Charity Commission Findings

Parsons Mead Educational Trust Limited (312062).

Our ref: MDL G558238 LCU.

I write further to our recent correspondence in relation to the closure of Parsons Mead School. 

Please accept my apologies for the delay in responding to the concerns you have raised.  Although it has been necessary to liaise with the charity’s trustees and solicitors and obtain additional information following a recent meeting between these parties, I had hoped to have responded by now and I am sorry for the delay in doing so. 

I would like to begin by acknowledging that the trustees’ decision to close Parsons Mead School resulted in difficulty for pupils, parents and staff.  Although it is my understanding that the majority, if not all pupils were found places at other schools fairly quickly, I realise that those affected by the closure faced a period of considerable difficulty and uncertainty. 

Background

I hope it will be helpful if I set out briefly the context of the situation.  The object of the charity Parsons Mead Educational Trust Limited (PMET) is ‘the promotion of education’.  Parsons Mead School was an activity carried out by the charity in furtherance of this object.

The object of the charity Vernon Educational Trust Limited (VET) is ‘to promote and provide for the advancement of education of children and adults by the provision of schools, tutorials and other establishments’.  Danes Hill School is an activity carried out by the charity in furtherance of its object.

As PMET has a broad educational object there is no legal requirement for the charity to operate a school or continue to operate an existing school.  The trustees have discretion to further the educational object of the charity in whatever manner they see fit. 

The Commission’s policy in handling complaints

As regulator of charities, the Commission operates to promote the effective use of charity resources but within an overall framework which safeguards and supports the independence of charities.  The Commission cannot consider policies pursued or actions taken by the trustees that are within the law and the provisions of the charity’s governing document and that constitute an acceptable exercise of trustees’ powers, duties, responsibilities and discretions.  Within the scope of these restrictions trustees have wide discretion to apply the charity’s assets and funds as they see fit in the best interests of the charity.  In instances where trustees have validly taken a decision that is within the scope of their powers, the Commission does not have discretion to overrule a charity’s decision on the grounds that others may have taken a different view, however strongly this view is held.  We cannot, except in the most exceptional circumstances, intervene in the proper administration of a charity.

Much of what I have said is derived from the Commission’s published guidance for handling complaints, which you may wish to review.  The guidance is available on our website via the following address:

http://www.charity-commission.gov.uk/publications/cc47.asp

Review of parents’ concerns

A number of concerned parents contacted the Commission regarding the closure of Parsons Mead School and raised similar issues of concern.  Although the decision to close the school constituted an acceptable exercise of the trustees’ wide discretions within the scope of their powers, the Commission was concerned about the number of complaints received and undertook to review the circumstances leading to the decision to close the school and the proposed transfer of assets to VET.  The process has taken longer than I would have expected, but it was necessary to consider the issues thoroughly in order to determine whether the Commission had any regulatory concerns in this matter.  During the process, the Commission met with the trustees of PMET and, following further consideration of the issues, corresponded at length with Bircham Dyson Bell (BDB), the charity’s solicitors.  A further meeting was held recently between PMET and the senior charity lawyer at BDB, who had not been involved previously in the case.  At that meeting the decision to close the school was considered and independent advice was provided to the trustees regarding the proposed transfer of assets to VET. 

Decision to close the school

Having reviewed the trustees’ decision to close the school, there is no evidence or indication that the trustees’ decision was preconceived or made in bad faith.  Indeed, it appears that the trustees received professional advice from their solicitors, auditors and bankers before making their decision.  During our meeting with the trustees, they explained the background to their decision and reflected on the issues detailed in the letters to parents from the charity dated 5 and 16 June 2006, including falling pupil numbers, the general financial situation and the school’s predicted future.  The trustees further explained that although their primary concern was for pupils and staff, they concluded that the continuation of the school was not viable.

Misleading information and the announcement of the closure of the school

Regrettably, information provided by the charities during 2005 suggested that a merger had taken place between PMET and VET.  It would appear that this was not an accurate description of the relationship between PMET and VET.  This helped to create concern and confusion following the closure of the school.  Furthermore, there was a short gap between the trustees’ announcement of the closure of the school and the actual date of closure, which gave parents and pupils little time within which to make future plans.  Although it appears that the trustees sought appropriate advice and planned for the effects of the closure prior to their announcement, there is no evidence to suggest that this was purposely or unduly delayed by the trustees.

Lack of transparency and communication

There is a general concern that the trustees have not been open with stakeholders about the progress of discussions regarding the school’s future prior to and following the closure.  It is my understanding that the trustees wrote to parents twice (the aforementioned letters of 5 and 16 June 2006).  The Commission expects charities to adopt effective communication policies and act transparently in all its dealings, but the trustees are not under a legal obligation to discuss any aspect of the charity’s business with other parties.  With this in mind, although it is understandable that the trustees’ decision not to communicate with parents and other stakeholders caused frustration, there was no legal obligation on the trustees to have done so. 

It is clear that there were a number of communication failings on the part of the charity from a best practice perspective, but we do not consider that these warrant regulatory action.  However, we will be providing the trustees with guidance on how the Commission expects effective and well-run charities to operate.

Other options

There have been some complaints that the school (or another school) could still have been run on the site by selling the school to a commercial provider, another school or another group.  The trustees of a charity are responsible for its administration and have a duty to act in its best interests.  The trustees decided that to maintain the school by selling it to another provider was not the best option for the charity. 

During our meeting, the trustees elaborated on the options considered and their deliberations before they decided to close the school.  The options included an approach from another school (Kingswood House School, apparently not pursued by that school due to lease and buildings issues) and an approach from Cognita (considered but the trustees had reservations regarding the possibility that the site might not be used for educational purposes) and changes to the structure of Parsons Mead School.  The trustees also carried out a local demographic survey, the results of which suggested to them that there was an over-supply of independent school places in the local area (a conclusion they felt was further evidenced by the placement of Parsons Mead School pupils in other schools fairly quickly following the closure). 

Conflict of interest

The trustee boards of PMET and VET are largely similar and the charities have broadly similar educational purposes.  The two charities are separate entities, however, and this is reflected in the governance arrangements.  From my review of the information provided by the charities and their solicitors, it would appear that both charities have held separate trustee meetings, maintained separate governance records and made decisions in the interests of the charity concerned.

Transfer of assets from PMET to VET

As the two charities have broadly similar objects, it is open to the trustees of PMET to transfer the charity’s assets to VET in furtherance of those objects.  The Commission cannot prevent any such transfer because it would constitute a reasonable use of the trustees’ wide discretions in applying the charity’s property.

Summary and conclusions

I would like to reiterate that the Commission acknowledges the difficulties caused to pupils, parents and staff by the trustees’ decision to close Parsons Mead School.  I should stress that charity trustees, having overall responsibility for their charity, are sometimes faced with difficult decisions.  It does not appear that the trustees of PMET took their decision lightly.  Indeed, it appears that they considered other options carefully before determining that the school was no longer viable. 

There have been some communication problems which will be brought to the trustees’ attention.  However, having considered your concerns and the information provided by the charity and their solicitors, there do not appear to be any issues that merit the opening of an Inquiry or further investigation. 

Yours sincerely

Matthew Lewis

Matthew Lewis
Large Charities Unit

Charity Commission
PO Box 1227
Liverpool
L69 3UG

Tel 020 7674 2356
Fax 020 7674 2301
E-mail Matthew.Lewis@charitycommission.gsi.gov.uk