In previous editions of our bi-annual Charity Bulletin, we reported on the long-running saga of the English independent schools and their fight against the Charity Commission’s guidance which sets out what the Commission considers such schools must do in order to deliver “public benefit”.
The Independent Schools Council (the “ISC”), which represents over 1,260 schools in England and Wales, challenged the guidance through judicial review – they considered that the “public benefit” guidance goes beyond the requirements of the English legislation, that the action which the Commission had been taking in relation to public benefit was “prescriptive and interventionist” and “reduced the public benefit of independent schools to a crude calculation of fees and bursaries”. The Attorney General also used his powers under the Charities Act 1993 (the English charity statute) to refer questions about the operation of English charity law in relation to a hypothetical independent school to the Tribunal for a determination.
These two proceedings were brought together before the Upper Tribunal and that Tribunal issued its decision on 13 October in favour of the ISC (indeed, the Tribunal felt some parts of the Commission’s guidance “obscure” and “wrong”).
The ISC’s response
The ISC has hailed the decision as a welcome clarification of the law, and suggests that it:-
puts governors back in control of decisions relating to public benefit;
- breaks the link between bursaries and public benefit;
- “lays to rest” the notion that the Commission can threaten independent schools with the loss of charitable status based on the Commission’s assessment of whether the school is doing enough to meet its public benefit requirement; and
- recognises that schools are no different to many other charities which provide high value services and have no option but to recover their costs through levying fees.
The Charity Commission’s response
For its part, the Commission has also welcomed the Tribunal’s decision and claims that the Tribunal has agreed with its interpretation of the law (some might say it’s the way you tell it). The devil is in the detail though, and the Commission does acknowledge that the Tribunal has found that “some parts of our guidance do not explain the law clearly enough”. It has undertaken to review its guidance immediately. Pending publication of updated guidance, the Commission has advised the trustees of independent schools in England to familiarise themselves with paragraphs 217 to 220 of the Tribunal’s decision – which essentially set out that there can be no specific threshold or benchmark which will demonstrate public benefit, and trustees must decide for themselves how they provide public benefit.
There is no doubt that the two contrasting press releases show some PR gloss – notwithstanding this, they make interesting reading. Certainly, it appears that the Commission’s net has been drawn in – they will need to be less prescriptive in their approach to assessing the public benefit provided by English independent schools.
The decision relates to the position in England – the legislation is different north of the border, and OSCR is the regulator in Scotland. However, Scottish charity law also uses a similar public benefit test and so trustees and advisors of independent schools in Scotland should still find the decision relevant. We shall have to wait and see if OSCR issues a statement on, or alters its guidance as a result of, the Upper Tribunal’s decision in this case.
For the ISC’s press release click here
For the Charity Commission’s press release click here
For the Tribunal’s full decision click here