A new comprehensive vision for education

The three parties are united behind a failed education consensus. We need a new system that promotes cooperation, not competition.

Coalitions don’t just have to be about government – they can be about ideas too. What is perplexing about British politics is that you find groups in each of the main parties saying pretty much the same thing. Nowhere is this more true than education. A coalition, predating the general election of 2010, dominates British education. No one voted for it or sanctioned it, and I suspect few want it. It is a coalition born of the 1980s and today it is represented by Michael Gove, Andrew Adonis and David Laws. It needs to be understood and trumped by a more radical, progressive and hopeful education coalition.

The puzzle of this cross-party coalition of ideology finds clarity in its evidential failure. The power of the coalition is that it served the dominant political economy of neo-liberalism. People would be shaped on a learn-to-earn consumer treadmill, thus enabling them to compete and shop in a global economy. Aspiration would be narrowly defined and individually attained. If you could climb the ladder and if you wanted to climb it badly enough, then the world was yours. Bad luck was just another way of saying you weren’t trying hard enough. But this meritocratic promise is fast breaking down. Today, even if you learn hard, work harder and play by the rules there is no guarantee of success. Instead, a generation is being laid to waste because, as we now all know, "there is a flaw in the model". The desire industry speeds up the turning of wants into needs – but this flawed economy is destroying the ability to pay. Given this rupture between the neo-liberal promise and the lived reality of millions of children and their parents – what now is the purpose of education? Indeed, why go to school?

The answer starts with Einstein who warned us "we cannot solve our problems with the same thinking we used when we created them". Next comes the recognition that we cannot view education in isolation to the economic, social and political culture in which the system fits. As such, education plays an almost unique role, not just a big part of the means by which society reproduces itself, but a platform from which society can actually transform itself. Thus, we have to understand education as a paradoxical entity, as both in-and-against the still dominant discourse of free market ideology. But given the objective failure of neo-liberalism and, therefore, of the educational consensus that flowed to it and from it, the onus must now be to come up with alternative – a new consensus for education in a good society.  

That of course will not be easy, although it is reassuring to remember that the majority always started out as a minority and that only from small acorns do great oaks grow. And let’s build on that thought by briefly stating what we don’t think education should be about and, therefore, how it must not be run. If it’s not about the production of addicted consumers, then the basis of educational production should not be consumerised or marketised. Likewise, if we think that everyone who has a stake in the education system should also have a voice in the creation of the education system then we can kick largely into touch the old bureaucratic model of the mid decades of the last century. As Simon Jenkins has written recently, "Britain’s economy is in a mess not for a lack of maths but for a lack of ethics and common sense. Being top of the world in science did not save the Soviet Union from collapse … the academic terrorism of tests and league tables has made Gradgrinds rote-learning seem almost liberal".  While heads, teachers and inspectors tick the boxes of the standards regime there is a growing hole in the heart of our education system – a hole in which empathy, compassion, responsibility, creativity and the enduring and genuine identity formation of the young people of our country is squeezed out.

Once we have dispensed with the market and the target, or to put it another way, the Soviet Union and G4S, as the models for educational production where does that leave us? Well that depends on what we think education is for. The work and thinking of the Compass Education Group has resulted in a rather simple, and dare I say, rather beautiful rationale for the billions we pump into education, and it is this: our education system is there to help us learn to live and collaborate together. It is the prime collective means by which we are socialised. And as such, its focus is relational, emotional and human. And if, as they should be, means and ends are to be united, then the way our education system functions should be relational, emotional and human. This "learning to live together" is the most precious gift we can bestow on young people. The art of life is to know how to live it with others. If, at the most basic, our core belief is that we should treat others as we would have them treat us, then our schooling system must, above all, teach us exactly that.  

Of course, we have to burden this fragile but wonderful structure with more capability and qualifications needs but if the essence is to produce citizens, rather than consumers, or their flip side, worker ants, then what is the model of a new educational consensus?  We cannot go on as we are, neither can we go back to some 1960s comprehensive nirvana. Instead, we are going to have to explore a new comprehensive vision – it will be challenging and difficult.

