The charitable status of elite schools: the origins of a national scandal
Author: Roy Lowe
Date: 2019-11-18T00:00:00+00:00
Keywords: Local government and services
Description: Professor Roy Lowe examines how 1,300 independent schools in Britain came to provide tax-subsidised education to the elite - freed from oversight by nineteenth-century compromises.
Publisher: History and Policy (historyandpolicy.org)
Rights: Copyright History & Policy, 2019

The charitable status of elite schools: the origins of a national scandal by Roy Lowe.

Published in Great Britain in 2019 by History and Policy.

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Policy Papers

The charitable status of elite schools: the origins of a national scandal

Roy Lowe

CONTENTS

- TITLE PAGE
- COPYRIGHT
- POLICY PAPER
- FUTHER READING

Policy Papers

The charitable status of elite schools: the origins of a national scandal

Roy Lowe

Executive Summary

- Why do private schools constitute a reverse Robin Hood principle? Patronised by the wealthiest in society, indeed by a global elite, most enjoy charitable status.

- Charitable status means they are funded by that vast majority of Britain’s citizens who derive no direct benefit from them.

- Since 1601 charities in Britain have been statutorily defined as being ‘for the benefit of the public’, with schooling and educational provision for the poor also included as an appropriate activity.

- Between 1818 and 1868 protracted attempts to reform both charities and schools, resisted by the Anglican bishops and Lords in the House of Lords, resulted in a compromise.

- Most endowed schools came under the purview of the Charity Commission created in 1853, but in 1868 the schools patronised by the nation’s political and economic elite – the nine ‘Clarendon’ Schools such as Eton and Harrow – were granted complete independence to run their own affairs.

- Over time the Clarendon nine have become 1,300 independent schools providing tax-subsidised education for the wealthiest in society through the continuation and expansion of anomalous charitable tax relief, now worth hundreds of millions of pounds per annum in lost revenue to the Treasury.

- It is high time to reform this anomaly in the nation’s charity and tax laws.

Introduction

There has never been a proper explanation of why today 1,300 private schools, patronised almost exclusively by a selection of the wealthiest 6% in society, enjoy tax-free charitable status. Charity, in most people’s understanding, is supposed to be what the wealthy give to the poor, rather than what society in general gives to the wealthy.

To understand how schools for the poor, many with medieval and Tudor origins, seamlessly transformed into schools for the rich, while retaining their charitable status, requires some careful investigation into nineteenth-century parliamentary history. As I have recently shown, 200 years after Elizabeth I’s founding statute, the 1601 Charitable Uses Act, parliament found that many charities, including those supposed to be running schools for the poor, had become grossly corrupt. At this point it was the obdurate refusal of the Anglican Church to surrender its control of secondary education which first delayed reform and then forced a compromise, with extraordinary long-term implications for British society today and the elite institutions reproducing its hierarchical class structure. This compromise resulted in the major public schools of the mid-Victorian era remaining outside the control of the 1853 Charity Commission. These decisions taken in the mid-nineteenth century continue to resonate, allowing today all elite, fee-paying private schools to continue to operate as registered charities, gaining significant financial support from the state – and therefore from the vast majority of citizens, in a reverse Robin Hood process.

Origins of charitable schooling

A significant number of grammar schools (about 250) were established during the middle ages. They were all founded as the result of charitable bequests, their function to provide schooling for the poor. The dissolution of the Chantries under Edward VI in 1547 generated funds to open many more. The 1547 Chantries Act specified that their funds must be used educationally, ‘to assign monies to the poor’ devoted ‘to teacher or preacher forever, for and toward the keeping of grammar schools’. These schools remained under the control of the Church of England, their function seen as charitable: the provision of a classical education to poor scholars. Thus, from the outset, at the moment Tudor statutes first envisaged a system of schooling, it was being construed as the product of charitable activity, rather than as a responsibility of the state. In this lie the origins of our present controversies.

