Bursaries

Testing times

Pressure to focus on providing bursaries to prove public benefit continues under the new Government. Henry Briggs sets out a strategy for how charitable independent schools can effectively means-test bursary applicants

With the arrival of the public benefit test and the evidence of its interpretation by the Charity Commission in its published assessment of five schools last year, all independent schools with charitable status were forced to review their bursaries policy.

Policies and procedures formerly in place may often have given the impression that they were there to deter, rather than encourage, applications for financial assistance from hard-pressed parents. A recent survey of the sector showed that the top schools (those with good league places and waiting lists to match) were the worst at giving out such awards. The concept of full bursaries is strongly supported by the Commission.

A fresh look
Schools must review how they can improve such awards to at least 100 per cent of the fees and how they both encourage and police them. Topping up scholarships to become bursaries would be appropriate, but schools must decide at what entry level they are granted and to which groups they should be awarded. Should they be awarded to existing parents or divorced couples (who may arrange maintenance agreements in a way to access the school’s funding)?

Some schools that are partnering academies may grant awards to applicants from the state schools they have chosen to help in other ways.

These questions will affect the method of testing and granting of awards; so will the level of fees.

Gathering the money
Bursaries at a rate lower than 100 per cent could give rise to other fee-collection problems for the school if they have gone to genuinely needy families. With average day fee levels costing a gross income of around £20k per annum and working family tax credits being granted on incomes of around £60k per annum, this should mean that any families with less than £80k income per annum could be in need of assistance. This, incidentally, would also include most of the teaching staff.

Historically, income levels below which assistance is available have been set too low to encourage applications, often for incomes below higher rates of income tax, nearer to £50k per annum. Levels may well need to be flexible, but indicative incomes should be given, depending on places available.

Getting to the truth
The emphasis is on encouraging, ascertaining and verifying applications from those most in need. Organisations such as ISBA have standard forms from which schools could devise their own. There is always going to be an element of self-assessment, relying on the honesty of the applicants, but this risk can be reduced by asking for evidence that can be independently verified. For instance, copies of tax returns or tax credit applications should be sought.

Adjustments for family size will also have to be made, as will their ability to improve their financial position. Capital must also be taken into account, as well as income and contributions made by family members or other sources.

Lifestyle and expenditure should be reviewed and the retention of profits within any private business owned by the family. Application forms must cover all of these aspects and should be renewed annually, to include a declaration that all relevant matters and any significant changes to a family’s financial position have been fully disclosed.

A home visit by the bursar is both a necessity and is recommended. Wherever independent checks can be made of information given on forms, they should be.

With increased competition from state-funded academies and the continuing spotlight on charitable status – together with the ISC-sought judicial review of the Commission’s action – independent schools could find they increasingly have to consider offering needs-blind places.

In consequence, bursaries are here to stay for the foreseeable future.

Henry Briggs is senior partner of the Birmingham office of Haines Watts, chartered accountants.

Return to Bursaries