Upper Tribunal rules on public benefit and independent charitable schools

The Upper Tribunal has ruled in a case relating to how independent charitable schools are to meet the public benefit requirement.  Such schools must operate for the public benefit, which means that they must provide for the poor, but how they do it is a matter for the trustees.  The Tribunal criticised the guidance given by the Charity Commission, saying that it was not clear in respect of the adequacy of the provision to be made for the poor.  

Two sets of proceedings were heard together:

• a judicial review application, seeking to quash parts of the guidance issued by the Charity Commission; and
• a reference by the Attorney General, consisting of certain questions about the operation of charity law in relation to a hypothetical independent school.

In its judgment, the Tribunal said (paras 217-220):

"It is for the charity trustees of the school concerned to address and assess how their obligations might best be fulfilled in the context of their own particular circumstances. … Not all of the benefits which the school provides to those other than students paying full fees need to be for the poor. We see no reason why the provision of scholarships or bursaries to students who can pay some, but not all, of the fees should not be seen as for the public benefit. Provided that the operation of the school is seen overall as being for the public benefit, with an appropriate level of benefit for the poor, a subsidy to the not-so-well-off is to be taken account of in the public benefit. It is certainly our view that in the right circumstances, remission of fees for an existing student who has become unable to meet any of the fees due to changed circumstances, should be seen as being not only for the public benefit but as a benefit provided to a person who has become 'poor'.

We have focused on the payment of fees and the provision of benefits. But those are not the only questions which trustees need to consider. They need to consider the question of access more generally and how to treat all their potential beneficiaries fairly. This is not to say that trustees cannot properly make policy decisions which have the effect of ruling out of consideration large numbers of potential beneficiaries. But such policy decisions must be rational and justifiable in the promotion of the public interest. They certainly cannot be capricious.

Quite apart from questions of impediment to access by reason of financial means, any school will need to consider whether the provision of some of its facilities can really be justified as either part of or properly ancillary to the advancement of education. This is the 'gold-plating' aspect referred to by the ERG [Education Review Group]. We have to say that some of the activities and facilities revealed in the promotional material produced to us in the case of two schools might well seem astonishing to those who are not familiar with such matters. We recognise that the extent of the activities and facilities provided in any particular school will depend on the school's historic endowment as well as the fees currently charged. In our view, however, where facilities at what we might call the luxury end of education are provided, it will be even more incumbent on the school to demonstrate a real level of public benefit. This is not to impost 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.

This is all a matter of judgment for the trustees. There will be no one right answer. There will be one or more minimum benefits below which no reasonable trustees would go but subject to that, the level of provision and the method of its provision is properly a matter for them and not for the Charity Commission or the court."

The Charity Commission has announced that it will be reviewing its guidance (see here).

The decision can be found here.