"Eton is a charity"

TRUE: UNBELIEVABLY. No, we’re not joking. Eton College [1], the world's poshest school, is a charity. Sound scandalous? We’ll leave that judgement to you – but we somehow doubt that the parents stumping up a minimum of £26,490 a year [2] in fees do it out of the goodness of their hearts.

And it’s not just Eton. Almost all so-called ‘public’ schools are registered as charities, and this means that they qualify for big tax breaks. It’s been estimated that these cost the government about £100m a year, the equivalent of providing a £225 subsidy for each pupil.

Public schools exist primarily to provide a service for rich people. So why are they allowed to register as charities? The simple answer is that they always have been – ever since the seventeenth century (when, to give them their due, they weren't all about educating rich kids). Since then, there's simply been little political will to change things.

Yet change is on the horizon. The Charities Act 2006 [3] will force schools to prove that they operate 'for the public benefit' from about 2009. This welcome move (which brings the regulation of schools into line with the regulation of other charities) will require the schools to provide evidence of an 'identifiable benefit' they bring to their local community. As we've written about on the Blog [3], it's not quite clear what will count as an 'identifiable benefit', but it's not likely to be very much. So the status quo will probably continue for some time to come.

Click here for bonus scandal #1

Bonus scandal #1: charities with no responsibilities
Have a look at the Charity Commission Central Register, and you won’t find any mention of Eton. You’ll also be disappointed if you’re after details for Winchester College. Seeing as charities are supposed to register with the Commission in order to qualify for tax relief, this might get you scratching your head. But there’s a simple explanation: these schools don’t have to register with the Commission. Under the 1993 Charities Act [4], they’re exempted from doing so.

Why? Well apparently they're all answerable to other organisations, which we can all trust (even if you've never heard of them). There's no explanation that makes much sense to us. What we do know, however, is that exemption means the charities get all the benefits of charitable status (like the tax breaks), without having to fulfil many of the obligations – like publishing a publicly-available annual report.

There is, however, some good news on the horizon. Under the 2006 Charities Act, they're going to have to register with the Commission at some point (probably in 2009). But until that happens, these schools' goings-on will remain as opaque as ever.

Click here for bonus scandal #2

Bonus scandal #2: schools for scoundrels?
In May 2006 50 charities were found to "infringe competition law". They admitted that for three years they exchanged details information about fees they intended to charge, in breach of the Competition Act 1998.

Who were they? The country's top 50 public schools. We could go on but we'll let the Office of Fair Trading do it for us [5].