THE BRITISH COUNCIL CANT REPRESENT UK EDUCATION INTERESTS AND COMPETE WITH THEM AT THE SAME TIME

Martin Davidson  of the British Council (BC),  a subsidised quango that is  supposed to represent UK education abroad ,in a letter to ‘Education Investor ‘this month  wrote interalia:

‘We believe that our mission is to support and promote the UK and UK institutions and aim to do that professionally and in partnership with others. However we are also aware that we will sometimes compete with other providers as well as collaborate.’

Unsurprisingly given this  admission and  what they have encountered in the market,   UK Education providers  say that this is a clear example of a conflict of interests.

How does the BC decide when  to compete with a provider and when to  collaborate? How can  other providers  trust an organisation that at one minute claims to represent them (using taxpayers money) and at another competes against them for contracts?  What criteria does the BC use to decide when to compete and when to collaborate? Providers are not aware of any published criteria or code of conduct to inform this process- so how exactly  does the BC decide? And how much information does it  withhold from its competitors in order  to  secure an advantage for itself  and its perceived commercial interests?

That these questions have to be asked (The BC doesnt  have credible  answers to them,  by the way)  demonstrates that the British Council  is not fit for purpose in its role as the  representative of UK education interests abroad.

One further question arises.How would the BC fare in the market if  it competed on a level playing field , deprived of its subsidies, and  without any political patronage protecting it? That is, of course,  one question to which  we all  know the answer .

UK APPROACH TO EDUCATION EXPORTS-CALLING TIME ON THE BRITISH COUNCIL?

The government is trying a new approach to supporting education exporters. Can it work? Patrick Watson

Published in ‘ Education Investor-’ September 2012

This government, it claims, is committed to export-led growth. Education is our seventh largest export industry, worth over £14 billion in 2008-09, and is growing at a rate of 4% a year but, ministers feel, it could do more.

So, in a tacit acknowledgement that our exporters need more support, UK Trade & Industry is moving to offer a ‘system to system’ approach to help education exporters. Its new UK Education Services unit aims to bring the best expertise in the private, public and voluntary sectors together under one roof, to enable a more joined up approach to education exports. The intention is to sell international customers a distinctive UK offer comprising a number of providers working together. This, the theory goes, will be more attractive to potential customers than a number of competing UK offers that meet only parts of their needs. This is quite a change. Until now, the go to organisation for UK education businesses abroad has been the British Council (BC), but that bodys inadequacies are well-known. Its too thinly spread, lacking the capacity, expertise or, indeed, competence to provide the support commercial education firms require. It also suffers from a conflict of interests. Though tasked with representing our education services, in practice the BC often competes with it, by providing language training and so on itself. Accordingly, it often keeps valuable commercial information to itself. To compound the problem, as its grant funding has decreased, its exhorted its staff to act more commercially. This toxic mix of conflicts of interest, overstretch and quality deficit once amounted to an irritation. Increasingly, though, its turned into a crisis.

UKTIs latest initiative, then, could represent a step change in the way the government supports the UKs education industry. We know whats needed: the UKTI spells it out in an overview of its new approach.

First, the identification of major opportunities, through detailed country market analysis. Second, engagement with UK education providers and supporting agencies to identify those with the capability and interest in exporting to these countries.Third, engagement with the host government contacts to develop opportunities to the point where they can be offered to UK providers. And, finally, facilitation and support to UK providers in bidding for contracts.

So far, UKTI has mainly focused on the needs of Higher Education institutions, but increasingly it accepts the need for a more inclusive approach. After all, the UK exports a wide-range of education services: independent schools and their franchises, school improvement, qualifications and assessment, inspection, teacher training, language teaching… Such specialist services are often poorly understood by our local representatives, and so havent had the support that they might.

The UKTI approach sounds promising, but  will  need to be backed by political will and resources. Secondments from the private sector would give this initiative some focus and traction. Using education service providers as a sounding board will help, too.

But heres one more idea. The BC receives a lot of grant money specifically to promote UK education, but the consensus is that this has not been used cost-effectively. Why not simply transfer it to UKTI, and use it to fund, say, secondments from the private sector?

