Dark Money Investigations: News

Exclusive: Private schools pocket millions in Covid loans denied to state schools

Ministers’ own schools were among those that received millions while state schools faced bankruptcy

Jim Fitzpatrick square
Jim Fitzpatrick
10 January 2023, 5.00am

(L-R) Steve Barclay, Michael Gove and Jeremy Hunt. All three attended private schools that received Covid business loans from the government for which state schools were in eligible. Background: Gove’s old school, Robert Gordon’s College in Aberdeen

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Simon Price / Mark Thomas / Imageplotter / Alamy Stock Photo / Yui Mok / PA Images (collage by James Battershill)

Private schools were handed more than £157m in government-subsidised loans during the pandemic, under a scheme that barred state schools from applying, openDemocracy can reveal.

Elite institutions that benefited include Charterhouse, the former school of chancellor Jeremy Hunt, which charges up to £44,000 a year per pupil.

It received a £5m Covid support loan to help with “any short-term cash flow issues” – despite declaring total income of almost £45m for 2020–21, the financial year in which it claimed the loan.

The King’s former school, Gordonstoun, was also given a £2m taxpayer-subsidised loan, which it said would act as a “buffer” during the pandemic for its plan to build a new state-of-the-art classroom hub on its campus in the Scottish countryside.

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And a private performing arts college in Liverpool, co-owned by pop star Robbie Williams and former Tesco boss Sir Terry Leahy, was given a loan worth £2.5m. That loan alone cost taxpayers over £350,000 in fees and interest.

Many loans went to the former private schools of government ministers. State schools were specifically excluded from applying

The Coronavirus Business Interruption Loan (CBIL) scheme was meant for those “adversely affected by the pandemic”. Taxpayers’ money was used to pay the first year’s interest and the government also guaranteed 80% of the loan to encourage swift lending from banks.

But state schools were specifically excluded from applying, prompting accusations of unfair treatment by the Conservatives.

Now, after the government failed to provide enough support, 90% of schools in England are set to run out of money by September.

Last year, one school leader warned: “In under three years we will be bankrupt. No one is in a position to keep going for very long eating their reserves.”

As budgets tighten in state schools, headteachers have been forced to cut staff numbers and watch equipment falling into disrepair.

But analysis by openDemocracy reveals that at least 171 private schools, colleges and academies in the UK received a total of £157m under the government’s CBIL scheme.

Private schools given loans

Many loans went to the former private schools of government ministers, including the Levelling Up secretary Michael Gove (Robert Gordon’s College); health secretary Steve Barclay (Reading Blue Coat); and Scottish secretary Alister Jack (Glenalmond College).

Armed forces minister Johnny Mercer’s old school, Eastbourne College, also received a loan.

The government loans scheme was hurriedly introduced in the wake of the coronavirus pandemic and was designed to ensure otherwise viable businesses wouldn’t go bust because of lockdowns or other Covid-related factors.

The scheme was devised by the Treasury, under then-chancellor Rishi Sunak, and administered by the Department for Business, Energy and Industrial Strategy, led by Alok Sharma.

Sharma’s own former school, Reading Blue Coat – where fees are £6,305 a term – was one of the elite institutions handed money under the scheme, securing £1.5m.

Government documents reveal that the education secretary during the period, Gavin Williamson, discussed government support with the organisation that represents private schools. His phone meeting with the Independent Schools Council (ISC) – “to discuss Covid-19 support for private schools” – took place in April 2020.

In written evidence to the Education Committee in July 2020, the ISC thanked the department for “smoothing out” early problems it had with the loan scheme, such as school governors being asked by lenders for personal guarantees over the money.

The ISC went on to hire Public First, a Westminster lobbying firm with close ties to the Conservative Party.

A spokesperson for the Independent Schools Council said discussions with the Department for Education (DfE) at the start of lockdown were to resolve uncertainty around funding.

“There was no lobbying of government beyond asking for clarification on what financial schemes, if any, independent schools qualified for,” they said. “CBILs were explicitly available for charities – including independent schools – affected by the pandemic, and were designed to assist with cash flow. The criteria for the loans were clear and the lender would not have granted the facility if it were not necessary to overcome the operating difficulties of the pandemic.”

Responding to openDemocracy’s findings, Labour’s shadow schools minister Stephen Morgan said the subsidised loans came on top of tax breaks worth £1.7bn to private schools through VAT and business rate exemptions.

“The public will rightly question why schools raking in tens of millions of pounds in income each year were able to secure interest-free loans footed by the taxpayer when state schools have seen their funding slashed over the past decade by the Conservatives,” he said.

Healthy balance sheets

Some of the schools using the Covid loans scheme appear to have healthy balance sheets.

Charterhouse was able to bank a £13m surplus from total income of nearly £45m in the financial year it used the scheme. And Accounts for Gordonstoun School in Moray, Scotland, show that its net assets increased from just under £12m in 2019 to nearly £13.2m in 2020, shortly before it took the loan.

Despite fears expressed at the time by private schools that they could close and the sector would be devastated by the pandemic, the outcome was ultimately positive for many.

Research suggests the pandemic actually increased applications to private schools and the ISC’s own figures show there are now more pupils than ever in the private school sector with a record 544,316 pupils at its member schools in the UK.

All loans of £100,000 or more granted before the end of 2020 are listed on the European Commission’s state aid transparency database, something the Conservative government initially resisted but was forced to accept under the terms of its Brexit withdrawal agreement.

*This article has been amended to remove an error. It originally named one of the loan recipients as Heathfield School, the private school attended by home secretary Suella Braverman. In fact, the loan went to a different school with a similar name.

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