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4 September 2000

Schools that are fit for the PM’s sons?

In Islington, the private sector has taken over state education. Will it work, asksNick Robinson

By Nick Robinson

Remember the fuss when Tony and Cherie Blair chose to shun local secondary schools for their eldest child? Imagine how much greater the reaction would have been if Labour’s new leader had declared: “I wouldn’t dream of sending my children to an Islington secondary school. Few people here even trust the council to clean the streets. So, if I become Prime Minister, I’ll privatise the schools service. Let’s face it, it worked for the binmen, so let’s give it a try in education. If it works, we might one day let private firms take over the worst state schools.” Enough, perhaps, to push even Alastair Campbell over the ideological edge. Yet that is what has happened.

Labour extended the powers of education’s hitman, Chris Woodhead, to allow the Office for Standards in Education to name and shame failing local education authorities as well as schools. Ofsted’s conclusion that Islington was “incapable of self-improvement” meant only one thing – call in the private sector. Over the past 12 months, with a BBC documentary team, I have tracked the results. The schools minister, Estelle Morris, calls it a privatisation without the usual vices. It may, however, prove to be one without many of the potential benefits, either.

Privatisation is a term that ministers shy away from. They prefer the language of the management consultants: “externalisation”; “outsourcing”. That nervousness extends beyond terminology. Bidders for the council’s £86m seven-year contract were judged against a series of tests. Most were objective measures of financial and educational competence. One, a test of commitment to “partnership”, was much less so. It allowed Islington to distinguish those companies it felt comfortable with from those it didn’t – a distinction that became, to us, increasingly clear.

Cambridge Education Associates (CEA) – a network of school inspectors, former heads and senior council officers – promoted itself as a member of “the local authority family”; it would bring out what was best in Islington. It spoke of charging a “management fee” rather than making a profit, and promised to cap it so that nobody would think it had an incentive to cut services. Quite a contrast to Nord Anglia, a company led by education’s first millionaire, which runs colleges here and English schools abroad. Its founder, Kevin McNeany, talks openly of his disdain for the work of most local education authorities. He told Islington that, if he could “release value” from its education department by running it more efficiently, he was entitled to make a profit.

It was pretty clear who would win. Isling-ton wanted to say that privatisation had not cost its council-tax payers a penny more than the existing service. Nord Anglia felt the risks were such that the cost of running the education service should be greater by almost £3m a year. Even CEA felt it should be increased by several hundred thousand a year. The problem was solved by the taxpayer bridging the gap. Ministers agreed, in effect, to a one-off subsidy of £1m. And that was not the only ministerial sweetener.

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The signing of a contract with CEA brought with it much excited talk about “inventing the third way”. CEA’s annual profit has been capped at £600,000 to ensure that there is no perverse incentive to cut services. It is liable to a series of fines for failing to meet a huge range of performance targets. Thus, the argument goes, the contract creates a virtuous circle in which the company will make efficiency savings to re-invest in initiatives that improve the service.

But those performance targets – no fewer than 411 in all – may produce their own perverse incentives. Each one must be monitored, and each carries a financial penalty for failure. Some are educational – covering test and exam results, exclusions and so on – but most are not. CEA is, for example, contracted to answer the phone after no more than six rings. So it may well spend its time on such marginal tasks, rather than on the proper educational job. Bizarrely, nobody was permitted to visit schools or meet teachers while bidding for the contract. As one bidder complained, he was “looking through a glass darkly”.

The purpose of the Islington experiment is to change schools in a way that local authorities – according to Ofsted – have shown themselves incapable of doing. But McNeany says that “they are expecting companies to go in and make a difference while all the other rules are held exactly the same”. CEA cannot pay teachers more, nor change the curriculum except around the edges, and would find it difficult to change, say, the length of the school day. Most curious of all, it can’t paint Islington’s disgracefully shabby schools while buildings remain under council control.

What has taken place in Islington is really a management takeover. The three main officers in the education department were “let go” at a cost to the council of £250,000, and they have been replaced by a new team. Cynics say that it is simply new faces and a new logo. CEA says that it is bringing new leadership and a new direction.

It is too early to judge the impact of privatisation. CEA is the first company to take over an entire education service, and it did so only in April. Yet companies specialising in private education have much more experience running schools than running services. Why not let them run the state schools themselves? I asked Morris. “That’s very interesting,” she said. “We’ve got no plans to do that . . . but who knows where we might be in five, ten, 15 years’ time?” I wonder what Alastair Campbell might make of that.

The writer is the chief political correspondent for BBC News 24. His Education, Education, Privatisation is on BBC2, 2 September, 6.45pm