FREE SCHOOLS AND PROFIT
It was rumoured that Gove’s education team may be looking again at whether the profit motive could be allowed to give new impetus to the Free schools initiative. However when pressed at the Spectator Free schools conference last week on the issue he gave three reasons why he wants to keep profit out of the equation. First, to ensure maximum acceptance that the policy is socially motivated. Secondly, to give the idealists rather than the capitalists a chance. And thirdly because other countries have had trouble with allowing profit making in state education. The Gove team have also long been admirers of the Knowledge is Power Programme ‘Charter Chain’ in the States, which happens to be not for profit. It has been suggested too that for-profit Charter schools, like Edison, may be less innovative than KIPP-though Edison would challenge this claim. However, we know, from those behind the Swedish Free schools programme, launched in the early 1990s, that it relied on the profit motive to get it off the ground. Charities’ also seek, of course, to make a surplus (no margin no mission!) and need to invest that surplus to create chains of schools. There is however growing pressure to introduce private sector management nous and capital into the programme if it is not to run into ground, as the process of setting up these schools is very demanding and time consuming (ask Toby Young whose group includes many top professionals willing to roll their sleeves up). This, at a time when, according to the FT, the DfE plans procedural changes which will make it more difficult for smaller parent groups to set up free schools by denying them funding until their plans are well advanced. The proposed rules were revealed this month at a meeting hosted by the New Schools Network, a grant -funded charity to help free school groups make initial applications to government. Groups will need to present detailed marketing, financial and curriculum proposals as part of their first application to the DfE. Until now, school groups needed to set out only broad plans before being eligible for up to £200,000 with which to commission specialist project managers and consultants.
The new rules – meant to make it easier to distinguish between the capability of the groups backing different school proposals – caused “shock and panic” apparently among free school founders present, said people at the meeting. School groups present report fearing that it would mean that they have little choice but to become partners with existing school providers and charities. They worry the new policy will limit their ability to innovate. Under the old system, parent groups could get to a certain point – stage 3 – and then procure a Project Management Company via the DfE’s Project Management framework. That PMC then helped the group prepare its Outline Business Case and, once that was approved, ushered the group through the rest of the process – ie Funding Agreement, recruitment, admissions, opening. However, under the new system, groups can only get to stage three once they’ve prepared their own OBCs. After their OBCs have been approved, they can then procure a PMC and be ushered through the final stages.
What this tightening up means in practice is that it will be difficult for parent groups to set up schools without the support of a company, whether for profit or not for profit, almost from the start of the process. The reality of course is that Free school groups have already been seeking advice and support from specialist companies most of whom seem to be giving pro bono support. But free advice and support goes only so far particularly in a relatively hostile economic environment and at some point in the process companies are going to want a return. The Government has done little to incentivise companies to engage more, and on a sustainable basis, while continuing to resist profit taking. Companies are operating in a difficult environment. Budgets are tight and new revenue streams are hard to come by which is why companies are looking abroad for new business as public sector contracts are in short supply. If they can’t make a surplus from such engagement you won’t see much evidence of a longer term commitment and, don’t expect the quick development of chains of Free schools-like KIPP- any time soon. These changes and the current lack of a sound enabling environment have the potential to de-rail the whole free schools enterprise, although we know that the big supporters of Academies have been in talks with the DfE to see a way around this. The other big elephant in the room is the lack of funding-not much public money is currently available to support the FS scheme (just £50m inititially) which is acting as a fundamental constraint on its expansion and with private investment not part of equation the Government has set itself a big challenge with no obvious solution although the ‘James’ Review on capital funding is on-going.
Note: As at 15 February 2011, there are 97 people employed in the Free Schools Group at DFE. As at 3 February 2011, the Department has received 10 proposals to establish free schools specifically for 16 to 19-year-olds. Six of these proposals are currently being considered by officials and four have been informed that their proposals have been unsuccessful. A trouble shooter has been recruited by DfE to vet early bids to help flush out those who do not have the capacity to deliver, or have dodgy backgrounds.