Free schools will invite corruption unless we fix them now

American free schools went through 20 years of shady deals because of their shoddy legislation. Now Britain is heading down the same path.

The coalition government pulled a clever trick with free schools. While swathes of normally vigilant people became consumed by worry about the suitability of Toby Young running a school, few of them realised that Free schools were largely a tiny distraction from a much wider-spread and more important education reform: “academisation”, the quasi-privatisation of state schools.

“Quasi-privatised” does not mean for-profit. UK state schools cannot be profit-making (though significant parts of the right would like it to be). No, academies are considered quasi-private because they are run by private non-profit companies, independently set up for the purpose of running schools. Before the change, most schools were owned and operated by local authorities. Academies effectively by-pass localism and instead get money directly from central government, which then contracts the non-profit organisation to run the school service via a “funding agreement”. Free schools are simply new schools that went through a special bidding process before they start up - but once their doors are open they are an academy like any other. And by “any other”, we are now talking about the majority of schools, since over half of England”s secondary schools operate as academies.

The first academies opened under Labour, built in areas where schools historically struggled to flourish. It was argued that giving the new school leaders greater flexibility would help with meeting the unique demands of teaching in challenging areas. A local “sponsor” was also commonly sought – someone who could bring capital, business acumen and a “brand name” to overcome the area’s poor reputation. However, this small, almost micro-managed, bundle of schools under Labour grew profusely post-2010. The coalition extended academy rules – all new schools must now be academies – and gave existing schools the opportunity to “convert”, giving up their link to the local authority in favour of direct cash and extra freedom. Enthusiasm for the change was revealed in a recent National Audit Office report where the vast majority of convertor Heads said they welcome greater freedom. The recent GCSE performance tables also suggest that academies do appear to be improving exam scores at faster rates, though only marginally.

So letting schools “go free” sounds great. But in the US, where a similar system has been operating for over twenty years, there have been some spectacular problems.

In Arizona the government went hard for autonomy when the policy began in the early 90s. Similar to Gove they encouraged speedy take-up and within two years had over a hundred schools. But the speed meant the State Department for Education could not keep up: the approvals process was not rigorous, schools started failing without a clear process for closing them, and financial issues mounted up.

Unlike in England, for-profit groups are allowed to run schools in thirty-two of America’s fifty states. While the impact of for-profits on student achievement is still debatable, several infamous for-profit “disasters” have left people questioning the appropriateness its appropriateness in education.

The most widely-reported early failures were in the Edison School network. Set up by Chris Whittle in the 1992, Edison aimed to make profit via efficient yet brilliant schools. Initially luring pupils in with promises of free laptops and bilingual education, once schools were taken over Edison closed libraries, sacked employees, and released misleading performance data. The laptops and bilingualism were also soon abandoned. Some argued this demonstrated the worst excesses of for-profit greed; others, that bad financial decisions in Edison’s early days meant cutbacks were more a scrabble for cash than anything sinister. Regardless of motive, the moral of the Edison story is that handing money over to an autonomous private company makes it hard to track, and even harder to enforce its sensible use.

Another common racket in the US is around real estate. In several states, non-profit school organisations created real estate “sister” companies that purchased buildings which they then rented back to the non-profit school company, often at rents far higher than market value. Hence money from the taxpayer - given to the school for the pupils’ benefit – actually went into paying rent to a for-profit company only able to gain the deal because of its close connections to the non-profit group. In a similar bout of high jinks, six Imagine charter schools – with more than 4,000 students enrolled - had to be unilaterally closed last summer in Missouri when a complicated real estate scandal was uncovered.

Of course, financial irregularities are not solely an academy problem. All schools can fall foul of misdemeanours. But the legislation governing Academies was pushed through in five days using a “compressed” Parliamentary process normally reserved for anti-terror laws. Much of the rushed law remains unclear and open for exploitation. For example, while academies must be run by non-profit groups, the non-profit company can hire for-profit organisations to manage the day-to-day operations of the school or for the lease of premises. These are precisely the types of loopholes in law commonly exploited in US.

One way to circumvent inevitable problems would be listening to those in the US already wise to such scams. “States didn’t realise that bad people would want to get involved, but there will always be some people who care more about the dollars than the kids” says Dr Louann Bierlein Palmer, Professor of Educational Leadership at Western Michigan University. From the late 1990s onwards Palmer analysed the differences in charter school laws springing up as each state implemented the policy in its own way. Gradually she noticed that some legal frameworks encouraged fast take-up, while others were too slow, but in either case without clear laws, financial and legal issues soon took hold.

In response Palmer and her colleagues created a list of “model laws” against which US states are ranked each year. This week’s release of the 2013 report shows that more states than ever are coming around to her way of thinking. In 2011 Maine was the first state to enact almost all 20 laws; in 2012 the state of Washington joined them. She notes that “the trick with these laws is that we want to be effective but not heavy handed”.

So what of England? How close are we to the model? The coalition cannot be faulted for encouraging autonomy and a fast take-up: on the measures ranking “freedoms” England would receive almost full marks. The bigger problem is that our current system hits almost none of Palmer”s “quality control” requirements. And those are the ones really important for avoiding disasters.

What could England improve? First, increased transparency about the way new academies (i.e. free schools) are opened. The British Humanist Association recently won a two-year Freedom of Information battle just to get a list of applicant group names, school location and religious affiliation, and the DfE still are considering using the power of veto to over-ride the ruling – all over a list of names. In the best US States there is complete transparency of the entire application process (For instance, Maine’s list is published online), and rightly so given the schools are taxpayer-financed.

There could also be clearer processes for renewing or revoking academy “agreements” as the current rules are too patchy. Campaign groups are already complaining that Roke Primary School is being forced to close (or, more likely, be taken over by an academy group) while schools with similar performance records which already operate as academies are being allowed to limp on. Perhaps this is because the government does not want to admit that academies are not a panacea; possibly it is because of finance — in the US charters have often been allowed to stay open far longer than they should because financial contracts they signed meant closing would involve prohibitive financial penalties. Finally there needs to be clearer guidance around the use of for-profit organisations, and an ability for the public to “follow the pound” as Margaret Hodge recently suggested.

The coalition government may have boosted the quasi-privatisation agenda without too much fuss, but the US's experience should be a serious warning. If its history is anything to go by, there is a need for much more transparency in the opening and closing processes of schools and for tighter financial accountability. Without both of those it’s all-too-likely that the free schools program will end in tears. Or a courtroom.

Photograph: Getty Images

Laura McInerney taught in East London for six years and is now studying on a Fulbright scholarship at the University of Missouri. She also works as Policy Partner at LKMCo.

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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.