Published in Education Investor September 2012 Vol 4 No 7

Education Investor is organising a conference in London  on 17 October 2012  ‘Exporting excellence: capitalising on the global value of UK education’, at the Westminster Conference Centre

Note

UK Trade & Investment (UKTI) works with UK-based businesses ‘ to ensure their success in international markets, and encourage the best overseas companies to look to the UK as their global partner of choice.’ It is  part of the  Department for Business Innovations and Skills (BIS). Lord Green is the Trade and Investment Minister .

Note 2

Unsurprisingly the BC has taken exception to my views on its role and competence, insisting on a  right to reply in Education Investor. Its weak reply in letter form  amounts to  flannel and flummery so typical of that organisation , signally failing to address the core issues raised. It   suggests that I am  articulating my clients views, the implication being that these views do not represent the broader education sector.  Wrong. There is a broad consensus among  UK based education providers, most of whom are not my clients  (if only!) about the inability of the BC to represent their interests, for the reasons given above. Many have to work in partnership with the BC or suffer commercially without  fully understanding the reasons why. The BC behaves like the worst kind of monopoly, and  in consequence  damages UK education interests abroad in a sector where we should have some competitive advantage. It really is that simple. The real shame is that our politicians and civil servants allow  the BC to get away with it. But for how much longer?

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PUBLIC BENEFIT REQUIREMENT FOR CHARITIES-COMMISSIONS NEW GUIDANCE UP FOR CONSULTATION

PUBLIC BENEFIT REQUIREMENT FOR CHARITIES

New Draft Guidance from the Charity Commission-  up  for consultation

Greater clarity for stakeholders

Comment

The Charity Commission, which regulates the Charity sector, issued Guidance on ‘ Public Benefit’ in the wake of the Charities Act of 2006. It wasn’t a great  success.  Guidance is, rather obviously, supposed to deliver some clarity to help, in this instance, trustees to understand how their charity might satisfy the explicit public benefit requirement and to inform their decision-making. This it signally failed to do.  With respect to schools, the Commission had created the perception that the number of bursaries offered by a school would provide the clearest indicator of public benefit.  This managed, simultaneously, to alienate both the independent and state school sectors. State schools were worried that this would provide a licence for private schools to up their game in poaching their best pupils, harming their schools in the process. Private schools with charity status, on the other hand, were determined to preserve the independence of trustees to determine what measures would satisfy the public benefit requirement. Nobody challenges the idea that schools with charity status should demonstrate public benefit but defining this ,in practical form, was  problematic.  Private schools and one of the bodies that represents them, the ISC, believed that the Commission were giving too little weight to the range of charitable activities that they undertook, in favour of bursaries and a form of  crude calculation  involving fees and bursaries.

In May 2011 a judicial review was brought against the Commission’s guidance by the ISC, challenging the legal basis of that guidance. The Upper Tribunal gave its judgment in October and December 2011. In short, the judgement found that the Commission had failed in its efforts to provide clarity on this, albeit complex, issue. The Tribunal found that parts of the Commission’s guidance on public benefit were ‘obscure’ or ‘wrong’. The Tribunal ruled that it is for the trustees of a fee-charging charity to decide how best to meet that obligation in the circumstances of their charity (not for the Commission, the Tribunal or the courts), provided they did so in a way that any reasonable trustee would have done, and that support should not be tokenistic. This amounted to a severe rebuke to the Commission for not getting it right in the first place.

The Commission has now, suitably chastised, issued new draft guidance (as it was instructed to do by the Tribunal)  ,for consultation . The revised guidance seeks to explain what the public benefit requirement means and sets out what all charity trustees need to know to make sure that they are running their charity for the public benefit. This makes it clear that schools will be given more freedom to decide how to open up to the poor without necessarily providing free places. It provides welcome clarification that charity trustees have the duty to decide what level of public benefit the charity can offer in its individual circumstances.

http://www.charitycommission.gov.uk/RSS/News/pr_pbconsultation.aspx

Note

Under Labour’s 2006 Charities Act, fee-paying schools are no longer automatically entitled to charitable status and must prove they provide wider “public benefit”