This was confirmed by the 1601 Charitable Uses Act, which gave the first formal definition of charitable activity. For any institution to be recognized as a charity, it ‘must exist for the benefit of the public’ and ‘must be exclusively charitable’. This included ‘schools of learning’, ‘free schools and schools in universities’ and ‘the education and preferment of orphans’. By the late eighteenth century there was much evangelical rivalry between Anglicans and nonconformists to found charitable schools for the poor.

Indeed, two centuries later in 1807, Sturges Bourne, Lord of the Treasury, argued in the Commons that it was only through encouragement of such charitable activity that the state could avoid becoming the main funder of an ever-growing education system: ‘I disapprove entirely of compulsion. It might considerably check the spontaneous charity of many individuals…It was teaching the persons relieved to look on as a right that which they ought to regard as a favour’. Others emphasized that ‘the operation of the poor laws and the public charitable schools already in existence were fully adequate to ameliorate the condition of the poor’. Samuel Whitbread argued that the Church might be supported and supplemented by the state in providing education, rather than supplanted. It seems that something along the lines of the ‘Dual System’, which developed later in the century was already in the minds of churchmen and women at this moment when they began to contemplate state involvement in education (the 1870 Education Act implemented universal elementary schooling by leaving in place thousands of denominational elementary schools while adding non-denominational school boards to ‘fill in the gaps’ where there was no provision). This was, of course, in part an attempt to maintain the grip held at that time by competing religious constituencies on the institutional provision of schooling.

The case for reform of charities in the early nineteenth century

But all was not well with the charitable provision of schooling 200 years after the 1601 Act. This was highly publicised by a comprehensive review of the endowed schools of England and Wales by Nicholas Carlisle in 1818. He identified shocking abuses which had become commonplace. In Taunton, for example, he found it ‘extraordinary that in so large and opulent a town…this once celebrated school should have been suffered to go to decay, for many years past there have been no scholars’. In many parishes the Anglican vicar, who had control of the school, was using its income to supplement his own stipend. Carlisle’s work deserves to be better known and provides a full and well-documented account of abuses taking place across the country. Carlisle was well-placed to uncover them. He was the under-librarian of the Kings’ Library (soon to be merged into the British Museum) and had worked part-time as secretary to the early enquiries of the great Whig reformer, Lord Brougham, closely associated with the Great Reform Act of 1832.

It was Brougham’s series of Reports into The Education of the Lower Orders in the Metropolis and beyond that brought the abuse of many charities to Parliament’s attention. The first Report, in 1816, called for an enquiry into ‘the mismanagement of the charitable donations …for the instruction of the poor in this country’. Two years later, he underlined the point, emphasizing that it was not simply ‘ignorance, carelessness and mismanagement’ which caused the problem, since ‘misappropriation’ was a more significant factor.  In 1818 Brougham broadened his initiative, introducing a Bill to establish a parliamentary Charitable Trusts Commission, to investigate, first, the educational charities, and, afterwards, charities in general. Originally intended to function for only two years, it was repeatedly renewed. By 1837 it had compiled 32 reports, covering almost every charity. Significantly, six schools were excluded from Brougham’s official investigations from the outset, on the insistence of the Anglican bishops in the House of Lords: Eton, Westminster and Winchester (all three Anglican foundations), Harrow, Rugby and Charterhouse. The justification was that, as institutions of ‘national significance’, they should not be made subject to whatever might follow from Brougham’s investigations.

Two points emerge from these initial exchanges. First, while the Charities Commission was eventually to be established in 1853 as a result of Brougham’s findings which covered a wide a range of activities, it was mainly the deplorable condition of so many educational charities, no longer serving the poor, which originally led to demands for proper supervision of all charities at national level.

