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15 January 1999

Blunkett accepts schools for profit

Ministers hoped that the private sector would give money to education for altruistic reasons. At las

By Francis Beckett

It’s hard to see how Dr Andrew Povey will ever be able to hold his head high again. The chair of Surrey County Council’s education committee was thought to be at the cutting edge of Thatcherism, a reputation greatly enhanced when he announced that he was going to privatise a Guildford school. But he has been outflanked on the right by a Labour education secretary.

Povey advertised for private sector companies to take over and run Kings Manor School in Guildford. It was to be the first state school to be managed by a private company, except for the 15 city technology colleges set up in the late 1980s by the Conservative government. But the big firms in the education contracting business – including the biggest, the American-based Edison Project – looked disparagingly at Povey’s small offering.

When it became clear that Edison was not going to bid, something called the Education Partnership was hastily cobbled together on 5 December. It is led by Gareth Newman, head of a city technology college, and Dr James Tooley, the right-wing educational theorist who promoted Edison in Britain. It has been promised money – loads of it, according to Newman and Tooley – by an unpleasant-sounding Thatcherite Midlands millionaire called Wynford Dore. “He has sold a series of companies and is very cash rich,” says Newman. The Jewish educational charity ORT – whose director, Dr Gideon Meyer, is deputy chairman of Newman’s governors – has lent its name (but not its money). Good Business, a marketing and public relations company, has agreed that its professional skills may be used, on payment of the appropriate fee.

Of the other three bidders on the council’s shortlist, two of them are the usual suspects: Nord Anglia, Britain’s biggest education contractor, with 2,000 staff; and the Centre for British Education (CfBT), a not-for-profit organisation with 923 staff.

Why is Edison not bidding? And why are the other market leaders bidding half-heartedly? Surely this is the foothold they have been waiting for. Edison says it wants to launch Edison UK with a string of schools here. Kevin McNeany, chairman of Nord Anglia, has been mocking education chiefs because they are not prepared to see a state school run for profit. Now McNeany and his allies have a gift horse, and they are examining its teeth.

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The reason is that they are certain they do not have to make do with the scraps that Povey can offer. If they are patient, the education secretary, David Blunkett, will spread the whole banquet before them. “David Blunkett is continuing to support everything I have been talking about,” says Tooley, sounding as though he cannot believe his luck.

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Blunkett has required educating. Just a year ago, he used the North of England conference, where local education authority officers and councillors meet annually, to launch Education Action Zones, and apparently thought that they would be largely funded by private companies. Since then, companies in the education business have been explaining patiently to Blunkett where he got it wrong. The idea, you see, was not for companies to give money to state schools, but for state schools to give money to companies. Last week, Blunkett proved that he is a quick learner. Again at the North of England conference, he made a policy announcement; this time, he got it the right way round.

Blunkett learnt his lesson the hard way. Companies declined to provide money for action zones, and education contractors like Nord Anglia watched implacably as ministers squirmed. “Stephen Byers [then the schools minister] was quite rightly roasted by Jeremy Paxman on Newsnight over this issue,” said the head of one of these companies at a private lunch organised by the Social Market Foundation just before Christmas. He was recalling a dreadful few minutes for Byers, during which Paxman, using information from the New Statesman, stripped away the pretence that the private sector was putting money into action zones.

Then the education contractors carefully lobbied the Downing Street Policy Unit, education ministers and the Conservative education spokesman David Willetts and his team. They implored them not to bring the private sector into education hoping for handouts or investment. Both political parties have made this mistake: the Conservatives over city technology colleges, Labour over the action zones.

What you should be after, they explained, is not private sector money, but the private sector mind. Commercial disciplines and competition will ensure that education is run better if it is privatised. The CfBT’s chief, Neil Mackintosh, delivered a clear message to ministers: “We are a contractor, we need a client. That has to be a public sector client – central government, an LEA or a school.”

The contractors required the education secretary to bear a few other points in mind. Benno Schmidt, the Edison chairman and chief executive, spelt them out last March.

Just one school, or one education action zone, would not be worth Edison’s while, said Schmidt in a letter to Blunkett’s department. He wanted a string of schools. He was concerned that local education authorities were going to hang on to some of their money, instead of handing it all over to an Edison-administered zone. And he was bothered by the idea that, after three to five years, he might be required to hand his schools back to the local authority.

David Blunkett took all these points on board. Last week, when he went to the North of England conference, he delivered a much more satisfactory message from the point of view of the education contractors. When an LEA was failing to perform any of its functions properly, he would hand the job to someone else. “To act effectively,” he said, “we have to be prepared. So we are . . . advertising for contractors that are capable of providing an effective service where an existing one is failing.” They could include not-for-profit or private service providers “or indeed a neighbouring LEA”.

A newspaper advertisement the next day said: “The Department for Education and Employment may wish to deploy private sector contractors.” Contracts might be for consultancy, or they might be “for the . . . provision of the education services themselves”.

No more talk of the private sector giving money or providing investment. No limiting a contractor to just one school: a whole LEA would provide even Benno Schmidt with a sufficient critical mass. No talk of handing a school back after three to five years. No question of LEAs hanging on to any of the money or the power. It was everything the education contractors had lobbied for.

Blunkett, in their view, has come on magnificently. He has given them almost everything. But there is one remaining problem. If the contractors are to run parts of our education system, they expect to make a profit. And in a recent letter, Blunkett’s minister of state, Estelle Morris, said: “There is no question of a state school being run for profit by a private company.”

But Morris’s statement is not quite what it seems. “Schools are run by governing bodies,” she explained. “School budgets are under their control and must be spent for the benefit of their pupils. This does not rule out buying services from private companies. This is common practice for services like cleaning and catering. Buying educational and management advice from private companies is less common . . .”

David Willetts translates this, accurately, as: “A school must be run by the governing body. But the governing body could contract out its responsibility to a profit- making organisation.” In a coded way, Morris was telling the education contractors that she meant the exact opposite of what she said. A state school can be run for private profit. “We are not,” she added, just to make this entirely clear, “in the business of ruling out solutions which might help failing schools get back on their feet more quickly.”

When, towards the end of last year, Povey advertised for a private company to run Kings Manor School, he had no idea what Blunkett was going to do. He thought he was at the cutting edge. But the education contractors had a pretty good idea what was coming, and they knew they could afford not to dance too readily to Povey’s tune.

Kings Manor School is in the middle of a council estate, and there are three schools with good reputations and wealthier catchment areas nearby. Kings Manor should take 180 pupils each year, but last September its intake was only 57. It has been placed under special measures by the standards watchdog Ofsted, but it has an excellent reputation for helping children with physical disabilities, as well as for community projects and a family literacy scheme.

Early last year the council wanted to close it, but parents and governors set up an action committee to save the school. Privatisation, said the council, was the only alternative. The action committee disagrees, and so does the popular head teacher, Greg Gardner, who will be fired if any of the education contractors is successful. Parents and governors have put forward alternatives. But the council has refused to let them see any of the papers, to give them any information about the bids, to allow their representative on its special sub-committee, or to consider their proposed solutions.

The council was saying all the things the education contractors do not want to hear. There was one school only. They had to bring their own money to invest. They are likely to be kicked out once they have done the job. No wonder they look a little askance at Kings Manor. They now feel sure that Blunkett is going to offer them a much better deal.

And, crucially, in Guildford they would have to act at the behest of the local authority. The education secretary’s statement shifts the balance of power decisively towards central government. David Blunkett, the former council leader who once believed that local schools should be responsible to elected local authorities, is turning into the most centralising and most private sector-friendly education secretary we have known.