THE SCHOOLS NETWORK-SO LONG

The Schools Network was forced into administration this week, as the TES pointed out ‘ after suffering losses from shrinking school budgets and government cutbacks’.This is shorthand  for- they lost their subsidies.The Schools Network and the original SSAT from which it sprung survived because they were subsidised by us taxpayers and guaranteed contracts  from the government often without the need to compete , as  many  contracts were  not put out to tender. This was the surest way to ensure that we  taxpayers  didnt  get value for money.   Nor did it encourage efficiency and accountability.  Large overheads-including plush Mill Bank Offices-  poor cost controls and falling income   meant that the organisation had nowhere to go. Doubtless the Network did some useful work , helped with networking ,dissemination of best practice and so on.  But  it  also unfortunately  helped ensure that the market was not a level playing field and  raised other providers costs and risks of entry and participation, both here and abroad. Other providers have long argued that many of the services provided  by the Network, and SSAT, could be provided at lower cost   by other providers, and without  the need for subsidies. Their successor organisation that reverts back to the old  SSAT name ,  should not be allowed   any special privileges nor to benefit from the political top cover enjoyed by the predecessor organisations. If  the (new) SSAT can compete on quality and price  without preferential treatment and subsidies then fine. But its not a culture that is familiar to those who work in the organistaion. Other education service  providers will  be  watching with interest in the months ahead.

THE SCHOOLS NETWORK-FOCUSES ITS ATTENTION ON GRAMMAR SCHOOLS

By attacking Grammars isnt  the network  deflecting attention from the performance of their schools?

Comment

The Schools Network wants grammar school pupils to have to achieve five A* or A grades at GCSE to be considered as having achieved a satisfactory level of education. All other state schools would continue to be judged on students passing five GCSEs at A*-C grades. The Schools Network , formerly The Specialist Schools and Academies Trust , helped roll out the Academy and Specialist schools programmes  under the last Labour government.  Academies, of course, are  central to this governments education reforms, although Labour claim that the new Academies are not the same as their Academies ,which were almost exclusively located in deprived areas. Just about any school ,even outstanding ones, can  now convert to Academy status .

Specialist schools were criticised by some, including Professor Alan Smithers, for not being Specialist in any meaningful sense. Although claiming to be ‘ Specialist’  if you  looked  a bit closer  at, for example,  the  number of  specialist  teachers  they employed or, crucially the number of  pupils taking hard  (as opposed to soft)qualifications  in their specialism  then you might be dissappointed to find, though perhaps not surprised,  that they were not much different from their neighbouring school, which  claimed  no specialism.(and therefore had access to fewer funds)

Professor David Jesson, an associate of the Schools Network, had created a means for measuring value added for SSAT supported schools, taking into account contextual data. Some critics suggested that this was conceived because their schools were not performing well enough  under the standard  government performance benchmark  of five good GCSEs,  including maths and English.  Perish the thought.  Mind you, if a pupil leaving school at 16 were to go to a job  interview and argue the case that he hadnt got five good GCSEs but  that  his school had  added  great value, one  might have grounds for wondering whether this was an approach  that maximised   the  chances of a positive outcome.

Jesson is the author of a new report for The Schools Network  which suggests  that because grammar schools produce such excellent results, their performance should be judged differently. Indeed the clear implication  was that many Grammar schools ,which are selective, are coasting.(so are quite a few  comprehensive  schools in leafy suburbs-which the SSAT was given funds by the last government  to address- err..whatever happened to that programme?)

Robert McCartney, chairman of the National Grammar Schools Association, said: “It would be grossly unfair and nonsensical to suggest comparing schools using different criteria according to their type. To do this would be totally misleading and grammar school pupils usually take ‘harder’ GCSEs, such as chemistry, physics, foreign languages, geography or history.”  He continued  “Pupils in comprehensive schools often take English and maths along with ‘softer’ subjects such as media studies, psychology or information technology which may count for up to four GCSEs.”

There is certainly evidence that quite a few state schools including academies have ‘gamed’ ie entered pupils for soft options ’ to secure good league table positions, something that the introduction of the Ebacc is designed to address.

Jessons  suggestion does seem slightly self-serving. If Jesson’s measurement were applied to  some of the schools in the Schools  Network then  I think we know the level of carnage that would result, and  some might then  begin to ask  some questions  about the performance of the Schools  Network itself.   Food for thought.

 

Note

The Network has just  this week been forced into administration, as public sector cuts ensured government business and its subsidies were slashed. There has been a management buyout which ensures that the ‘SSAT’ continues to trade. Other non-subsidised education providers have long complained that the SSAT/Schools Network only survived because they were heavily subsidised and guranteed business from the government, with quite a lot of this business not put out to open tender.Some of these criticisms now seem vindicated.

