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19 February 2001

The end of Blunkett’s grand illusion

Business won't put money in state schools unless it also gets control. Labour's latest plan suggests

By Francis Beckett

David Blunkett, the Secretary of State for Education, has written to me as follows: “My dear Francis, You were right and I was wrong. We have completely failed to persuade business to support our education action zones, which were to raise standards in deprived areas. I am sorry that I dismissed your warnings as the ravings of an unreconstructed old Labourite. What we need, as you said, is a proper state-funded and state-run education system, and I undertake to try to ensure that the Education Secretary in our second term, whoever that may be, works single- mindedly to achieve this objective. Yours ever, David.”

The letter hasn’t actually reached me yet, but Blunkett is a fair-minded man, and it can only be a matter of time. But if he had really wanted to understand the difficulties of getting private money into government schooling schemes, he need not have relied on me. He could have recalled that, in 1986, the then education secretary, Kenneth Baker, announced a “pilot network of 20 city technology colleges”. Private sponsors would “meet all, or most, of the cost of buildings and equipment” by contributing between £8m and £10m.

Soon ministers were forced to say that what they really meant was £2m, or about a fifth of the cost, and the grateful taxpayer would cough up the rest. It required a lot of creative accounting to suggest that business handed over even that much. After 15 CTCs had been built, each one requiring more effort to get less money out of private sponsors, the government finally pulled the plug.

Now, Blunkett has learnt the lesson of Baker’s fiasco. He has done what politicians always do when their pet policies collapse. It is what Baker did when the CTC project collapsed. Blunkett has stopped talking about education action zones – no mention of them on Monday in the publicity for Labour’s latest school plans – and quietly pushed his money and his praise elsewhere. Without fuss or fanfare, he has cancelled the next round of bids for zone status. That is the nearest politicians ever get to saying: “I made a mistake.”

The lesson has been rammed home by three reports from impeccable sources: the Institute for Public Policy Research, the Audit Commission, and PricewaterhouseCoopers. As these reports make clear, the idea that the private sector is willing to bung in great chunks of money to improve education in deprived areas is a delusion. Business people’s interest in state education, mostly, is whether they can sell things to it. There is no shame in that. Business lives by selling things. This point is better understood by the right. Britain’s foremost apostle of education privatisation, Professor James Tooley of Newcastle University, says business is not going to give handouts to state education, and what we should be seeking instead is investment. Business should be paid to run schools, he argues, because it can do it better than the state.

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And that is the choice confronting Blunkett’s successor. He or she can choose to rebuild state education. Or else education can be handed over to burgeoning private companies such as Nord Anglia and Cambridge Education Associates, which, so long as there is a return for shareholders, will run it on the government’s behalf.

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At the start of the action zone experiment, Stephen Byers, then Blunkett’s schools minister, said: “Education action zones can be the forerunner of ensuring a third way forward is developed for our education system.” Their failure shows that there is no third way. The government must choose. There are some worrying signs that, having belatedly understood the reality of business, the government is preparing to do precisely what Tooley advocates.

Education action zones are clusters of schools working with partners, including the local council, charities, health authorities and social services, and (most important of all, we were told) businesses. Blunkett offered up to £250,000 of government money for each zone, so long as it was matched by the same amount from business. He was quickly forced to treble the government contribution to £750,000, leaving the business contribution at £250,000. He was also forced to make it clear that the £250,000 did not have to be real money. “Benefits in kind will count towards the private-sector contribution,” said the Department for Education.

That is where the thing degenerated into farce. Like Baker before him, Blunkett had assured everyone that business would give generously. So those – usually local councils – who wanted to start action zones in order to get government money for their schools were compelled to reinforce this delusion and pretend they were getting lots of money from business. I got to see the bids (which were supposed to be secret), and it was my melancholy duty to tell NS readers the often laughable ways in which they tried to assure the emperor that he was fully clothed.

