Hard lessons for private schools as the recession bites

Gosfield School in Halstead, near Braintree in Essex, is cutting its junior school fees by between 18 and 40 per cent when it opens its doors to its 200 pupils next Wednesday. Gosfield believes it is the first independent school to slash its fees on this scale. At entry level, parents will be paying £1,500 a term for their four- or five-year olds, down 40 per cent on the £2,480 they paid previously.

Parts of the private-school sector are currently going through a time of crisis as parents struggle to pay the fees. Some schools will be tempted to increase their charges. Others, like Gosfield, will try other strategies.

One headmaster says: "I know of quite a few schools which have gone down considerably on numbers. There are going to be a lot of closures and mergers. Some will become co-eds, rather than being single-sex."

Neil Roskilly, the chief executive of the Independent Schools Association (ISA), says: "Private-school pupil numbers have mostly held up, with London and the south-east being largely immune from the recession, particularly where pressure for places is historically strong. However, isolated small schools (often single-sex) in the regions have certainly felt the pinch and many of these are hoping to just ride out the recession."

Private schools are already shutting down. Oakfield School in Woking announced that it was closing near the start of the summer holidays, leaving parents only a month to find places for their children this term.

Schools are regarded by banks just like other businesses, and loans are being called in, which is forcing some schools to sell off property assets and, in a few cases, to close.

RBS is seen as being "the worst offender" by the ISA. "They've got about 10 schools on their hit list that we are aware of," Mr Roskilly says.

RBS denies that it is anti-school, believing that it may show up more often in statistics than other banks only because it has a larger market share.

"We are very supportive of this sector," a spokesman says. "We have specialist managers to help schools if they do get into trouble. That's free of charge. But this sector is suffering. School fees come from households' discretionary spending, and that gets looked at in the downturn."

So what can parents do to avoid financial problems in paying fees? First, they should recognise that many others are struggling and that head teachers would much rather hear about the problem in advance than on the eve of a default.

"A lot of the meetings I have with parents now are to do with the recession," says Ian Daniel, the head of Rushmoor School, which has more than 300 pupils aged two to 16 in Bedford.

He is clear that he would rather be forewarned about any problems.

"Making parents feel at ease in the school is important," he says. "Parents are more likely to open up and be honest about the situation they are in if they are at ease."

James Wilding, the academic principal of Claires Court School in Maidenhead, believes parents may need to mix state and private education, rather than trying to educate all their children privately for their entire school careers.

"The majority of our families are using a mixed menu," he says, referring to the 1,000 three- to 18-year-olds who attend Claires Court.

Parents can also ask for bursaries or for different payment arrangements in order to stagger their fees.

"We often find ourselves having to support someone through the last year of primary school or GCSE," says Mr Wilding.

Similarly, Catherine Mawston, the head of Dodderhill School, for 220 three- to 16-year-olds near Droitwich Spa, says: "We are very sympathetic."

For instance, on fees of about £9,000 a year, Dodderhill has allowed some parents who were made redundant to pay just £100 a month on a temporary basis while they looked for a new job.

Rushmoor, Claires Court and co-ed Kirkstone House in Lincolnshire are among the many establishments which allow parents to spread payments over monthly direct debits, rather than paying much heftier sums at the start of each term.

Many schools are painfully aware that the outlook for parents' incomes might not improve for many years. If the downturn is likely to last another five years then the effects on private schooling will last for 10 years altogether, according to Ms Mawston.

"This will affect schools for five years after the recession," she says. "We plan on keeping everything pretty tight."

Many schools will stay away from buildings expansion.

"Major building projects have been put on hold," says Kirkstone House's head Corinne Jones.

Expanding the curriculum has been given preference over construction. Girls' schools in particular may be cutting back as they are less likely than the prestigious boys' schools to have cash reserves in the form of endowments.

Despite rising costs in some parts of their budgets – particularly an expected rise in pension payments – many schools are trying hard to keep fees increases down. Claires Court will try to stay at or below the rate of inflation. Rushmoor fees are going up 2 per cent this year, for the second year running. But some schools, perhaps including those with more demand for places, do not feel the need to cap fee increases and can be less sympathetic to parents in trouble.

"I see quite a few independent schools who are quite ruthless," says one head. "If you can't pay you are out."

Schools are reluctant to do away with the trips they organise for pupils, not least because these are a useful marketing tool when recruiting new children.

However, many institutions are aware that some parents simply cannot afford all the trips now. So Claires Court, for example, does the expedition module of the Duke of Edinburgh awards locally, an exploration of local environs which, says Mr Wilding, the children find "fascinating".

Dodderhill has "only one expensive trip a year", says Ms Mawston.

Staff try to keep costs down to £600 to £800 a head. The last one was a music trip to Barcelona.

In the state sector, funding is staying flat to schools in cash terms.

"That means real-term cuts," says Martin Johnson, deputy general secretary of the Association of Teachers and Lecturers.

After reforms of the funding system come in from April, more cash is likely to go to schools with large proportions of pupils on free school meals.

"There will be winner schools and loser schools," says Mr Johnson.

He is also worried that hard-pressed local authorities are increasingly withdrawing the centralised organisation they provide for schools on issues such as sport, art, music and the provision of educational psychologists.

Back at Gosfield School, principal Dr Sarah Welch hopes the cut in junior school fees is only the start. Could fees be reduced in the senior school too?

"We'd love to be in a position to do that," she says. "That will depend on how our numbers continue to rise."

Case study: The financial strain was enormous’

Nicky (not her real name), a mother-of-three, describes her experiences:

"We sent our oldest two sons to the best school for them as they were not very self-confident aged 11. They needed the small nurturing community that a private school near us offered. However, the finances were a precarious undertaking, even though we both had secure jobs throughout.

"We started at £6,000 per year for the first one. When a new head teacher arrived, who ambitiously expanded the school and raised the fees each year, we were finally paying £11,000 each boy!

"This was an enormous financial strain we had not predicted. We looked into transferring back into the state school system but it was a punitive process. By this time they were in the process of exam courses which do not easily transfer due to different exam boards being used and, of course, there were no places in the good local school that their friends attended. Instead they would have had to travel in the opposite direction to a 'sports specialist school'.

"So instead we just tightened our belts and had cheap seaside holidays, made no investment in the house, kept the same car, same winter coats etc.

"It's been money well spent, I think, when you see the big confident boys today, travelling independently and finding internships."