COASTING SCHOOLS-SO WHAT HAS THE SSAT BEEN UP TO?

COASTING SCHOOLS

Coasting schools in leafy suburbs new target

But SSAT was supposed to be targeting  Coasting school for the  last three years

Comment

The Government self-evidently wants to see standards rise throughout the education system so that our schools and system compare with the best in the world. The Accountability regime  has ensured that there has been a concentration on  targeting failing schools, but  the Government also now wants  to ‘ concentrate on the schools in the leafy suburbs that are not challenging their pupils as well as they should. All schools will now be subject to our scrutiny to make sure that they raise standards. The new performance tables will identify how schools perform in relation to children of high academic ability, as well as how they perform in relation to children of a lower academic ability.’ (Nick Gibb, Commons 14 Nov). Currently outstanding schools are exempt from inspection but the opposition worry that this might encourage such schools to start coasting . For example , when an  outstanding leader leaves an  outstanding school, that can often lead to a big change in the performance of that school. The Governments view  revolves around the principle of having proportionate inspection and targeting the limited resources on schools that have the most pressing need. However it is perhaps significant that the new head of Ofsted has said one of his priorities is ‘Coasting ‘schools.It is also true ,of course, that even when schools are exempted from inspection, inspectors will still see some outstanding schools  during the process of  themed inspections, which might look for example  at how religious education or maths is taught.  David Cameron in a Daily Telegraph article last  week says that while it is “relatively easy” to identify problem schools, it is just as important to tackle those that are resigned to mediocrity. “It is just as important to tackle those all over the country content to muddle through — places where respectable results and a decent local reputation mask a failure to meet potential,” he writes.  “Children who did well in primary school but who lose momentum. Early promise fades. This is the hidden crisis in our schools — in prosperous shires and market towns just as much as in the inner cities.”   In January, new league tables will be published that will show how low-, middle- and high-achieving children are performing in their schools.  Coasting schools though is hardly a new problem. Back in 2009 Official data, obtained under the Freedom of Information Act, showed  that a total of 470 secondary schools, many located in middle-class suburbs and shire counties, were  “resting on their laurels” instead of pushing pupils to get the best grades. In 2008/9 the SSAT won a contract to  target and support coasting  schools as part  of the   Gaining Ground programme, using its Schools Network. The aim of the programme was ‘to raise students’ rates of progression through collaborative intervention.’ The SSATs Schools Network involvement in the programme ended on 31st March 2011.  Can we now assume that   this initiative failed given that the issue is now being revisited by this Government? What exactly did the SSAT achieve with taxpayers money? I think we should be told. No doubt the SSAT will bid for the next contract to support coasting schools. Other bidders for the Gaining Ground programme pointed out at the time that many of the so-called ‘coasting ‘schools were  then  operating under the umbrella of the SSAT. So it looked at the time that  awarding this quango the contract   was effectively   incentivising failure. And thats what  it still looks like!

 

Note

Nick Gibb, the schools Minister,  reacting to this weeks Ofsted Annual  report said

“ There are still far too many underperforming schools making painfully slow improvements. It is worrying that Ofsted finds that 800 schools are stuck steadfastly at a satisfactory rating in inspection after inspection. It’s a real concern that some schools with very able intakes are merely coasting instead of making sure students achieve their full potential. And outstanding or good schools cannot afford to take their foot off the pedal simply because they have had a strong inspection result.”

EDUCATION UK WEB SITE-BIT OF A SHAMBLES REALLY

BRITISH COUNCIL RUN  WEB SITE

Sowing confusion?

