Judicial review proceedings that started in the Upper Tribunal (Tax and Chancery Chamber) of the Royal Courts of Justice earlier this week could impact on the way in which charity law operates in relation to fee-charging independent schools and potentially all fee charging charities. Whilst the review concerns charity law applicable in England and Wales, it will also be of interest to Scottish charities, particularly independent schools.
Following a reference from the English Attorney-General and a successful judicial review application by the Independent Schools Council (ISC), the Charity Commission's guidance on fee-charging charities, which includes the statements, "people in poverty should not be excluded from the opportunity to benefit" and "where benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted by the ability to pay any fee charged" is being reviewed.
The ISC argument focuses on the guidance containing important errors of law which lead to significant practical consequences. One of the main errors ISC argue is that the definition of "public benefit" to mean those in poverty should not be excluded, is wrong and should be removed. They argue that when assessed by the Commission, too much emphasis was placed on bursaries and too little on the other forms of public benefit that the schools could provide.
A further argument is that the guidance requires fee-charging schools to provide bursaries without stating what value these should be and that the Commission has made it difficult for private schools to know whether they have met the requirement to provide a public benefit.
The ISC state that, "the commission appears to be adopting an approach, which in substance makes it mandatory for independent schools to provide free places funded by bursaries equivalent to what the commission judges to be a sufficient proportion of the school's income, although without any clear indication of exactly what the commission will regard as sufficient."
The Commission issued a statement sticking by its guidance; "If trustees administer a charity for the advancement of education in such a way that benefits are available only to persons able to pay fees which a substantial part of the public (including the poor) cannot afford, they are not administering it to further the purpose for which it was established, and they may thereby be in breach of duty."
The outcome of this decision is awaited with interest. It will hopefully clear-up confusion surrounding the definition of what is classed as "public benefit" in England and Wales. The action is expected to end on 27 May, so watch this space!
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.