Scholarships do “remarkably little” to make private schools more socially inclusive, research suggests.

Private schools are building luxury facilities in an “educational arms race” while minimising the amount they spend subsiding their fees for less well-off students, a new report says. 

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In 2018-19, private schools offered reduced fees to 176,000 out of their 537,000 students, resulting in over £1 billion of lost income, states the British Sociological Association (BSA) report, called How English private schools keep fees high, scholarships low and luxury pervasive.

But the BSA’s analysis of 142 schools suggests that only 44 per cent of the money spent on reduced fees - £440 million -- went towards helping less well-off parents.

This £440 million spent on means-tested fees was shared between 44,395 students - an average of around £1,000 per student, according to the analysis.

Scholarships ‘do little to make private schools more socially inclusive’

The rest, it finds, “went to scholarships to students with sporting or musical talent who would enhance the schools’ reputations, or on discounts for teachers’ own children”.

The researchers analysed data from the Charity Commission and the annual financial reports and accounts of private schools in England, where the average charge for boarders was more than £30,000 a year.

Only 6,118 students - around 1 per cent of all private school students - received a full-fee scholarship, while a further 2 per cent received remissions of between 75 and 99 per cent of fees, they found.

The report says that “the overwhelming majority of scholarship students still require very substantial family contributions”.

It says: “Scholarships may therefore do little to make schools genuinely more socially inclusive. Many scholarships may, in practice, be awarded to middle- or upper-class families who might be asset-rich but cash-poor.”

It adds that some academic research has argued that “scholarships are used to bolster the existing social and cultural composition of student bodies”.

‘Exaggerated’ reach

Malcolm James, head of accounting, economics and finance at Cardiff Metropolitan University, found that the scholarships were equivalent to around 5 per cent of schools’ income but that “the limited nature of the level and reach of scholarships may be obscured by exaggerating their costs in the schools’ financial accounts”.

This was because schools put the total cost of scholarships as an expense in their accounts, but as schools’ costs are largely fixed, “the marginal cost to the school of additional students will therefore usually be lower than the valuation placed on the scholarships”.

In a hypothetical example given in the report, a school could have 10 fee-paying students charged £10,000 per year, with running costs of £80,000 per year. If an eleventh student attends with 80 per cent fee remission, the cost of admitting this extra student is £1,000, but the school can present itself as having awarded an £8,000 scholarship.

“Schools might therefore appear more virtuous than they actually are and this might permit them to give lower levels of total fee remission than they actually could,” the report adds.

“The accounting regime utilised by these schools permits a veil to be drawn over the actual cost of scholarships granted - effectively overstating it and thereby justifying a limitation on the numbers of students assisted.”

Private schools’ associations have denied they are using accounting techniques in this way.

Private schools ‘virtue-signalling their generosity’

But Dr James said: “These ambiguities allow the schools to appear to provide public benefit whilst utilising accounting techniques to minimise access to students from lower-income families. Even so, they virtue-signal their generosity.”

Dr James said that the study found that in real terms, private school fees had tripled since the early 1980s, with their total annual capital expenditure rising from £247 million in 1997 to £794 million in 2009, declining to £771 million in 2013.

“Through ingenious accounting technologies, schools are able to provide remarkably little benefit to less-advantaged families,” he said.

He added that most private schools were charities and that fee remissions were the way in which they provided public benefit, as required by law, but that the law set no firm targets for schools.

In February 2020, a Tes investigation revealed that five top private schools accumulated surpluses worth £34.8 million in a year - up to four times as much as they spent on bursaries.

Independent schools ‘committed to widening access’

Responding to today’s BSA report, Independent Schools Council (ISC) chief executive Julie Robinson said independent schools were committed to widening access and that the value of means-tested fee assistance provided by schools had increased by over £175 million since 2011 to reach £440 million in 2019.

In addition, “the sector has proposed a scheme to enable up to 10,000 children from low-income families to attend independent schools every year,” she said.

She added: “Schools spend far more on bursaries than on scholarships. In fact, over double the amount is spent on means-tested bursaries compared to scholarships. Bursaries are specifically targeted at those whose financial circumstances merit fee assistance.“

Schools’ accounts are independently audited every year to ensure they are fully compliant, which includes meeting all charity law requirements, she added.

‘No accounting tricks’ by private schools

Rhiannon Cutler, managing director of Baines Cutler, an organisation that carries out research and survey work with independent schools and academies, said: “No accounting tricks are involved as is suggested.”

While there is “no legal requirement for independent schools to provide a breakdown of fee concessions in their annual accounts”, she said her organisation’s own survey of more than 750 schools - covering over 75 per cent of all pupils in ISC schools - showed that scholarships were equivalent to around 2 per cent of schools’ income, she said.