said the ISC’s argument had been shown to be wrong. "Fee-charging schools have got to include the poor and those who can’t afford the fees in some way. The commission will still have a statutory duty to make sure they are providing a public benefit and can still intervene if they think that is cursory."

Paul Ridge, a solicitor who represented the Education Reform Group, said: "I don’t think the schools can claim victory. They went to the court hoping for the verdict that educating those students who could pay would be seen as enough of a public benefit. That failed. The tribunal has decided that poor people cannot be excluded."

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