Private schools to offer cash to rich parents

Rule change will hit poorer pupils

Wealthy parents could soon be offered unlimited cash incentives by top independent schools to lure bright children away from their rivals.

It follows a warning that leading private schools may be operating illegally as a cartel by limiting the value of scholarships to 50 per cent of the cost of a child's education.

The scholarships are not means-tested and can be taken up by parents who could well afford to pay fees.

The Headmasters' and Headmistresses' Conference - which represents top independent schools such as Eton and Harrow - originally brought in the 50 per cent limit to allow more of schools' charitable funds to be set aside for separate bursaries to help students from poorer families. But independent school sources argue it also prevents institutions competing for the brightest pupils by vying to offer the best financial deal to prospective parents.

Leaders of the HMC are seeking a meeting with the Office of Fair Trading to discuss whether they will have to abandon the limit. Lawyers who specialise in education argue the ruling is in breach of legislation encouraging free competition - and an example of the independent schools operating as a cartel. It is the second brush with fair trading legislation in recent months: at least four independent schools - including Eton and Winchester - are already under investigation after allegations they colluded to fix fees.

The challenge to the ruling will be a blow to those who have been campaigning for top schools to spend more money on bursaries to help hard-up families - and less on non-means-tested scholarships.

At last month's HMC conference in Dublin, Sir Peter Lampl, the millionaire education philanthropist who is campaigning to get more children from poorer homes into top universities, said independent schools must question whether they were "morally justified" in continuing to claim charitable status.

He singled out the 50 per cent scholarships - which account for up to half of the income spent charitably by independent schools - saying many of them went to parents who were "well able" to afford to pay full fees.

Graham Able, this year's HMC chairman and headmaster of Dulwich College, has also made it a hallmark of his year in office to try and persuade independent schools to cut scholarships and spend more money on bursaries for the least well-off students.

His own school is scrapping 50 per cent scholarships from next September, and he said that a number of other private schools were following suit.

Geoff Lucas, secretary of the HMC, said it would be meeting the OFT to seek "reassurances" over a number of rules - including the agreement to set a ceiling on scholarships. "It was introduced from the best of motives," he said. "It was felt the money would be better spent on bursaries for those in hardship."

If the ruling is declared illegal, it would open up competition between private schools which could then make their own decisions as to the percentage of fees awarded in scholarships to individual pupils. But they would also have to satisfy the Charity Commissioners that the way they spent the money qualified them to claim tax exemption.