Top schools’ pupils to reap handouts

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Former pupils of some of the country’s most expensive private schools will be eligible for £1,500 handouts to offset the costs of university – from tuition fees to student union bar tabs.

A new charity, to be launched on Friday, will be open to up to 40,000 young people who attended schools such as Harrow, Radley and Cheltenham Ladies’ College that were caught up in the 2004 Office of Fair Trading investigation into alleged fee-fixing.

But their parents, who paid fees set after school bursars met in secret to discuss future price rises, will not be entitled to payments.

The initiative has been widely condemned both inside and outside the independent sector. One private school head described the new charity – the Schools Competition Act Settlement Trust – as a “Kafkaesque financial gesture” designed to allow the OFT to save face after its much-criticised three-year investigation into 50 elite schools.

Chris Keates, general secretary of the NASUWT teaching union, said it was an absurd solution to the fee-fixing saga. He said: “This is clearly going to have no effect on the schools concerned and it makes no sense to give extra funding to the children of parents who had no problem finding the fees in the first place.”

In the final settlement with the OFT, the schools involved agreed to pay fines of £10,000 each as punishment for the practice of systematically sharing information on future fee increases.

They also agreed to pay a total of £3m into the new trust to benefit pupils who were at the schools at the time of the misconduct.

The 250 bursaries the trust plans to award next year will not be means-tested and will be used to help pay general university living costs. A further 200 grants worth £500 will be paid out to help meet the costs of a particular course of study such as equipment or travel costs.

Applicants must have joined the schools at least six years ago, attended after September 2001 and be aged between 18 and 30. They must be involved in some form of educational activity.

Jonathan Shephard, the general secretary of the Independent Schools Council, said he was pleased the money was going back into the “charitable estate” rather than to the Treasury.

But he criticised the way the trust had been set up. “We wanted the money to go to an educational charity to help disadvantaged kids,” he said. “But they got completely hung up with the idea of compensating people who had been at the school at the time.

“First of all, there’s no evidence that the fees went up through the exchange of information – arguably they went down. Secondly, even if they had gone up, all the proceeds had to be spent on the kids themselves because these schools are charities.”

Although the OFT’s interim findings concluded that an illegal price-fixing cartel had forced up fees, this was dropped from the final settlement after the schools stressed they would not accept a ruling that made them vulnerable to parents’ lawsuits.

The private schools still insist they had not been made aware that changes brought in by the Competition Act 1998 made their long-standing information sharing illegal. Fee rises, they say, were purely driven by wage inflation pushing up teaching costs.

Charts supplied by the ISC suggest that prices at the 50 schools investigated increased at a slower rate than in the rest of the sector. Mr Shephard said this was because, as charities, the schools were not driven by shareholder pressure to increase profits.

But a recent article by David Starkie and Tim Wise in the Business Economist journal found that fees in not-for-profit schools tended to be higher in areas where independent schools were most concentrated, running counter to the normal laws of supply and demand.

In some non-profit schools, they said, “management is effectively captured by the workforce” who spent the extra money on more generous salaries, pensions or working conditions.

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