Charity Commission challenged on the legal front


Dominic Grieve, the Attorney General, has asked High Court judges to rule whether the Charity Commission is acting illegally by making fee-charging schools offer means-tested bursaries or lose their charitable status and face closure. The Commission has threatened to revoke charity status from independent schools that fail its “public benefit” test under guidance to the Charities Act 2006 that it issued in 2008. However,the Commissions guidance rather than serving to provide clarity and predictability has sown widespread confusion in the sector. Schools really don’t know exactly what is required of them to satisfy the public benefit criterion. The  Independent Schools  Council has said “the entire sector continues to be at the whim of the Commission’s prevailing and subjective view as to what public benefit means, and what is ‘sufficient’ for a school to pass the public benefit test. The verdicts of the Commission in the cases of the five independent school they reviewed, and the two where action plans were required, have done little to clarify the position or reduce the uncertainties.”  While the sector understands and accepts  that in order to have charity status you must fulfil charitable purposes and  show that you deliver ‘ public benefit’, how public benefit is defined and what it means in practice has become hugely contentious.  Prior  to  the election the Tories made it clear that  they had concerns about the on-going confusion. Some schools with Charity status believe that it may not be worth retaining the status given the increase in regulatory risks and costs. Private school chains such as Cognita and Gems seem to manage well enough without it.

The Commission has signalled that its main focus is on the number of bursaries offered by schools as a measure of the degree of public benefit offered by a school. This threatens in particular smaller schools who are hard pressed to offer ‘free’ places and will be forced to raise fees (making them even more exclusive) and could even force some to  close. Schools also point out that they can and do benefit the public by sharing facilities, teaching expertise, and  pupil exchanges, but  also  through federations and less formal partnership arrangements,   and some of course sponsor Academies. State Heads complain  too that the Commission is encouraging private schools to cherry pick their best pupils which diminishes their schools, while signalling that state schools cannot educate the best pupils. Self evidently offering bursaries for a  relatively few pupils benefits just those few pupils, rather than the many, which a partnership arrangement for example  is  more likely to do. But the Commission seems unwilling to give appropriate weight to other  non-bursary arrangements in determining  whether or not a school satisfies the public benefit requirement.

Certainly this is the  widely held perception.

The Attorney-General  has  now stepped in to the two-year battle, seeking a full review of the law applied to private schools. The Charities Tribunal, an independent body that can overturn decisions by the commission or clarify legal ambiguities, will now rule on the matter.  There are lawyers who believe that the Commission has been making it up as it goes along and  agree that its  approach has been both whimsical and subjective and is therefore very  vulnerable to legal challenge. Charity law  as it stands does not, they claim, say anything about  poverty  having to be taken into account when determining whether education delivers a   public benefit .

The ISC is still pursuing ,separately, a judicial review and  there will be a hearing early  this month to confirm whether or not it  can proceed with its application.

The Commission has undoubtedly been damaged by the furore, alienating many in the sector, because of its opacity and it doesn’t  help much that Dame Suzie Leather is seen as  very close to the Labour party, having spent most of her professional life as a quangocrat.

If the Commission  loses on the legal front, there will be  significant political fall out and the Commission, short of political top cover, may be very  exposed.

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