Fifty leading private schools were found guilty last November of running an illegal price-fixing cartel, which investigators said allowed them to drive up fees for thousands of parents. The Office of Fair Trading (OFT) published provisional findings showing that the schools, which include Eton and Harrow, exchanged detailed financial information in a regular report known as the Sevenoaks Survey. “This systematic exchange of confidential information as to intended fee increases is anti-competitive and resulted in parents being charged higher fees than would otherwise be the case,” says OFT’s report.
The inquiry has focused fresh attention on the benefits private schools derive from their charitable status a controversial tax exemption that critics say effectively amounts to a government subsidy in return for questionable wider “public benefit”. The Charities Commission says it will be looking closely at the implications of the ruling for private schools and charities in general.
The Independent Schools Council (ISC), an umbrella group that represents 60 percent of private schools, has rejected the OFT findings and says there is no evidence to support the claim that sharing of information had led to a rise in fees. “Fees in the independent sector rise in line with costs in the (public) sector, for the reason that most of the costs are staff salaries and pensions,” says Jonathan Shephard, director general of ISC, adding that the two-and-a-half-year inquiry, which cost hundreds of thousands of pounds is a “scandalous waste of money”.
Earlier this year research by the Halifax building society showed that school fees had risen by more than three times the rate of inflation in the past 20 years. The schools have until March to appeal, when OFT will make its final ruling and decide what fines, if any, to impose. It can fine each school up to 10 percent of its annual turnover, but an OFT statement says financial penalties are likely to be limited. The ISC says any fine would mean that some schools would be forced to raise fees further.
The OFT investigation focused on fee rises between 2001 and 2004 and found that in each year schools swapped details of their intended fees. Sevenoaks school in Kent then “collated that information and circulated it, in the form of tables, to the schools concerned. The information in the tables was updated and circulated between four and six times each year”.
The investigation was reportedly started by a student who hacked into his school’s financial records and leaked the documents to the press. Bursars freely admit that they used to meet regularly and talk about fees, but maintain that such swapping of information did not amount to a concerted plot to push up fees.
