School profit

Nick Wright on the Policy Exchange plan to make money from education

A deeply ideological drive to monetise education is gathering pace. On the wilder reaches of wonkery, free-market ideologues are letting their imaginations roam.

Arguably Labour’s main achievement was to put in place centrally driven measures to support family incomes, expand childcare and in doing so drive up professional standards, boost the children’s services workforce and strengthen school improvement. That this was subverted by its academies programme was masked by the already fragmented system skewed by remaining areas of selective schooling in the state sector, and the wide range of private education opportunities for the most privileged. Inevitably, an erosion of the local authority role came bundled with the academies programme.

While the harmful effects of fragmentation were clear to many teachers, most school improvement professionals and almost all local authority education leaders, the public argument has been conducted around the perceived need to improve particular schools rather than address key structural questions.

The powerful political and media narrative around individual failure and success and failing schools – reflected in the fetish for performance measurement – has successfully deflected attention from systemic causes of the failure to fully prepare all our children for adult life.

Now that the Coalition government has dispensed with the Labour rationale that academies were principally an opportunity to improve failing (working class) schools, the issues are becoming a little clearer. Even so, the free marketeers know that have a long way to go to convince a sceptical public that profit should replace the public service ethos. Something less alarming than a red-in-tooth-and claw free market is needed if a wedge is to be driven into the solid block of parental, political and public opposition to profiteering.

As Andrew Laird, the lead author of a report from the right-wing Policy Exchange, put it: “The context of this debate in the UK is extremely complex. The question of profit is nowhere near as black and white as is sometimes presented but nevertheless there remains a heavy aversion to any form of for-profit provision within the education establishment.”

With commendable honesty he argues: “Accepting the reality of this, yet also recognising that a new approach is needed given the challenges the system faces, our report proposes a social enterprise model as a sensible middle ground.”

Policy Exchange has a worked out plan. Despite its presentation as analogous to the “John Lewis” model of retail enterprise, the contours of the Policy Exchange scheme more resemble a standard business model. Private companies should be allowed, indeed encouraged, to run state schools as profit-making enterprises. Teachers and staff – freed from national pay structures – could become shareholders and receive half the profits with the other half allocated to investment.

The authors argue that these factors would create powerful incentives to drive up standards.

Theywant this for-profit sector to grow big enough to break the national bargaining framework for teachers’ pay and conditions and institute local arrangements.

Central to the argument for a market-driven schools system is the example of the United States – where charter schools educate up to 3% of children and half are run for profit. Another model is Sweden, where two thirds of free schools are run by for-profit businesses.

The Policy Exchange found it inconvenient to cite Swedish evidence that opposition to for profit schooling remains substantial. A 2011 Synogate survey found that Swedes who want to ban companies from operating schools for profit outnumber those that don’t.

To get round the opposition to for-profit provision Policy Exchange want the state to pilot their soft-option ‘social enterprise’ schools in ‘deprived areas’. They argue that there is already in existence a large for-profit element in the school system and cite the delivery of free nursery places by private operators and provision for special needs and excluded students.

They point out that: “Private companies have been involved in school improvement programmes for a number of years. The private sector also provides all kinds of services in schools. In 2009/10 school spending on ‘other professional services’ – IT, facilities management, catering – was £572 million.” Aspect members will recognise from their own experience the ideal terrain that Policy Exchange sets out. Local education authorities and state schools can already outsource school improvement to the private sector and numbers of school improvement professionals find themselves competing for this work now that their old local authority posts have vanished.

The report reminds us: “Following direct intervention by the Secretary of State in 2000, Cambridge Education secured a £105 million contract to run education services in the London Borough of Islington from 2000-2007. The contract was extended to run through until 2013. Babcock International Group Plc. have been running school improvement services in Waltham Forest since 2008.

“School inspections are also contracted out to profitmaking providers in many instances. Ofsted deploys around 440 of its own school inspectors, augmented by almost 2,000 additional inspectors employed by Regional Inspection Service Providers. Prospects Services Ltd. covers a £71 million contract to deliver the Early Years inspection services for the north of England and the Midlands, while Serco Plc. currently holds a six-year contract worth £53 million to provide school inspection services in the Midlands.” There is, of course, a world of difference between a public sector that engages specialist service providers to supplement its core operation and the for-profit delivery of those core services. Blurring this distinction is the first step in softening up public opinion. This might be called ‘nomenclature creep’ – the confusing conflation of the ambiguous concept of ‘social enterprise’ with its more familiar polar opposite – private enterprise.

Taking its cue from the Big Society discourse that marked David Cameron’s early pitch, the Cabinet Office last year suggested that the ‘social enterprise’ model could unlock a figure of up to £95 billion – circulating in Britain’s substantial complex of charitable giving, endowment revenues and voluntary effort.

Understandably, given the history of privatisation in Britain, the Policy Exchange authors are anxious to allay fears that introducing the profit motive into schooling would allow predatory takeovers that could strip the school of its assets or dispose of valuable property. Undoubtedly, they fear the opposition that would follow if a school was to be burdened with takeover debt. The prospect of a Manchester United style revolt by a school’s stakeholders would substantially undo their efforts.

Accordingly they suggest that operators of social enterprise schools could be subjected to a higher degree of scrutiny than not-for-profits, at least initially and that social enterprise pilots should operate within areas of greater deprivation and ensure that enrolment initially, includes at least 20% of students eligible for free school meals and hence the pupil premium.

Policy Exchange favour a performance test and suggest that a rule could be introduced such that the operators of a social enterprise secondary school would receive no share of any surplus unless a certain proportion of their pupils made the expected level of progress.

And finally, they propose an ‘asset lock’ whereby Free School buildings and facilities procured by government could not be sold off for private gain. An exception to this principle would be made in those instances where the providers are prepared to invest their own capital to build a new school from scratch.

This is an ambitious project. The authors are well aware of the powerful opposition to their scheme. Their ideal is substantially more embedded in the profit-making ethos than this carefully crafted interim model suggests.

Undoubtedly there are free marketeers who favour the full integration of education into the market, but schooling is an unlikely candidate for such a radical transformation.

Privateers desire above all a substantial asset base that can be transformed into liquid capital and/or a solid revenue stream. Schools are not like railways, power companies or gas fields – they are not assets to be sweated without massive opposition and they can yield but meagre revenues.

It would be foolhardy to completely disregard the authors of such eccentric policies; they have powerful allies in high places. Of course, some of this may be driven by the fevered imaginations of policy wonks unconnected with the real problems of schooling. A more probable motor for extending for-profit schooling is the pressure to provide a wider range of selective schooling options for the relatively privileged in a situation where adequate funding for mainstream schools is constrained by government and many middle class parents can no longer afford private schooling.

This is an edited version of an article that originally appeared in Improvement magazine



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