The public school maffia

They met in private. They all knew each other, and they all knew why they were there. Behind closed doors, they gathered together at the South London public school, Dulwich College, in February this year. It was, at least to some, like a meeting of a mafia council, a show of hands which would have a direct impact on thousands of parents. Because, should you have a child at a public school in London or elsewhere, it is likely that the decisions made at this unbroadcast meeting will determine how much is taken from your bank account for the privilege of educating your child.

The closed gathering was a get-together of bursars and staff from the Eton Group, an adhoc body comprising some of the country's top public schools, such as Westminster, Eton, Marlborough and King's College, Wimbledon. On the agenda was a particularly thorny issue: how much were they all charging parents for the next academic year? Over tea and coffee, they compared and contrasted fees.

If you thought this practice reeked of a cartel, then you could be right; it is also a practice which, given recent changes in the law, may also be illegal. As providers of 'goods and services' to the public, the fact that leading public schools are passing notes across the desk on how much they charge runs against the spirit - and, according to some, the letter - of the law.

Jonathan Tatten, a partner specialising in competition law at Denton Wilde and Sapte, says simply: 'If you are a competition lawyer, it sends shivers down your spine.' Certainly The Office of Fair Trading has its suspicions. Last month it launched an investigation into allegations of fee-fixing. If the schools are found guilty, they could face massive fines and even up to five years in jail for the headmasters.

Naturally, Mike Sant, general secretary of the Independent Schools' Bursars Association, is keen to play down the accusations of closed-shop behaviour. 'These discussions are very informal,' he says. 'It's really a show of hands. Someone will say: "Who is putting up fees by six to seven per cent?" and a certain amount of hands would go up. And then seven to eight per cent and so on.' But formal or not, thousands of London parents will be hoping that competition replaces such cosy comparisons, because the fee hikes tend to be massive.

One in eight school-age children in London attend public schools, twice the national average. Private school fees will increase next year between a staggering eight and 12 per cent, but the increase in London is often even more: the Girls' Day School Trust, which owns 12 schools in London including South Hampstead High School and Kensington Prep, is increasing its fees by 12.3 per cent. And with salaries in the capital rising by just over three per cent last year, and redundancies in the financial sector taking place almost monthly, the squeeze on middleclass parents is even more pronounced.

The schools themselves are adamant that they are offering a fair price across the board. Graham Able, headmaster of Dulwich College, dismisses any allegations of 'price-fixing' as 'complete rubbish'. He goes on: 'Our job is simply to look at our costs and come up with fees that allow us to do the job to the standard that people expect.' The latest round of school fees are unavoidable, he says, and largely down to government attempts to improve teachers' pay and conditions.

'Most of our costs are staffing costs and quite rightly there have been efforts in recent years to increase teachers' salaries and advance the teaching profession,' he says. 'This September we have an extra 5.1 per cent in employer pensions contributions to find, and an extra one per cent in National Insurance contributions. We also have to keep pace with state-sector teachers' salary increases. Maintained schools are going to have to increase their budgets by 9.5 per cent just to stand still. Our costs are going to rise by a similar amount so we are looking at fee increases at those sorts of levels.'

He does admit that headmasters and governors are always interested to see what other schools are charging to make sure that 'we aren't missing a trick'. And Eton bursar Andrew Wynn says: 'We do meet and talk about fees to get some idea of what other schools are doing. We are a co-operative bunch and we are not out to slit each other's throats.'

Private schools, especially in London, are no longer the preserve of the children of an elite few. With standards in state education seeming to plummet daily, thousands of middle-class parents are stretching every inch of their resources to send their children to a private school. Unless you can wangle your child a place at a top religious school (like the Blairs who managed to send their boys to the Catholic-run state Oratory School), or you literally live next door to one of the few good comprehensives in London, state education is a gamble many middle-class parents would rather avoid - even if it means placing themselves under intolerable financial pressure.

Which makes the subject of school fees, and how they are set, such an emotive issue. Russell Barrett has a 17-year-old daughter, Elizabeth, at an independent school in the City. His other daughter Laura, now 20, was also educated there. It isn't difficult for Barrett, a London businessman, to get riled about the amount of money he is forced to hand over every year: the fees at his daughter's school are £3,000 a term. 'When I receive the bill,' he says, 'and see how much it is, I feel like banging my head against a brick wall. The rises in fees are nearly always above the rate of inflation. There's no way I would consider taking my children out of private education because the standards of state education are so appalling. I pay a fortune in tax, then cannot use state education so I end up paying through the nose again for private education.'

Russell Barrett's genuine anger - and he is not the only parent furious with what they see as unfair demands from private schools - is easy to empathise with. As one parent with a son at Westminster told me: 'You go shopping around to look at schools like these, and they are all different in their own ways, but then you suddenly realise: hang on, they're all charging pretty much the same amount. Is that a coincidence?'

Of course, as any parent with a child at a private school knows to their cost, it is not simply the overall term fees which are rising. The hidden extras such as school uniforms and overseas trips add a further hefty 'levy' each term.

One London mother who has a daughter at a prep school in London and a 12-year-old son about to go to Westminster, told me: 'My daughter has to wear an autumn navy blue woollen jacket which I can buy specially made for the school and sold in John Lewis. It costs £83! She's seven years old, for God's sake. If I went and bought a similar jacket from Gap it would be £30. She wears a simple summer dress at school which, from the school outfitters, is polyester and costs £31. I can buy the same dress at Hennes for £5.99.

'Not only is the cost difference huge but most of the school-approved uniforms are not 100 per cent cotton - which is what you want your child to be sitting in for eight hours during the summer - so most of us mothers simply shop around and try to match the clothes to what the school insists you wear. But if you need something with the school logo, you have to shop where they want you to.'

Liz Bolton has struggled for years to bring up two children and send them to private schools: her son Angus is 14 and her daughter Kate now 30. Both of her children attended Cumnor House prep school in West Sussex and Angus is now at Cranbrook which receives some state support but where fees are nonetheless £2,700 per term. She says: 'As a single parent, I've had to take far more notice of bills than most parents. I agonise over and itemise each bill.'

Not only is she faced with a lump sum to pay each year, but she must also seek to provide the extra cash to get by each term. 'I think public schools are something of a rip-off. School trips can be a nightmare. At my son's prep school, we were sent details of one skiing trip to California which would have cost £3,000. Of course, most parents thought that was too much, but there are also some parents who can pay and that creates an elite within the school.'

The majority of schools are registered charities which means that, across the board, public schools are eligible for around £60 million a year in tax breaks. Although that status was almost revoked last year, the government is looking at proposals by which schools will have to prove their 'benefit to the community' (ie open up their facilities to nearby state schools) if that tax status is to remain. The schools themselves point out that they are non-profit-making and that any surplus (from parents paying more each year) is ploughed back into new buildings and so on.

But like many parents, Russell Barrett is also beginning to examine the minutiae of school bills very closely. 'As a businessman, I am not prepared to sit back and accept all the other charges that come with the fees. I was being charged £100 a term for insurance against non-payment of school fees and personal accident. I thought that was a ridiculous sum and I went to my financial adviser and found an identical policy for between £10 and £20 a term. Most parents don't bother to itemise the bill. They just shut their eyes and write the cheque but I could just not sit back and allow myself to be ripped off.'

And whatever the OFT decides, it's likely that next year's meeting of the Eton Group will not be quite so cosy.