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 director of the Police Foundation

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

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