Secondly, a fascinating and ill-tempered exchange between Robert Peel and Henry Brougham in the Commons on 23 June 1819, makes clear that, from the outset, the bodies which oversaw the administration of charities were dominated by members sympathetic to the ‘best’ schools and the ancient universities. Brougham began with an excoriating attack on the educational charities: he described ‘the almost universal abuse of the free grammar schools, which the masters generally regard as a perfect sinecure. Good houses, gardens and glebe lands, and often ample salaries, are enjoyed by masters who teach no free scholars’. Peel then intervened, accusing Brougham of extending his enquiries beyond their brief by proposing investigation and state interference into revered national institutions such as Eton and Westminster, Oxford and Cambridge, and packing the proposed commission with his friends. It was the presumptuous proposal for too close a public, official oversight of how these elite, private institutions operated, which provoked such howls of protest from the Tory establishment (who were the very people whose sons attended those institutions). The compromise which eventually emerged from this clash was to be of enormous significance because, in a nutshell, the major schools (Eton, Westminster and Christ’s Hospital were all mentioned in the debate) were eventually permitted to continue operating as charities; but they were also to be excluded from the prying eyes of any state commissioners.

Reform gathers momentum 1832-53

Subsequently, through the consequences of the 1832 Reform Act, the state did begin to assume regulatory powers over the charities. The householder franchise resulted in the election of a new kind of Member of Parliament representing the larger towns. Among the most influential were the businessmen who attended the Cross Street Unitarian chapel in Manchester. Several of them represented new south Lancashire constituencies (the 1832 Act had created 132 new seats in Parliament). For the most part they were Dissenters and representatives of the new urban elite, Whig in affiliation, and politically radical. The latter is important, in that radicals, schooled in liberal denunciations of ‘Old Corruption’ – and with Peterloo in living memory – were deeply suspicious of the central state as a nepotistic servant of the landed elite.

The Bill they introduced in 1833 was to have a direct impact on the development of policy, even though it was unsuccessful. Largely ignored by previous historians, the brief discussions on education which this group initiated deserve close attention, because the views these dissenting reformers put forward at this time, and the attitudes to which they gave voice, go a long way towards explaining not only how elementary education was to be governed throughout the rest of the century, but also why legal oversight of the charities became a real prospect at this time.

The first took place on 15 February, when Richard Potter presented a petition on behalf of the Cross Street Unitarian Chapel in Manchester calling for a national system of education. Potter, a founding member of the Manchester Chamber of Commerce and one of the architects of the 1832 legislation, went to the heart of the discontents about the conduct of the educational charities. Reflecting deep-seated and widespread suspicions about the advisability of direct governmental involvement in the provision of schooling, he argued that there was already ample funding available to establish a national system of education if only it were properly deployed.  The device he used to illustrate this was a swingeing attack on the Manchester Grammar School.

Potter argued that ‘Many charitable foundations are much mismanaged, to say the least…Rich private charities are misdirecting funds which, in equity, are available towards the education of the labouring classes. I would mention the Manchester Free Grammar School, the income of which is upwards of £4,400 yet only 150 boys are educated, many of them not on the foundation, but paying for their tuition. If the bequest were properly managed at least 3,000 might be taught’. His friend, Joseph Brotherton, stepped up to second him. He pressed the need for ‘an extensive system of education as means of suppressing crime’. But it was not to be done through taxation: ‘Taxes produce poverty, and poverty produces crime’. He pointed out that across the country the revenue of all the charitable Endowed Schools was upwards of three million pounds annually. If this were properly applied, ‘ample means of education might be provided without additional taxation’. Reticence to countenance direct state funding of education from both dissenters, as well as Anglicans, in this era of both laissez-faire and radical liberalism was, therefore, another key driver of the moves towards regulatory control of the charities.

The first of a succession of Bills intended to establish oversight of the educational charities was presented in 1835. From the outset the underlying issue was clear: whilst the largely Dissenting Whig element in the Commons was determined to right the historic wrong of corruption and mismanagement, the Anglican establishment, which dominated the Tory Party, was equally determined to minimize any measure which might weaken their control of the charities.

Thus, in the Commons, on 11 June 1835, Daniel Harvey, the radical founder of the Sunday Times, called for a Select Committee, to ‘report …by what means the Charity funds may be most efficiently, promptly, and economically managed’. He went on to attack the House of Lords, which, he claimed, had crippled Brougham’s enquiries from the outset: ‘It suited the wisdom of the hereditary council of the nation to restrict the enquiry to those charities which only made reference to the education of the poor – taking especial care to exclude from investigation all those institutions and endowments, whose profligate perversion and mismanagement, criminal in some and censurable in most, originally suggested and justified the enquiry’. The 1818 legislation was, he claimed, ‘crippled, in the other House of Parliament, by the introduction of a clause forbidding all enquiry into the universities and public schools’.

