Public schools told to cut fees for poor children or risk losing tax breaks

A dozen public schools face losing their charitable tax breaks if they fail to slash fees for poor children.

Charity officials are to investigate up to 12 fee-paying schools by the end of this year to see if they meet new requirements to show they are benefiting families who cannot afford their fees.

They will scrutinise their accounts to ensure they meet charity rules being unveiled tomorrow in a Labour war on private schools which operate as "exclusive clubs".

The schools face being stripped of their charitable status unless they earmark more cash for bursaries and share facilities with local state school pupils.

They are also being encouraged to get involved in Government initiatives, for example by sponsoring state academies to replace poor-performing schools.

Loss of charity status could mean closure or takeover by profit-making organisations, and a likely increase in fees to compensate for the loss of tax breaks.

Heads have said fees will go up in any case as schools raise cash to fund places for poorer pupils.

The Charity Commission is publishing details tomorrow of a "public benefit" test that fee-paying schools must meet to keep their charitable status.

Fee-paying schools previously had an automatic right to call themselves charities on the grounds they provided education.

Labour's controversial shake-up threatens public school charity tax perks worth £100million a year across the country.

Schools will be asked to volunteer for in-depth checks, but others will be selected at random.

All schools will be expected to draw up a report on their public benefit by March next year, but heads privately doubt the commission has enough staff to carry out full checks.

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The commission has already warned that public schools will have to do more than merely show they are accessible to "middle income" earners.

"Charities should not be seen as 'exclusive clubs' that only a few can join, since the public benefit from that is very limited," it said.

"In particular, people in poverty must not be excluded from the opportunity to benefit."

Dame Suzi Leather, chairman of the commission, is expected to say tomorrow that public schools should "embed" themselves in their communities when she unveils detailed guidance on the scheme.

In an address to a gathering of heads last week, she cited Christ College in Brecon, South Wales, where local primary pupils visit the school - founded by Henry VIII - to learn about the Tudors.

Michael Spinney, chairman of the Independent Association of Prep Schools, said: "I don't see any resistance from our schools from a philosophical point of view, but there is concern about how it will be enacted.

"Clearly there will be some schools that can do a tremendous amount and in others it will be only marginal. Whether or not that will lead to fee rises, nobody yet knows."

It emerged last night that one of the country's most prestigious public schools is to help run a troubled state comprehensive.

Winchester College, where boarding fees are £26,481, will provide teaching materials and staff to help bring the failing, non-selective Midhurst Grammar into the Government's academies programme.