The focus for this new comprehensive vision will not be the solitary school, but the local area. The challenge of the future is how schools and local institutions collaborate to ensure everyone learns about their life in common and that through a cooperative local system all maximise their potential and their capabilities. The building block will be the formation of local stakeholders Educational Boards that could be indirectly or directly elected. They must include parents in the recognition that we cannot outsource the socialization of our children to either the market or the bureaucracy.  If we do then our children will suffer. Parents, alongside professionals, local politicians, the community, business and other interests, have to play a role in shaping and determining local collaboration, not least the localisation of inspection and standards. And instead of league tables that can be gamed, local democratic accountability would provide a much more effective spur for continuous improvement and innovation.

Such a democratic educationalism cannot just be argued for on intrinsic reasons alone but the instrumental case too - we get better outcomes through democratic participation and engagement than we do from the machine or the market. Trusting people is better than either imposing decisions on them or forcing them to compete. Their buy-in and the co-production of services between users and workers locks in organic initiative and enterprise. These ideas are going with the flow of economic development, even in a period of neo-liberalism – more networked, more localised and more innovation based.  

Seen in the global context of a growing relevance of relational and democratic ideas, all of a sudden it becomes our school and our area and our commitment to both improves outputs in ways competition and instruction never can.  Democracy is not easy or quick, but is the only way to come up with solutions that are embedded and enduring. And such a move would break the strange-hold of Whitehall – a blow not just to the control freaks, but also the neo-liberals. The free market always requires a strong state to usher in privatisation.

Of course, central government will have a role, not least in funding. And professionalism must be recognised, encouraged, respected and rewarded. As Melissa Benn wrote recently, "for Adonis and Gove all that stands in the way of a child on free schools meals and King's College Cambridge is a militant, clock watching member of the NUT". A good education cannot be built with teachers as the enemy but, rather, along with parents and other stakeholders, as one of the prime forces to improve performance.

This new comprehensive vision will have to be supported by more specific educational strategies – for example, it should be underpinned by a common curriculum and a unified qualifications framework. This means not a divide and conquer Bacc of academic and technical varieties, but a unified Bacc that dusts down the Tomlinson report, which recommended the end of the academic divide and radically updates it. Finally, further and higher education need to be merged around a new educational entitlement that ends any notion of up-front fees and charges. Such a comprehensive and unified structure can be the only basis of a truly one nation politics. Indeed, I think we say that one nation starts in the classroom.

Conversely, government should do nothing to support division and competition within the education system, anything that tears people apart,  rather that drives them together. Private schools should no longer receive tax breaks. Andrew Adonis’s aspiration for private schools to back academies and free schools to level up opportunities and standards is at best a naïve category error which fails to recognise the reason why parents pay thousands in fees each year – to buy an advantage over the state system. As charitable status must go, so the 11-plus must be phased out.

A new comprehensive vision and new education coalition will not emerge solely from Labour because it paved the way for much of the Gove agenda. What we are witnessing is its logical conclusion. Instead, the braver elements of the Labour Party must make common cause with social liberals, parents, localists, businesses, vocationalists, the teaching unions and other professional groups to develop, flesh out and popularise this new vision. We can learn from the best practice in Canada and Finland, but we must build a distinctly English model of this new vision. Time is of the essence.

The goal of our education system cannot be to produce more hedge fund managers that carve up the country in their interest, divide the few from the many and then wreck everything we hold dear. The failure of that economic system means the end of the education system that flowed from it. It is time for something new and something better.  

The Compass Education Group's conference to discuss and debate "a new comprehensive vision" is on 8 December at the TUC in London. Speakers include Jon Cruddas MP, who is chairing Labour’s Policy Review and Mary Bousted from the ATL

Neal Lawson's column appears weekly on The Staggers

Pupils wait for school buses in the playground. Photograph: Getty Images.

Neal Lawson is chair of the pressure group Compass, which brings together progressives from all parties and none. His views on internal Labour matters are personal ones. 

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?