Private schools start to feel the financial pinch

Many are considering staff redundancies and are putting capital expenditure on hold as part of plans to tackle the effects of the recession. Other schools are offering "buy one, get one free" deals for siblings and fee-free terms, say insiders.

Headteachers fear expected job losses in well-paid industries, such as banking, will force parents to withdraw pupils as school fees put too much pressure on household budgets.

With Edinburgh having a high proportion of children at fee-paying schools – about 25 per cent of secondary pupils – and many parents working in the beleaguered finance sector, the city's schools are expected to be hit hard.

George Watson's College in Edinburgh is putting a 6 million-7 million scheme to refurbish a swimming pool and sports facilities on hold for a year, until it sees how many children are removed.

Gareth Edwards, principal of the 2,335-pupil school, said: "It's not a knee-jerk reaction. We have the finances to do it, but we are just taking stock and being cautious and I think that's absolutely right."

He stressed that interest in places at the school from parents was as strong as ever. However, he added: "What we are not certain of is the effect of the downturn on our current children, or more importantly their parents, and we should take the view that we must do everything we can to protect those children's stability in education."

A well-established bursary scheme at the school was available to help families, he said.

Mr Edwards added that no exodus of pupils for financial reasons had yet begun.

He said: "We are not seeing it yet. None have been leaving in connection with the current recession, but it's wise and proper to prepare for that so, yes, like other schools we are looking at budgeting next year in a way that we are not overstretching. The proof of the pudding will come in the beginning of a new school year in September and actually how many children we have."

David Gray, principal of Stewart's Melville in Edinburgh, said that his school was putting all unessential building and maintenance work on hold.

Although both the senior and junior schools were full and expecting similar numbers for next year, he said it was sensible to take financial precautions.

He added: "We have no borrowings and therefore we are in a robust position. However, we are well aware that many parents are likely to find the coming two years difficult because of the economic downturn. Therefore we are determined to keep our fees as low as possible so as to be affordable for them."

A hardship fund currently helps 70 children at the secondary school and would continue to be available, he said, "but we are going to limit any capital expenditure and any routine maintenance expenditure to what is necessary on a prioritised basis in order to keep our costs down".

The Scotsman has learned that at least two large schools are in talks with unions over job cuts in relation to the recession.

Keith Robson, the national official for the ATL teaching union in Scotland, said he was in redundancy talks with two independent schools and expected the problem to escalate. He added: "In one of the schools, it is quite clear posts will have to be lost. Whether that's through early retirement or some reworking of the staff structure, there will be savings to be enforced.

"In the other school, they are looking at alternative ways of making efficiency savings to try and save jobs. The credit crunch is having an effect."

The emerging issue is of such concern that the union's next newsletter will focus on potential redundancies in the looming financial crisis. Mr Robson said: "This is just the start of the process. Anecdotal evidence is that parents are going to be putting the children into independent school at a later stage.

"They will wait until secondary, or the later years of primary, and I am already aware of some children not returning to school after the coming summer. Parents are giving a term's notice and enrolling them in state schools for after the summer."

Gail Dixon, editor of Tom Brown, an online guide to the independent sector, said some of the most prestigious schools fear they will see the effects of the recession next year.

She said: "They are really keen not to sacrifice teaching quality and smaller class sizes, which independent schools are renowned for, so are putting on hold the big capital projects, like the state-of-the-art music centres, 100-seat theatres, and sport centres with spa facilities.

"We have been told these are being put off so they can offer more bursaries and scholarships, which will hopefully tide people over and prevent them having to pull their kids out.

"Some are offering free terms, the equivalent of a four-figure discount, or 'buy one, get one free' offers for siblings, so schools are working quite hard to keep these children, and it has never been harder for them."

Dr Michael Carslaw, headteacher at St Leonards School in St Andrews, said: "I'm sure it will hit us eventually; we are well aware of it."

Parents' groups said the looming storm was yet to fully break.

IN NUMBERS

per cent of secondary pupils in Edinburgh attend private schools.

per cent of pupils at independent schools receive some financial assistance from the school.

8,000

is the average annual fee for an independent secondary school.

32,000

pupils in Scotland attend a private schools.

is the approximate number of independent schools in Scotland.

23,000

is the average cost for a pupil to attend boarding school for a year.

years is the maximum number which children spend at school.

per cent of private school pupils pass their Higher exams.

per cent is the amount school fees in Scotland have increased by over the past five years, according to the Bank of Scotland.

