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Tribunal ruling fails to provide clarity over public benefit

14 October 2011

Independent schools failing to provide some benefits for their potential beneficiaries other than their current or prospective fee-paying students would be falling foul of the law, an appeal tribunal ruled this afternoon as it rejected most of a claim challenging the interpretation of the concept of 'public benefit' as set out by the Charity Commission.

Ruling in Independent Schools Council v Charity Commission [2011] UKUT 421 (TCC) the Upper Tribunal decided that each case depended upon its own facts and that - provided the de minimis threshold was crossed – it was a matter for the trustees of a charitable independent school rather than the Charity Commission or the Charity Tribunal to decide how trustees’ obligations might best be fulfilled in the light of their circumstances.

The appeal judges also ruled that benefits for potential beneficiaries who weren’t fee-paying students may be provided in a variety of ways, such as the remission of all or partial fees to “poor” students and the sharing of educational facilities with the maintained sector.

The ruling follows an application by the Independent Schools Council, which sought a declaration that the Charity Commission’s guidance on public benefit for fee-charging schools was unlawful and should be quashed.

Rejecting the ISC’s argument that independent schools should be exempted from funding because they were charities, the appeal panel ruled that “where facilities at what we might call the luxury end of education are in fact provided, it will be even more incumbent on the school to demonstrate a real level of public benefit”.

“This is not to impose different standards on different schools; it is simply that where such luxury provision is made, a stringent examination of how it is provided and how the public benefit is satisfied is appropriate,” the judges said.

But lawyers have been disappointed at the lack of clarity in the ruling.

Paul Ridge, a partner at Bindmans who represented the Education Review Group, a group of academic organisations which intervened in the case, said the court had not drawn “a firm line as to what a school should and should not do”.

“The court points out that one per cent of funds allocated for poor pupils would simply not be sufficient,” Ridge said. “It suggests that ten per cent would be enough but where the line is to be drawn remains unclear.”

Other charity specialists were equally disappointed. “The decision does not deliver the absolute clarification of charity law that many had hoped for,” said Jonathan Burchfield, partner at Stone King.

“The tribunal was at pains to emphasise that its decision will not please any of the parties,” Burchfield said.

He went on: “There can ultimately be no clarity on all the questions arising without a political conclusion to what is a political debate - namely, whether independent schools should have the benefit of the fiscal advantages available to charities, not whether they are, legally, charities.”

Categorised in:

Charities Education