Justify charitable status or you will lose tax breaks, public schools told

Britain's independent schools will be told tomorrow they risk losing millions of pounds of aid from the taxpayer if they fail to justify their charitable status.

New guidance from the Charity Commission will stipulate how the schools have to prove their "public benefit" if they are to retain their charitable status, worth £100m a year to them in tax breaks.

The crackdown has met with fierce opposition from some of the country's best-known fee-paying schools, who have sent submissions to the Charity Commission.

Some schools, including Eton, claim the commission is using "flawed reasoning", and that they do provide public benefit merely as a result of educating children who would otherwise have to be taught at state expense.

Andrew Wynn, Eton's bursar, in a submission to the commission, said "many of our parents are conscious of paying twice" for their children's education, although he acknowledged this was "not enough on its own" to prove public benefit.

Harrow said that instead of insisting children from poor families "must be able to benefit" from private schools with charitable status, the phrase should read "must not be excluded from benefiting".

The controversy over the crackdown – brought in as a result of new laws governing how all charities must operate – deepened last night after a scathing attack on the leaders of the country's private schools by one of their fellow heads. Dr Anthony Seldon, master of Wellington College and biographer of Tony Blair, told his colleagues they had to drop their "20th-century apartheid thinking" and start co-operating with state schools.

He said the independent sector had "no vision of itself in the 21st century", adding: "By the end of the 20th century, the independent sector had emerged pre-eminent in the British education system but the only vision the independent sector has today remains entrenched in the 20th century, dedicated to excellence and carrying on as we are in splendid isolation, detached from the mainstream national education system, thereby perpetuating the apartheid which has so dogged education and national life in Britain since the Second World War."

Last summer, Dame Suzi Leather, the Charity Commission's chairwoman, said private schools would be treated "the same as every other charity in the land". She added they would "have to show they bring public benefit, including to people on low incomes. There's a level playing field for everyone now."

Jonathan Shephard, chief executive of the Independent Schools Council, which represents most fee-paying schools, said there was "merit" in arguing that private schools were of public benefit in saving taxpayers from paying to educate their pupils.

"I do think it is valid up to a point but you can't rely on that and that alone," he said. "It is certainly something that can be taken into account but you can't simply sit back and say that's all we need to do."

He said independent schools had been worried about "a lack of clarity" over the guidance, which could see contested cases ending up in the courts. He also said it was wrong to "surcharge a paying beneficiary", giving the example of a care home charging £450 a week for 32 people. If it had to take in two non fee-payers, the charge would have to increase by £30 a week "to people who may find it difficult and are using all their savings to pay for the place".

Dr Seldon is urging all independent schools either to sponsor one of the Government's flagship inner-city academies – replacing struggling schools with institutions run by the sponsors – or go into partnership with the new "trust" schools being set up by ministers, and offer their expertise.

Wellington College plans to set up its own academy in east Wiltshire by 2009. It will be a co-educational non-selective secondary school for up to 1,150 students and is expected to provide places for the children of many Army families in the area.

That replaces Castledown Foundation School in Ludgershall, Wiltshire, an 11-to-16 comprehensive with a large intake of children from local Army bases. The new academy would have a Combined Cadet Force for its pupils.

How Wellington helps its comprehensive partner

Castledown School, a 471-pupil comprehensive for 11- to 16-year-olds in Ludgershall, east Wiltshire, is the type of school which will benefit from the new vision of private/state school partnership Dr Anthony Seldon is proposing.

It serves a largely Army-based community and has a transient pupil population as pupils' parents are transferred to new postings.

As a result of Wellington College, the £20,000-plus a year school set up as a memorial to the Duke of Wellington, it will get plush new buildings from 2010 and its pupils, with their Army background, will be able to join the Combined Cadet Force.

It will also be able to benefit from the educational expertise of its sponsoring school. Castledown differs from many of the schools selected to become academies in that it is not a struggling inner-city comprehensive that has failed its Ofsted inspection. Ofsted, the education standards watchdog, declared it to be a good and improving school whose results had gone from below average to average as a result of its last inspection. There is no doubt, though, that its pupils will stand to benefit from the educational makeover its buildings will undergo as a result of the academy proposal.

Queen Victoria laid the foundation stone at Wellington College, in Berkshire, back in 1856.