Parliamentary debates lay bare the essentials of the problem. As early as 1835, the Tory Party had conceded that reform of the charities of some kind was necessary (Brougham’s case was incontrovertible). But they managed to mitigate the most damaging impact to themselves by making the question of who should oversee the educational charities their sticking point. So, on 19 July 1836, Peel made it absolutely clear that he was firmly against the suggestion that the new Municipal Corporations, introduced in 1835 as a part of the Whig reform programme, should be given control and oversight of the educational charities around the country, as the Whigs were now proposing. (The Whigs’ proposal would have seen all educational provision become subject in principle to more ‘democratic’ control, under elected local authorities with the more uniform reformed electorates replacing the variety of often restrictive arrangements inherited from charters in the past). It enabled the Tories to delay reform for a further seventeen years, and, when that reform became irresistible in 1853, still to determine the form it was to take.

Underlying the obduracy of the Anglican interest was not only a fear of losing control of the educational charities, but also that their powers might be subsumed by the emerging new civic elites. Tory MP Arthur Trevor argued that the reform of the educational charities ‘would inevitably tend to injure the interests of the Established Church’. Peel argued that such popularly elected bodies were unfit to assume such heavy responsibilities: ‘if they once vested these reversionary interests in a popular body…they would be making an arrangement to place them practically beyond the means of control’. He claimed that ‘placing the management of the charitable estates in the hands of individuals chosen by popular election afforded no check to practices all must condemn’. The Whigs were quick to seize on this as evidence that Peel and those around him had not understood the implications of the 1832 and 1835 reforms. Sir James Graham responded that Peel was defending the ‘abuse of charities for Tory purposes’. When, at the second reading, Peel proposed that only the Freemen of the new Boroughs should oversee the charities, Lord John Russell was quick to step in and rule out any such, restrictive provision.

Over in the Lords Charles Pepys, the Whig Lord Chancellor, pointed out that a considerable portion of the charitable funds available in Exeter, Truro, Cambridge, Ipswich and Winchester was ‘devoted to purposes of bribery and corruption in elections’, rather than their intended purposes, which were mostly educational. But even this was not enough to silence the Tories. Immediately, Lord Falmouth countered that in his constituency there was ‘no comparison between the late corporation and that which had been called into existence by the new law’. The old one, he claimed, ‘had property, education and the qualifications for good government’, all of which were lacking in the newly elected council. The Marquess of Lansdowne commented glumly that the Bill, as it stood, did nothing more nor less than ’vest the rights and patronage of the Church of England in Dissenters’. In other words for these Tories, the very reforms of the franchise, which had increased the proportion voting in the nation’s towns and cities, were not so much democratic as demotic. They feared that the newly enfranchised (in fact still only a minority of less than a quarter of adult males) were unfit to take part in the governance of their communities. However, these exchanges did slowly wear down the Anglican resistance and it was under the later Peelite Aberdeen government (1852-55) that the Charity Commission was eventually established.

A key compromise facilitating this came in 1846 from a leading Tory, Baron Lyndhurst, during his third term as Lord Chancellor. On 18 May he declared himself ‘disposed to make great concessions’. As Lord Chancellor, disputes in charity law and trusteeships fell within the law of equity under his Chancery Court. Acknowledging that for many small charities it had become impossible to litigate because of the costs, his concession was to allow most charities to fall instead under the authority of the proposed, new Charity Commissioners for faster, cheaper resolution of their legal issues. However, for the wealthier and more substantial educational institutions, they should be treated as exceptions by the new Commission and remain on the legal high road of equity and the Chancery Court. ‘In that schedule I except the universities, the great colleges, the schools of royal foundation, and extensive establishments of that description’. What he was suggesting (soon to become reality) was that the major public schools (the very schools that were attended by the sons of the English power elite) were to be allowed to continue operating as charities but their financial governance would be exempt from direct oversight by the state’s new Charity Commissioners.

