Independent schools could be forced to provide more free or assisted places for pupils or face having to increase their fees in order to survive following a landmark charity ruling.
The warning, from the head of a leading independent school in Birmingham, came after two preparatory schools became the first in England to be ordered to increase the amount of money they spend on free places or risk being stripped of their charitable status.
Under new legislation, independent schools are no longer automatically entitled to charitable status.
Instead, they must now prove they provide a wider “public benefit” to remain in business and retain tax breaks worth around £100 million every year.
Five private schools have been assessed by the Charity Commission before rules are extended to more than 2,000 schools across England over the next 18 months.
Three passed the test, but two small prep schools each educating around 235 pupils, failed.
John Claughton, chief master of King Edward’s School in Edgbaston, warned independent schools had a reason to be concerned.
He said: “We spent around £1.2 million each year on scholarships and assisted places, which is a very large sum of money.
“But I think independent schools in general have some reason to be concerned and unhappy about what is going on.
“Independent schools come in very different shapes and sizes, and some are very small and don’t have a great deal of capital, so it’s very difficult for them to offer assisted places without raising fees.
“I would find it inconceivable that the Charity Commission could find the King Edward schools wanting, but it is certainly generating quite a lot of anxiety.”
Mr Claughton said it was always “a given” that independent schools were automatically entitled to charitable status. “Now, we have to prove we are providing public benefit by making more assisted places available.”
But he added that the Charity Commission had not revealed what level of free or assisted places was needed to pass the test.
Independent schools in Birmingham are still weighing up the implications of the ruling.
John Hayward, clerk to the governors at Blue Coat preparatory school in Edgbaston, said: “The governors of the school remain confident that it provides demonstrable public benefit and will continue to do so.”
The Charity Commission has the power to suspend trustees, freeze bank accounts and ultimately seize schools’ assets.