Analysis: Rising stakes over public benefit

The new chief executive of the Independent Schools Council has used one of his first public appearances to attack the Charities Act 2006 and its effect on independent schools.

Barely a week after being appointed, Chris Parry fired a broadside at the act and the Charity Commission guidance resulting from it, Fee-Charging and Public Benefit, during a meeting of the Commons select committee on education.

The former admiral said that the act had heightened tensions in the independent sector and he had encouraged independent schools to write to the commission to explain their legal position (Third Sector, 14 May).

Parry's comments continue the combative stance adopted by his predecessor, Jonathan Shephard, who launched a salvo at the Charity Commission guidance shortly before leaving in March. Shephard said the commission had drifted so far from the law that it was ignoring "fundamental legal authorities".

He said the Charity Commission had failed in its duty to produce guidance that was "free from inconsistency, sound in law and workable in practice".

The commission had consulted the ISC, and Shephard had spoken positively about the body's general guidance on public benefit, published in January.

But his remarks when the more detailed draft guidance on public benefit and fee-charging charities was published appeared to signal a change of view and a loss of patience.

This was confirmed when Matthew Burgess, recently appointed general counsel for the ISC, also said the commission had fundamentally misinterpreted case law - principally Re Resch, the main precedent on public benefit and fee-charging. He said the requirement that schools should help "people in poverty" was not supported by the law.

He said that, to meet the public benefit requirements, schools had to provide education to a reasonable number of people and not "purposefully exclude" anyone, and that the commission was incorrectly working on a principle of inclusiveness, not non-exclusiveness.

The clarity of Re Resch has long been questioned by charity law experts. Lord Phillips, a former member of the House of Lords and a specialist charity lawyer, described the case as "wonderfully unclear" during the passage of the Charities Act.

"To rely on that case and those circumstances is a pretty unsatisfactory basis on which to interpret the public benefit test," he said.

The Charity Commission maintains its guidance is extremely clear and follows the law as laid out by Re Resch. It has published a detailed analysis of the case, which it said showed that organisations that benefit only those who can afford high fees were not charitable.

"It's not simply that charities must not be 'deliberately exclusive', but rather that they must not be unreasonably restrictive, and the poor must not be excluded from the opportunity to benefit," a spokesman said.

The final version of the commission's fee-charging guidance is to be published by the end of the year.

THE VIEW FROM THE SMALLER SCHOOL

Mike Piercy, headteacher of Moor Park, a small independent school in Shropshire, said schools like his were worried about being asked for more than they could afford.

"At Moor Park we have a very small surplus," he said. "Seventy per cent of our income goes to our teachers. We can't afford to offer a lot more than we do at the moment."

He said schools gained relatively modest tax benefits from charitable status, and that strict commission requirements could leave them in a worse position than private businesses.

But he said he did not expect schools to take legal action unless they found their financial futures endangered by the commission's requirements.

"Only if we're asked to do something we really can't afford will we go to court," he said. "Independent schoolteachers would like to see the level of education they offer open to everyone in the country. We're happy to try and help."

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