COMMENT

Visit the Education UK website, run by the British Council designed to help students abroad to choose university courses here.  It’s a mess. Look at the search facility on the right hand side of the home page. Choose, for example, Degree Courses as the course category and Applied and Pure Sciences as the subject area. The system will find 179 results and list the first ten by default.  What are these top ten institutions and how are they ordered ? See for yourself, and put yourself in the shoes of one of these inquisitive students.   The site, when I sought information, as above, listed the University of Southampton twice and the University of Nottingham three times in the top ten. With the Metropolitan University, Manchester topping the list. There was no logic whatever to the order of institutions or explanation as to why institutions appeared more than once.  Nor were they in Alphabetical order. The FCO is boasting that there were 46 million visits to BC sites over a year,   so those accessing the sites  could get some idea of ‘British Values.’ Oh Dear!

http://www.educationuk.org/

THE DAMAGE QUANGOS INFLICT ON THE EDUCATION MARKET BOTH HERE AND ABROAD

THE DAMAGE QUANGOS INFLICT ON THE EDUCATION MARKET BOTH HERE AND ABROAD

Comment

We should all be grateful to Education Investor (June) for exposing the grave problems in the education market.

The latest edition highlights the escalating tensions between private sector suppliers and education quangos (British Council, SSAT, TDA (on the way out), NCSL).

Quangos are competing here and abroad, head to head, with private and not for profit suppliers, using their public funds, inside knowledge and political top cover to steal an advantage over other non-subsidised suppliers.  The charge is that these organisations use taxpayer funding to subsidise their activities, and can exploit “captive audiences” contacts and databases (which can’t be accessed by competitors) built up over time, while fulfilling their regulatory roles and use them  to market their self- serving commercial activities. In contract bids this information is exploited by them but   is not accessible to others, because it is deemed ‘commercial in confidence’.  If anything, in the wake of funding cuts, the activity of quangos in  the market is greater now than it has ever been.Neil McIntosh ,Chief Executive of not for profit CfBT Education Trust,  told Education Investor “Grant aided organisations are most dangerous to independent ones at the moment  when they are told that their grants are being cut’.

Not all though can dip into the Aid Budget, as  the British Council has done, to make up its shortfall (the BC is funded by the FCO-but the FCO has seen it budget cut, unlike the DFID).  The National College for School Leadership, as Education Investor has pointed out, irritates many providers as its role in delivering the professional qualification for head teachers affords it ‘an iron grip on the UK market for school leadership training’.  It is now busy marketing itself abroad where it now competes with both for profit and not for profit providers.

The SSAT is signing up schools abroad too to its Inet school improvement service. It remains something of a mystery, though, to other suppliers, that an organisation responsible for supporting state schools improvement here, with 90% of maintained schools signed up, is qualified to support state schools abroad.  Our position in international league tables might  suggest that  we are hardly regarded as stellar  international  performers, as Ministers are at pains to  keep reminding  us (PISA etc-OK I know Pisa has its limitations but the Government regards it as a benchmark) Nick Gibb, the schools Minister put it as follows in a recent speech “We’re failing to keep pace with countries with the best education systems – falling back in the PISA international rankings, from fourth to sixteenth in science; seventh to 25th in literacy; and eighth to 28th in maths – meaning our 15-year-olds are two years behind their Chinese peers in maths; and a year behind teenagers in Korea or Finland in reading.  We’re still not meeting the expectations of employers – with the CBI’s annual education and skills survey just last month finding that almost half of top employers had to invest in remedial training for school and college leavers.”  The SSAT manages to rise above such awkwardness. Nobody has ever claimed that we have one of the best state systems in the world, although that is the aim of this government which wants our performance to compare with the very best in the world, a laudable aspiration. But we certainly haven’t got there yet. So it’s a  little perplexing   that a quango  which is at the heart of our underperforming system, in support of schools, finds  itself in the position that  it does-  telling  others  how to improve.  Pots and black kettles spring to mind.

The SSAT also won a contract,  a couple of years back ,financed by us taxpayers, to help ‘coasting’ schools ie those schools that should, based on their intake, be performing better. Yet these same schools had been, for some time, paid up subscribers to the SSAT. Its called incentivising failure.  Of course some of these quangos work closely and in partnership with private sector providers and will tell you that their relationship is sound. But they are always the dominant partners.  And talk to these providers and you will find that they believe that the benefits of such relationships do not remotely off -set the damage done to the market, more generally, by quangos presence and anti-competitive activities-in terms of lost contracts and the high costs of participating in a market that  is demonstrably neither fair nor transparent . These activities clearly raise the risks and costs of participation in the market for other suppliers.  And one wonders whether we as taxpayers benefit from these quangos activities. They are not transparent in the way they operate, and measure inputs rather than ouputs.

