‘Let schools profit’ idea under fire

The Institute for Public Policy Research (IPPR) argues that schools should remain public institutions with innovation and reforms being driven by the not-for-profit and public sectors.

It follows calls to allow private companies to run state schools for profit from various other think tanks – a move to which Education Secretary Michael Gove has suggested he is open. The coalition Government has pushed the creation of free schools with groups of parents, teachers, existing schools, faith groups and charities being encouraged to set up their own state-funded schools from scratch if they can prove they have parental demand.

The policy is modelled on education reforms in Sweden where new state schools have been set up and run by for profit education firms such as Internationella Engelska Skolan (International English Schools).

The Swedish firm has been given the go-ahead to run a free school in Suffolk this year under a £21m contract over 10 years. At present free schools cannot be run for a profit. However, giving evidence to the Leveson Inquiry earlier this summer Mr Gove suggested this could be allowed to happen in future.

The IPPR’s research claims that in countries such as Sweden and Chile not-for-profit independent school providers generally out-performed for-profit providers.

The report also says countries that have introduced extensive market reforms are not those that sit at the top of the international performance league tables.

And the centre-left think tank argues that international OECD 
(Organisation of Economic Cooperation and Development) evidence demonstrates more competition-oriented systems tend to produce higher levels of school segregation between children from different backgrounds.

Its new report is published in the wake of calls from centre-right think tanks to allow state schools to be run by profit-making providers.

The Institute of Economic Affairs says the majority of new free schools in the Swedish case came from the private sector and that these have “been essential to the increase in competition per se. The implication is clear – without the profit motive, the UK’s reforms may fail”.

Policy Exchange argued, in a report published earlier this year, that “there are limits to the numbers of groups and individuals ready to sponsor an academy or set up a new free school” and that “effectively harnessing the profit motive could really enhance capability and lead to the emergence of new free schools at a faster rate”.

Rick Muir, IPPR Associate Director, said: “The argument that the profit motive is needed for raising schools standards is simply ideological. It is not supported by the international evidence at all.

“There is a good case for allowing new providers into the system to foster innovation. But given the strength of the not-for-profit sector in this country, there are no compelling reasons for thinking that commercial providers would add any value.

“The financial case for private sector involvement is particularly weak: even at a time of budget cuts across the public sector, the Government has recently found hundreds of millions of pounds to meet the rising demand for new school places. In the long term, it is much cheaper for the Government to raise this capital funding than for the private sector to do so at the taxpayer’s expense.”