For-profit schools would not raise standards

There is no significant evidence for the benefits of competition in education.

In recent months, we have seen a growing clamour from right-of-centre think-tanks for private companies to be able to set up free schools.  Both Policy Exchange and the Institute of Economic Affairs have published reports arguing that allowing the private sector in is vital if we are to raise educational standards.  Such moves are opposed by Nick Clegg, but it seems likely that proposals will be included in the next Consevative manifesto.

And yet the evidence behind these claims is weak. Proponents of for-profit schools argue that they will raise standards in our schools more rapidly than the existing mix of charitable and mainstream state schools. However, an IPPR report to be published this week shows that this evidence is limited to a small number of cases: among developed countries only Sweden, some US states and Chile have experimented at scale with commercial providers of publicly funded schools.  In the United States, the performance of commercial providers is at best mixed. Analysis of the performance of free schools or their equivalents in Sweden and Chile show that not-for-profit free schools out perform for-profit free schools. In Chile, while on the surface commercial schools appear to out perform local authority schools, much of this difference disappears once you take into account pupil’s prior attainment.

Proponents such as Toby Young argue that only commercial education providers have an interest in expanding good schools, because they are driven by the profit motive to do so, whereas not-for-profit and state schools lack this incentive. Competition drives out weak providers and allows good ones to flourish and competition works best when private rewards are at stake. 

However, the evidence for the benefits of competition in education is not strong. The OECD's analysis of the performance of international school systems is clear on this point, showing that "countries that create a more competitive environment in which many schools compete for students do not systematically produce better results."

Rather, the OECD finds that the most important factors in raising educational standards are the quality of teaching, high levels of school autonomy coupled with strong accountability, and comprehensive strategies for narrowing attainment gaps between children from richer and poorer backgrounds. 

There are good reasons why we should want a more diverse range of providers in our school system. They can bring new expertise, energy and innovation into state education. But England already has a vibrant not-for-profit independent sector and there is no shortage of non-profit organisations willing to run academies and free schools. Whatever one thinks of the free schools programme, these schools are growing successfully without a profit motive. There is therefore no strong case for introducing commercial providers on either innovation or competition grounds.

There are, moreover, strong arguments in principle for keeping schools within the public realm, run exclusively in the public interest.  Schools have multiple and complex objectives which it is hard to contract a private provider to deliver in the same way that one might, for example, contract a company to collect the bins on time.  Schools exist to teach basic skills, knowledge and understanding, to prepare young people for the world of work, to enable personal fulfilment through the enjoyment of learning and to help young people becoming active citizens. While you could contract a private company to improve children’s exam results that is not the only outcome we want our schools to achieve.   

The introduction of the profit motive would also very likely undermine trust. Good schooling depends on strong relationships between teachers, parents and young people. Those relationships would likely be undermined if parents knew that a school’s management had one eye on their children’s welfare while having another eye on their profit margin. 

Finally, schools inculcate values and send out important messages to children. We want schools to encourage children to be good citizens, to respect their neighbours, to look after other people, to participate to some degree in public affairs.  If schools were run for profit they would send out an altogether different set of signals about what is important in life. If schools are to teach young people the value of public service, they themselves must be run in the public interest.

Rick Muir is Associate Director at IPPR. IPPR’s new report ‘Not for Profit. The role of the private sector in England’s schools’ is published this week.

Education Secretary Michael Gove has suggested for-profit schools could be established in the future. Photograph: Getty Images.

Rick Muir is associate director for public service reform at IPPR.

Photo: Getty Images
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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.