Of all the quangos cited, the British Council is by far the most unpopular and most damaging to UK commercial interests. Often co-located with British Embassies  abroad and the darling of diplomats and many an MP and Peer, who take advantage of all expenses paid trips abroad  to visit its projects, the BC has considerable political patronage and cover.  But as one supplier pointed out to Education Investor “You have got to go some to compete with an organisation called the British Council that’s operating out of the ambassadors office”.

David Blackie MD of International Education Connect will tell you of many contracts awarded to the British Council without any competition-which cannot possibly deliver value for money either for the client or the UK taxpayer. Kevin McNeaney, now managing Orbital, who is probably the most successful UK education entrepreneur of the last generation, nurses many bruises from encounters with the BC. He told Education Investor, obviously with some feeling, that “the British Council exists to continue the success of the British Council rather than as an enabler for the industry”. The BC continues, though, to pretend that it represents concurrently both cultural and educational interests abroad. Yet it competes with UK companies ie those it purports to represent for the same contracts.  Like other quangos it peddles the fiction that it doesn’t cross subsidise and that it maintains ‘Chinese Walls’ (-What? You ask- like those that operate so brilliantly in the city?)

But clock this. In a recent British Council publication it gave the game away. Expressing the hope that the BC would rapidly expand its commercial operations it said ‘The aims are for the British Council to be seen as an important player in our priority markets and sectors… and to present our contracts business as a fully integral part of our cultural relations programme.’  A prize- for anyone who can spot the wall, chinese or otherwise!  If the British Council, the DFE and the BIS are not supporting  UK education companies abroad (which they are not) then who is? It’s a very good question-if you know, could you let me in on the secret, so I can pass the message on to providers)?

Five senior executives of leading UK education companies wrote to the Government in December of   last year complaining about the conduct of the British Council and other quangos in the market outlining the issues affecting the education market here and abroad , providing  some recommendations to ensure that there is a level playing field in the market and that  the referee isn’t wearing one sides colours. It took the Government five months to reply, presumably because Ministers needed to think long and hard about it, more of which later.

For more on Quangos and the Market look at this months  Education Investor Vol 3 No 5  ’Hitting the Wall’ -Firms brand quangos barrier to new business

For more on the British Council look at http://www.dblackie.blogs.com/

IS THIS GOVERNMENT HOSTILE TO THE PROFIT MOTIVE?

IS THIS GOVERNMENT HOSTILE TO THE PROFIT MOTIVE?

Private sector confidence threatened, while not for profit sector suffers too

Mixed signals from Ministers perplexes  many managers

Comment

Is the Coalition Government against profitmaking?

It seems a ludicrous question on the face of it. But some in the private sector are now beginning to ask it.  The Coalition Government is dominated by the Tories. Central to Tory thinking is the paramountcy of  regulated free markets ,enterprise  and wealth creation ,with a  small state and low taxes ,all tempered by a belief in strong local communities. In practice it doesn’t always work out that way, particularly with respect to a small state and low taxes.   Liberal Democrats too want wealth creators to thrive, (although  are keen to limit profitmaking to prescribed areas)  with a focus on a fairer tax system and more equal distribution of wealth, throughout  society .But talk to businessmen and entrepreneurs, the wealth creators, and you might get a surprise. Many actually believe that this Government is hostile to the private sector and the profit motive. Does this perception stack up?  You have got to look at the Governments main big idea to begin to understand why some hold this perception.  So keen is this Government in promoting the Big Society that its rhetoric is almost entirely focused on championing the third sector, social enterprises, co-ops and mutuals.  Phillip Blonds ideas about mutualisation and localism  have not only caught their eye but are integral to many of their policies.

Indeed even when it talks about business models its not Marks and Spencer or Virgin, for that matter, but the John Lewis Partnership it references. Successful though this Partnership clearly is, it has an almost unique ownership structure and is hardly mainstream. More co-op, than bog standard corporate.