The route from this ‘great concession’ led to the appointment in 1849 of a Special Commission which drafted potential legislation but then there was another change of government.

The formative years of the Charity Commission, 1853-69

Aberdeen’s Peelite Tory coalition government was responsible for setting up the Charity Commission in 1853. It manoeuvred to ensure that it had only limited powers, in order to minimize the damage it could do to Anglican control of the secondary schools. The number of Commissioners was strictly limited; Dissenters were not to serve as Commissioners, and Eton and Winchester were given ‘special status’, exempt from scrutiny. When the Whigs returned to office in 1855, they immediately introduced an Amendment Act increasing the number of Commissioners, but the clause exempting the major public schools was left unchanged. As Prime Minister Palmerston (Harrow and Cambridge) explained to the House of Commons, ‘with regard to Eton, Winchester, and other public schools of that description, it rested entirely with the masters and the governors to determine that... improvements should be made' (in other words, they had the resources to take any disputes from either party – teachers or governors – to the Court of Chancery). Thus, from the outset, educational institutions which were of national significance (i.e. those which educated the sons of the most powerful families, not only Tory Anglican but also Whigs like Palmerston, too) were to be excluded from the purview of the Charity Commission.

The independence of the elite public schools from the Charity Commissioners was then formidably strengthened later in the century. The Clarendon Commission reported on the nine major public schools in 1864. The Public Schools Act which followed in 1868 reformed their governing bodies and, in clause 7, gave them unprecedented powers: the ability to ‘consolidate and amend any existing Statutes or Regulations’. The Act thus took these schools out of any direct control by the Crown, the Established Church or the government, giving the governors complete independence over their administration. In other words, they continued to benefit from their charitable endowments without having to justify to the state how that was being done.

However, most other secondary schools (classified as the ‘endowed schools’) were subject to their own Royal Commission and this had a quite different outcome. The 1868 Taunton Report proposed a root and branch restructuring of secondary education in three tiers, first, second and third grade. The Endowed Schools Act which resulted had two central clauses which were to determine the administration of all these remaining educational charities. First, it specified clearly (clause 8) that ‘nothing in this Act shall apply to any school mentioned in section 3 of the Public Schools act 1868’ (ie the Clarendon nine). It went on to exclude all the Anglican choir schools, too. It then proceeded, as Taunton had recommended, to appoint commissioners with draconian powers, including the ability to ‘alter the constitution, rights and powers of any governing body’. In brief, they were given the right to oversee and control how the charitable funds of the grammar schools were to be used in future. And that is precisely what they went on to do, significantly, incidentally, creating many of the nation’s first secondary schools for girls all around the country.

So, in the late 1860s, the filibustering of the Anglican establishment, which had been going on for fifty years, ended in a settlement which meant ultimately that the charities of the grammar schools were brought under state control, while those of the Anglican choir schools and the best known schools for the elite were allowed to continue independently of the state’s control. The smaller endowments of many of the grammar schools were redeployed to provide scholarships and free places, initially for poor pupils, but, increasingly, over time, for the academically outstanding, who often hailed from less humble backgrounds. Thus, the schools themselves became part of the state system of schooling, and effectively no longer charities. Meanwhile, by contrast, the major schools found themselves under no such constraint.

Thus, when, in 1909, the Socialist MP Philip Snowden asked for a root and branch enquiry into the sources of funding of all schools which came under the Charitable Trusts Act, he mentioned particularly Eton and Winchester. Walter Runciman, President of the Board of Education, told him, without apology, that ‘Eton and Winchester are, by section 49 of the Charitable Trusts Amendment Act of 1855, outside the jurisdiction of the Board, and are also exempt under section 8(i) of the Endowed Schools Act of 1869. Thus, no return is possible for them’. The legislation of the 1850s and 1860s cast a long shadow.

