Probe into private schools' charity status

Since 2006, organisations have had to meet a charity "test" to achieve or keep charitable status. The biggest area of controversy is whether private schools, some of which charge up to £30,000 a year, deserve this treatment.

Being classed as "charities" brings multi-million-pound benefits to the fee-paying schools. The Sunday Herald revealed last week that they qualify for 80% discounts on their non-domestic rates.

In 2008, OSCR ruled four private schools, including Hutchesons' Educational Grammar (HEG) in Glasgow, had failed to demonstrate public benefit. This led to a process during which the schools increased spending on means-tested assistance and eventually received a pass from OSCR. HEG increased its number of bursaries from 2.6% of the school roll to 9.9%, although only 2.2% of pupils receive 100% support.

Another of the schools that initially failed, Merchiston Castle in Edinburgh, upped its mean-tested bursaries from 3.7% of pupils to 14.7%. Again, however, only 2.4% of the school roll get the full fee paid.

St Leonards in Fife turned a fail into a pass by increasing support from less than 1% of pupils to 10.1%. According to OSCR figures, 1.3% of the school roll now receives a 100% bursary from this school.

Despite passing a total of 13 independent schools, OSCR said the reviews confirmed that fee-charging organisations had a "higher possibility of failing the charity test".

This was because school fees may "unduly restrict the access people have to the public benefit they offer". In this context, the watchdog has continued to categorise independent schools as a "priority" group.

The Sunday Herald can reveal OSCR is to conduct assessments of all the remaining private-school charities – estimated at around 45 to 50.

This could include institutions such as The Glasgow Academy, Strathallan, Loretto and Fettes, which charges up to £27,150 a year for its charitable services.

The probe will involve OSCR putting the schools' financial returns under the microscope and making individuals judgments on the benefit provided.

The body will review progress in September and allocate extra resources to the project.

A minute of one of the quango's recent board meetings stated: "The Board noted that it was a priority to set out a plan to deal promptly with this group of charities which presents a known risk of not meeting the charity test - "

It added: "The Board noted that some schools already reviewed were asking when the remaining schools would undergo the same scrutiny."

A growing body of political opinion is now questioning charitable status for private schools.

At a Westminster level, Labour's shadow education secretary Stephen Twigg said a "significant number" of the schools were "failing to fulfill their charitable objectives".

Hugh Henry, Labour's shadow education secretary at Holyrood, said charitable status for private schools was a "peculiarity", adding: "I welcome this move by OSCR. In other countries, private schools are regarded as businesses, as they seek to make a profit. If in this country they claim to be charities, then they need to clearly demonstrate their charitable purpose and benefit in order to justify their subsidies.

Henry called for a debate on whether private schools benefit disproportionately compared to state-funded schools with regard to non-domestic rates relief, for example.

John Wilson, an SNP MSP for Central Scotland, said: "The decision by OSCR to carry out an investigation into other charitable educational facilities should include all organisations which claim to provide private education and are currently registered for charitable status.

"Any educational facilities which do not fully comply with the legislation should be removed from charitable status with immediate effect and any benefits accrued should be reimbursed as soon as practicable."

Alison Johnstone, Green MSP for Lothian, said: "This is a welcome development - we should ensure those private institutions enjoying the benefits of charitable status are entitled to do so."

A spokesman for the OSCR confirmed the body would assess up to 50 private schools, adding: "We don't have a definitive list of the 45-50 charities at present, as this is still being compiled. But essentially, if a charity is or is operating a fee-charging school, it will be examined as part of this priority group. Once we've finalised this list, we will publish it on our website in line with our existing practice for any charity whose charitable status is under review."

Another Labour MSP, Kezia Dugdale, said: "With families across the country struggling to make ends meet, it's only right that private schools are seen as a priority group for investigation in the eyes of the charity regulator. Charitable status brings with it considerable tax relief – I have serious concerns that many private schools, which operate like businesses, simply don't make the grade when it comes to their charitable work."

John Edward, director of the Scottish Council of Independent Schools, said: "The schools are happy to take part and they know the test is there. Every charity knows what is expected of them."

Pressure on watchdog over officials' links to independent schools

THE watchdog overseeing a probe into private schools' charitable status is under pressure after it emerged its chief executive sends his children to be privately educated.

The Sunday Herald can reveal that David Robb, CEO of the Office of the Scottish Charity Regulator (OSCR), sends his children to a fee-paying school, while the quango's chair also has links to the sector.

An SNP MSP has demanded Robb and any OSCR figure who uses private schools should not be involved in the investigation. The call comes after it emerged the former chair of the Charity Commission (CC) – the watchdog for England and Wales – had to absent herself from a similar review south of the Border.

OSCR is the Scottish quango investigating the charitable status of up to 50 private schools. This follows another 13 school reviews the body has completed in the last few years.

But questions are now being asked about potential conflicts of interest in OSCR. A minute of a joint meeting between the OSCR and the CC in 2007 stated: "CC have formal legal advice. The effect of which is to rule that the Chair [Dame Suzi Leather] has a direct financial interest in the level of fees charged by schools and is therefore precluded from taking part in the debate, to the extent of not even receiving Board papers."

The document revealed the OSCR was reluctant to go down the same path. It noted a "similar ruling" for the Scottish body on fee-paying charities "would find the Board un-quorate [sic]", meaning there would be too few eligible members left to conduct business. This suggests OSCR board members during the first review of private schools may have had links to the independent sector.

After this newspaper approached the OSCR about whether board members or senior staff used private schools, the organisation confirmed Robb fell into this category. An OSCR spokesman said the school Robb was using had already been assessed by the watchdog before his appointment as CEO.

Dr Graham Forbes, OSCR's chair, declares a non-financial interest in the private St Mary's Music School in his register of interest.

None of the body's senior management team has children attending a fee-charging school.

SNP MSP John Wilson said: "Given the revelation that the chair and chief executive of OSCR both have involvement with the private education sector, they should absent themselves from any involvement or discussions regarding the investigations on the issue. This situation should also apply to any other board or staff members who may have links with the private education sector in Scotland."

A spokesman for the OSCR said: "OSCR has its own published Code of Conduct governing such matters - As you would expect, this is regularly reviewed and we have sought and received advice and guidance from the Standards Commission for Scotland, and from Scottish Government."

A CC spokesman said: "The 'direct financial interest' [in the minute] refers to the fact Dame Suzi Leather's children were attending an independent school at the time."