Its worth asking what profit is, as its become  something of a  dirty word for some  politicians (look at the polarised  debate over the NHS).  A profit  is financial benefit that is realized when the amount of revenue gained from a business activity or enterprise  exceeds the expenses, costs and taxes needed to sustain the activity. Any profit  that is gained goes to the business’s owners, who may or may not decide to spend it on the business.  So a profit is actually a surplus. Any sustainable business, or indeed any enterprise including a charity, has to aim to generate a surplus or ‘margin’. Not to do so over time is unsustainable. One American charity head involved in Healthcare summed it up succinctly as ‘No margin, no mission’.  What happens to that surplus and how it is managed and distributed is what differentiates the private sector from the charity sector (although not obviously the only difference).  However, regardless of the type of service provided or goods sold or traded, all companies, enterprises and charities, whether pursuing public benefit or not,   have as their goal making a surplus (profit).Indeed if you look at the way charities are structured and operate  they,  to a considerable extent, imitate the way a profit making company operates, although there are clear differences in governance. They have to project manage, control costs, plan ahead, invest in research, train and assess  staff, recruit experienced managers, bid for contracts, market their services and  above all compete.

All the public services we cherish depend on profitable enterprises. If they don’t make a profit there is nothing, or rather not much to tax to fund services. Indeed it is strange for this Government, which is relying on profit making companies and an export led recovery,  to get us out of the economic mess we are in,  remains so ambiguous  in its attitude to the private sector, when market confidence is so important and by the same token  so low.  It suggest a lack of strategic nous. A weak private sector, self- evidently, also means a weak charity sector. It is perverse in the extreme that the governments mood music is perceived as so hostile, therefore, to profitmaking. The private sector offers important skills, innovation, creativity, and capital. It also exerts a downward pressure on costs and prices, if it operates in a competitive market and responds quickly to shifting demand. Clearly profit companies are already delivering many high quality support services in health, education, prisons and other public services.

The Cabinet Office is the Department driving, overall, Public Sector reforms. It is  supposed to be rationalising procurement, cutting red tape, cutting contract costs,  culling quangos, encouraging more public service delivery from the private and not for profit sectors,  encouraging SMEs to have a greater share of public  sector contracts,  ending  late payment    and, of course, crucially  it  is also championing the Big Society. The Tories  and particularly so under Camerons leadership, stress  that individual freedom is only half the story. Cameron has said “Tradition, community, family, faith, the space between the market and the state: this is the ground where our philosophy is planted.”

The Cabinet Offices Business Plan says that ‘ We will change structures so that public sector provision is more  open to voluntary organisations, social enterprises and small businesses.’ Certainly the third sector can make a strong case to be given a greater slice of the public sector pie.

However, according to Education Investor,  Francis Maude, a Cabinet Office Minister,  was sent a letter last year  by five  leading education  companies which expressed concerns over the fairness of the education market and the anti-competitive conduct of subsidised education  quangos ,  offering constructive  recommendations about how to make the market fairer and more transparent. It took the Minister almost five months to reply, (Cabinet Office guidelines encourage reply to letters within 20 working days) . Was his reply worth waiting for? Apparently, not. In his reply (only secured after the journalist rang his office) he was entirely dismissive of the managers complaints, implying that everything was hunky-dory while failing to address a single  one of   their recommendations. These are companies, by the way, seeking to make inroads into the international education market, which will help UK Plc. Clearly they can expect little support in this from HMG in the future. They certainly haven’t in the past.  Why, one has to ask, would they have bothered to write to Maude in the first place  if there were no  legitimate issues to address. These were competitors agreeing that there were substantive issues of shared  concern, and which merited a response and action from the Government. Such cavalier and discourteous behaviour from a Government Department responsible for important reforms hardly inspires confidence. No wonder the private sector (and in this case not for profit too) is miffed. The fact that Maudes Department sent the letter initially to the Health Department, for answer, rather suggests a Department in some disarray and under- resourced. One hopes for the reforms sake that this is not the case. But this episode surely reveals three truths. A considerable degree of complacency from Ministers and senior officials  , a lack of concern or interest in   issues affecting our exporters  in the education market and   a lack of willingness to engage with  key stakeholders on matters of crucial concern to them.

A white paper on public-service reform that Mr Cameron said would lead to a “range of providers competing to offer a better service” has now been delayed. According to a leaked memo of their meeting acquired by the BBC ,  Francis Maude, recently told John Cridland of the Confederation of British Industry that there was to be no “wholesale outsourcing” of public services. The note was marked “strictly private and confidential” and was drawn up by the CBI as a record of the meeting. It said: “The minister’s messages were clear cut… the government is committed to transforming services, but this would not be a return to the 1990s with wholesale outsourcing to the private sector – this would be unpalatable to the present administration. “The government was not prepared to run the political risk of fully transferring services to the private sector with the result that they could be accused of being naive or allowing excess profit making by private sector firms.” Private sector involvement would be limited to joint ventures with not-for-profit groups.