Here are a few examples. The chief executive of a Bradford company and his assistant helped write the Bradford bid for zone status. That was put down as a £5,000 contribution; and when the gentleman said he would go on offering his advice, that instantly became a promise of £5,000 every year.

In Ellesmere Port, Associated Octel opened up its Learning Centre to zone schools. This appeared in the zone’s bid as a £70,000 business donation. The local branch of Barclays Bank offered to send someone to sit on the “forum” that controls the zone, to ask volunteers from its staff to sit on school governing bodies, and to advise teachers on financial matters. So Barclays was deemed to have donated £30,000. The Blue Planet Aquarium offered half-price entrance for action-zone pupils. That appeared as a donation of £12,500. EA Technology said it would try to identify gifted pupils whom it might wish to employ, which is probably sensible business practice, but it is hard to see how this got turned into a £30,000 contribution to the zone.

In Preston, unspecified “in kind support for various activities” from Preston North End Football Club appeared with an arbitrary price tag of £10,000, and reduced fees at a local water park were valued at £42,000. The Blackburn Partnership, representing some local businesses, agreed to sit on the Blackburn zone management committee. That went down as a contribution of £80,000 a year.

In Newham, the construction giants Mowlem and Laing were put down for £20,000 each. Their contribution consists of welcoming older children at their training centres and asking them whether they fancy a career in construction, which has a recruitment crisis.

Today, 73 zones are operating, and they contain about 6 per cent of the school population. If they all run for five years, a notional £365m should have been spent on them. Only a quarter of this is the business contribution, and that includes the Blackburn Partnership’s £80,000 and all the other bits of pretend money. As the IPPR report puts it with masterly understatement: “Much of the in kind contribution appears to be overvalued.”

But it is worse than that. According to the IPPR, some zone accounts list money simply as “private sector” without stating the source, and the phrase “business contributions” often includes donations from charities and even the government. Some of that government money had already been promised to the local council before anyone had heard of the zones. And businesses that have offered work-experience places for years are suddenly finding that these places are having a monetary value put on them, so that they can appear in the zone accounts.

To obtain these driblets of private-sector charity, zones have spent huge sums of public money. Thetford’s plan budgets for a “business outreach worker” to be employed at a cost of £60,000. Worst of all, the IPPR reports: “In one zone it seems that, through selling their services to the zone, some partners are receiving more funds from the zone than they are contributing.” There follows the logical conclusion. If zones cannot work without business contributions, “such contributions may need to be incentivised through allowing businesses more explicit returns on their investment”. In other words, let businesses make a profit out of state education.

Several senior Labour figures seem to have accepted the view that education has to enter “the real world”, and that the real world is what goes on in the offices of big companies. Everything else is an illusion. City academies, which have replaced education action zones as the government’s big idea in education, may turn out to be a test bed for privatisation. They are very like Baker’s city technology colleges, but instead of giving them money, business may choose to “invest” in them. And in this case, business often means the specialist education businesses, not the big-name companies.

But do such organisations want to invest? The Centre for British Teachers (actually a voluntary body rather than a business) agreed to help run a city academy in Lambeth, but failed to understand that it should take along a cheque for £2m. The project is now in doubt. It seems likely that “investment” will normally come from the taxpayer. Only the profits will be looked after by business.

Privatisation requires that private companies should be in real control of schools. A proper business contractor cannot allow elected people to come on the governing body and tell the company what to do, any more than Tesco’s management allows the government to put people on its board to dictate corporate policy. Tony Blair, launching Labour’s latest education plans on Monday, seemed to understand this point. He said: “We need to change the law to allow external sponsors . . . to play a far greater role in the management of schools.”

Tooley goes to the logical conclusion. He argues that education is unlike any other function of government. It is more like the supply of food or other consumer items. Customers should be able to buy education from competing suppliers, just as they can buy washing powder from a supermarket.

It follows that the state should not pay for education any more than it pays for washing powder, and Tooley says that only the children of the poorest should have minimal education provided, just as their parents get the bare minimum to buy food and shelter. But that could never be a route for a Labour government. Could it?