Finally, we should note that a further pointer to the future was already signalled in 1869, when Wingfield Digby MP pointed out to the Commons that there were many another ‘rising’ public school which ‘promised to become one of the great Public Schools’ and which were now almost equal to the excepted schools. They should qualify for the advantages of independence from ‘interference’ already enjoyed by the major schools. He advocated such a change of status for King’s Sherborne where he was a governor. With lobbying representatives like Digby within the legislature, his intervention explains how it came about that during the succeeding century many schools like Sherborne have been able to fulfil their aspirations to be classified as elite institutions, independent of the Charity Commissioners. A trickle became a flood, resulting in today’s 1,300 such schools.

Long-term implications

The exceptionalism of schools for the fee-paying wealthy enjoying charitable status has never been seriously challenged. Calls for reform have always been channelled into schemes to alleviate one or other consequence of this arrangement, rather than its complete abandonment. There have been, particularly in recent years, a succession of Acts of Parliament seeking to reform the charities. But none has addressed this central issue of the charitable status of the nation’s fee-paying: independent, but tax-funded schools for the wealth elite.

Instead, the public schools continue to enjoy massive financial advantages as a direct consequence of state involvement. The business rates firm, CVS, were reported to have conducted an analysis of government data in 2017 which found that ‘on 2,707 properties classified as private schools there would be a business rates bill of around £1.16bn over the next five years. Extrapolating from the data received from councils, it forecast that £634m would be paid, with £522m saved through the schools’ charitable status.’ Among the beneficiaries are Eton, whose bill for business rates would have been in excess of £4m, but is, in fact, only £821,000. Many of the better-known schools, outside the state system and registered as charities, are among those which enjoy similar benefits. In a blistering attack on the charitable status of elite education the authors David Kynaston and Francis Green wrote recently: ‘the private schools… enjoy the passive support of the Church of England, which is distinctly reluctant to draw attention to the moral gulf between the aims of ancient founders and the socioeconomic realities of the present; and… they have no qualms about using all possible firepower… to block anything they find threatening’. Given the evidence deployed here, it is a judgement which might have been made at any point in the last two centuries.

Today’s public schools provide a reverse Robin Hood tax benefit for the nation’s wealth elite. They have distant historical origins in the charitable provision of schooling for the poor. But this was entirely subverted in parliament in the mid-nineteenth century. An exception made originally for a handful of schools has grown to become a massive system. It is high time to reform a highly regressive set of arrangements that makes a mockery of the notion of charity.

About the author

Roy Lowe is an historian of education, former Professor of Education at Swansea and London Universities, and author of Schooling and social change, 1964-1990 (1997), The Death of Professive Education: How Teachers Lost Control of the Classroom (200&), and Education in the Post-War Years: A Social History (2011). This Policy Paper is derived from a full-length article, which is available to consult online in History of Education, 49, 1, 2019. He is currently working on a new book, Schooling and social change in England since 1760: making inequalities through education, to be published by Routledge in 2021. He may be contacted via Roylowe[at]hotmail.co.uk

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Further Reading

- N. Carlisle, A concise dscroption of the Endowed Grammar Schools in England and Wales (Baldwin, Cradock and Hoy, London, 1818).

- N. Carlisle, An historical acount of the Commission appointed to inquire concerning charities in England and Wales (Ulan Press, London, 2012) [originally published 1828].

- P. R. Elson, 'The origin of the species: why charity regulations in Canada and England continue to reflect their origins', International Journal of Not-for-Profit Law, 12, 3, May 2010.

- F. Green and D. Kynaston, Engines of privilege: Britain's private school problem (Bloomsbury, London, 2019).

- N. Malik, 'Defining charity and charitable purposes in the United Kingdom', International Journal of Not-for-Profit Law, 11, 1, November 2008.

- The charitable status of independent schools, House of Commons briefing paper 05222, 19 September 2017.

- R. S. Tompson, The Charity Commission and the age of reform (Routledge and Kegan Payl, London, 1979).

- R. Verkaik, Posh boys: how the English public schools run Britain (Oneworld, London, 2018).