WHAT NEXT

ANY exodus of pupils from the independent sector would impact on the state sector.

Local authorities across Scotland have looked at closing schools to cope with falling rolls caused by a drop in the birth rate.

Supporters of the independent sector say its schools save the state thousands of pounds per pupil each year.

An influx to the state system would put enormous financial pressure on councils, already coping with tight finances given the SNP government's council tax freeze.

Should there be a large increase in state enrolments, cash-strapped councils like Aberdeen and Edinburgh would struggle to afford to pay for additional teachers and new classrooms.

State schools in England, where the recession is already hitting the independent sector harder than in Scotland, are seeing huge rises in applications. Two-thirds of local authorities south of the Border have reported an increase compared with last year.

Judith Gillespie, policy development officer with the Scottish Parent Teacher Council, said: "

Edinburgh City Council would be in a terrible mess because they simply do not have the capacity to cope with another 25 per cent of pupils, end of story."

State sector couldn't cope with private influx

ANY exodus of pupils from the independent sector would impact on the state sector.

Local authorities across Scotland, from the Western Isles to Edinburgh, have looked at closing schools to cope with falling rolls caused by a drop in the birth rate.

Supporters of the independent sector say its schools save the state thousands of pounds per pupil each year. An influx to the state system would put enormous financial pressure on councils already coping with tight finances, given the SNP government's council tax freeze.

Should there be a large increase in state enrolments, cash-strapped councils like Aberdeen and Edinburgh would struggle to afford to pay for additional teachers and new classrooms.

Judith Gillespie, policy development officer with the Scottish Parent Teacher Council, said: "

Edinburgh City Council would be in a terrible mess because they simply do not have the capacity to cope with another 25 per cent of pupils, end of story."

'Most schools will be budgeting for fewer pupils. Contingency plans are being drawn up, and all sources of saving are being examined'

Commentary: Frank Gerstenberg

NO-ONE is immune from the credit crunch, and independent schools will not escape its effects.

Little evidence has emerged as yet in Scotland of parents removing their children in droves from their fee-paying schools, but there cannot be a single school which is not viewing the start of the next academic year with some apprehension.

In England, the process is well under way. Several well-known schools have already lost more than a few pupils, while state schools in some areas cannot accept any more refugees from the independents.

In Scotland, things are moving more slowly, but the near-collapse of our two major financial institutions is bound to have an effect, while the schools themselves are already struggling to satisfy the demands of the Charities Regulator to provide more bursaries.

Most schools will be budgeting for fewer pupils in August and September.

Contingency plans are being drawn up, and all sources of saving are being examined.

The schools face two major difficulties.

First, they have to fix their budgets and fees before they know how many pupils they are going to have at the start of the new session, and even then, last-minute withdrawals might well occur.

Second, the withdrawal of one or two pupils from different years and different classes does not permit a school to dispense with the services of any teachers – and staffing represents a school's largest single cost.

So other options have to be looked at.

The most obvious saving can be achieved by postponing capital development, while departmental budgets can be frozen, but as a percentage of total expenditure, that represents very little saving.

Many businesses are currently asking their employees to forego salary rises, or even to take a pay cut.

In a school that would contractually be very difficult; more importantly, the effect on staff morale would be huge – it's not as if teachers are in the same financial bracket as the bankers whose actions have caused us all so much grief.

So savings will be difficult to achieve, but they are not impossible. Nor is it all doom and gloom.

Removing a child from a school is regarded by most parents as a last resort, and the evidence so far suggests that parents will do everything in their power to postpone that evil day.

For some, the reduction in their mortgage payments may be offsetting their other financial difficulties.

Also, some grandparents may decide that it is a better investment to help with their grandchildren's school fees than to keep their money in the bank where it is earning a derisory rate of interest.

Also, if there is a mass exodus from the independent sector, will the state sector be able to cope?

What is happening in England suggests that this will lead to even more problems for state schools, though some will argue that an influx of middle-class children may lead to more vocal parents demanding higher standards.

In the longer run, one possibility might be the setting up of "no-frills" independent schools, where the fees would be significantly lower.

But you cannot get away from the fact that staffing represents at least 70 per cent of a school's costs.

So the independent schools face an uncertain future. But they have done so before, and have often emerged stronger as a result.

Some schools will face real problems in the next 12 months. But the inability of the state sector to provide the standards which Scotland's middle classes seek will probably mean that most parents will make even greater sacrifices to keep their children in their present schools.

• Frank Gerstenberg is a former principal of George Watson's College in Edinburgh.