After 1945, when state-funded grammar schools were demonstrating equal or greater academic excellence, the public schools began to modernise themselves. During the 1970s most of them abolished beating and 'fagging', the system whereby new boys carried out menial tasks for senior boys, and many introduced girls into the sixth form, as a civilising influence. They made particular efforts to improve their academic and scientific quality. Traditionally boarding public schools were more popular, but since the 1970s there has been a progressive shift of balance in favour of day schools. Today only 16 per cent of pupils in private education attend boarding schools, and the number of boarders declines on average by 3 per cent each year.

Demand for public school education is now so great that many schools register pupils' names at birth. Eton maintains two lists, one for the children of 'old boys' and the other for outsiders. There are three applicants for every vacancy. Several other schools have two applicants for each vacancy, but they are careful not to expand to meet demand. In the words of one academic, 'Schools at the top of the system have a vested interest in being elitist. They would lose that characteristic if they expanded. To some extent they pride themselves on the length of their waiting lists.' This rush to private education is despite the steep rise in fees, 31 per cent between 1985 and 1988, and over 50 per cent between 1990 and 1997 when the average annual day fees were Ј5,700 and boarding fees double that figure. Sixty per cent of parents would probably send their children to fee-paying schools if they could afford to.

In order to obtain a place at a public school, children must take a competitive examination, called 'Common Entrance'. In order to pass it, most children destined for a public school education attend a preparatory (or 'prep') school until the age of 13.

Independent schools remain politically controversial. The Conservative Party believes in the fundamental freedom of parents to choose the best education for their children. The Labour Party disagrees, arguing that in reality only the wealthier citizens have this freedom of choice. In the words of Hugh Gaitskell, the Labour leader in 1953, 'We really cannot go on with a system in which wealthy parents are able to buy what they and most people believe to be a better education for their children. The system is wrong and must be changed.' But since then no Labour government has dared to abolish them.

There can be no doubt that a better academic education can be obtained in some of the public schools. In 1993 92 of the 100 schools with the best A-level results were fee-paying. But the argument that parents will not wish to pay once state schools offer equally good education is misleading, because independent schools offer social status also. Unfortunately education depends not only on quality schools but also on the home environment. The background from which pupils come greatly affects the encouragement they receive to study. Middle-class parents are likely to be better able, and more concerned, to support their children's study than low-income parents who themselves feel they failed at school. State-maintained schools must operate with fewer resources, and in more difficult circumstances, particularly in low-income areas. In addition, the public school system creams off many of the ablest teachers from the state sector.

The public school system is socially divisive, breeding an atmosphere of elitism and leaving some outside the system feeling socially or intellectually inferior, and in some cases intimidated by the prestige attached to public schools. The system fosters a distinct culture, one based not only upon social superiority but also upon deference. As one leading journalist, Jeremy Paxman, himself an ex-public schoolboy remarked, The purpose of a public school education is to teach you to respect people you don't respect.' In the words of Anthony Sampson, himself an ex-pupil of Westminster, the public school elite 'reinforces and perpetuates a class system whose divisions run through all British institutions, separating language, attitudes and motivations'.

Those who attend these schools continue to dominate the institutions at the heart of the British state, and seem likely to do so for some time to come. At the beginning of the 1990s public schools accounted for 22 out of 24 of the army's top generals, two-thirds of the Bank of England's external directors, 33 out of 39 top English judges, and ambassadors in the 15 most important diplomatic missions abroad. Of the 200 richest people in Britain no fewer than 35 had attended Eton. Eton and Winchester continue to dominate the public school scene, and the wider world beyond. As Sampson asks, 'Can the products of two schools (Winchester and Eton), it might be asked, really effectively represent the other 99.5 per cent of the people in this diverse country who went to neither mediaeval foundation?' The concept of service was once at the heart of the public school ethos, but it is questionable whether it still is. A senior Anglican bishop noted in 1997, 'A headmaster told me recently that the whole concept of service had gone. Now they all want to become merchant bankers and lawyers.'

There are two arguments that qualify the merit of the public schools, apart from the criticism that they are socially divisive. It is inconceivable that the very best intellectual material of the country resides solely among those able to attend such schools. If one accepts that the brightest and best pupils are in fact spread across the social spectrum, one must conclude that an elitist system of education based primarily upon wealth rather than ability must involve enormous wastage. The other serious qualification regards the public school ethos which is so rooted in tradition, authority and a narrow idea of 'gentlemanly' professions. Even a century after it tried to turn its pupils into gentlemen, the public school culture still discourages, possibly unconsciously, its pupils from entering industry. 'It is no accident,' Sampson comments, 'that most formidable industrialists in Britain come from right outside the public school system, and many from right outside Britain.'

Britain will be unable to harness its real intellectual potential until it can break loose from a divisive culture that should belong in the past, and can create its future elite from the nation's schoolchildren as a whole. In 1996 a radical Conservative politician argued for turning public schools into centres of excellence which would admit children solely on ability, regardless of wealth or social background, with the help of government funding. It would be a way of using the best of the private sector for the nation as a whole. It is just such an idea that Labour might find attractive, if it is able to tackle the more widespread and fundamental shortcomings of the state education system.