The note adds: “Government is very open to ideas for services currently provided within the public sector to be delivered under a private/government joint venture. Government is committed to new models of partnership, and private sector organisations need to offer joint ventures – joint ventures between a new mutualised public sector organisation and a ‘for profit’ organisation would be very attractive. ”Government… was very interested in turning existing services into government companies. These would avoid the downsides of ‘hassle’ and adverse political reaction.”

The third sector and not for profits clearly have an important role in public service delivery and indeed arguably   deserve a greater role. But we need a diversified supply side bringing each sectors strengths into play. The Private Sector has access to capital and capacity that the not for profit operators could only dream of .The Governments job is to provide an enabling environment within which there is a diversified, fair, regulated  supply market but  does  little  to deliver this ,ignoring among other things , the  market activity of  subsidised quangos which increase the risks and costs to other suppliers, while  obstructing the development of the market both here and abroad. (and yes  they do cross-subsidise!)

 

Michael Gove the Education Secretary, at the forefront of public sector reforms introducing “free schools” inspired by the Swedish system and US Charter schools has rebuffed suggestions that education companies should be able to make a profit from them, as firms can in Sweden and the United States.  Some  advisers have even briefed against profit making Charter schools in the States suggesting they were less impressive than not for profits, while studiously ignoring the fact that the most successful Swedish Free schools tend to be privately operated. Its a desperately naïve and counterproductive approach. Its not either or, but both sectors that are needed in the supply mix. Nobody would claim that the private sector is a panacea for public service delivery but the best in the private sector has much to offer  public services.   He insists that he has enough not-for-profit providers: “We don’t need the profit motive,” Mr Gove has said. . He obviously hasn’t clocked yet that the state education system relies on companies driven by the profit motive whether its building the schools, providing ICT,   school books, inspecting the schools, providing specialist support, training and improvement services, running local education departments  managing special schools and so on. Indeed isn’t it distinctly odd that there is no need of ‘profiteers’  managing state schools   but there is a need for them apparently   in managing our most vulnerable pupils  in special schools .  The mood music if not hostile to the private sector is decidedly lukewarm.

So, given this policy backdrop you would have thought, wouldn’t you, that not for profits are optimistic and gung-ho about the future and their role in support of the Big Society and looking forward to more public service contracts.   Well no, actually they are not.  The truth is its pretty cold out there .Not for profits are having a hard time of it. Many are restructuring or merging, income and donations are reducing, there are much fewer big ticket contracts available and those that are left are subject to increased competition   with contracts smaller in scope and value, while many fine charities are haemorrhaging capacity and manpower.

 

The Economist recently pointed out that Britain is unusual among rich democracies not in how much private involvement there is in its public services, but how little.

 

It also pointed out that profiteers are cold shouldered when it comes to education but welfare…. now that’s a different matter. In welfare there are no such qualms about profitmaking. A new scheme, the Work Programme, offers payment by results to providers for placing the long-term unemployed in jobs and keeping them there.

 

There is much muddled, incoherent and contradictory thinking going on which could well derail the reforms. The Government needs a long hard look at what it wants to achieve against the backdrop of straitened economic circumstances and work out how both the private and not profit sectors can deliver reforms for them. It is managing to upset large numbers of stakeholders (whom it needs to keep on board), and for no conceivable gain. Its spending too much time listening to policy wonks and woolly, pie in the sky theorising about the Big Society and too little time working out the practicalities, and the change drivers including the provision of incentives   to harness both the market and the third and voluntary sectors to deliver its public reforms, focused on raising productivity and improving efficiency. And time is running out.

 

 

ACADEMIES REGULATION

ACADEMIES –AND REGULATION

Need to ensure that autonomous schools are accountable

Comment

In January, this year, the Commons Public Accounts committee  found that academies, the independent state schools that are central to this Governments education  reforms,  have improved pupils’ educational achievements and life chances in some of the most deprived communities in the country. Around 17% of state secondary schools are academies and the government has made no secret of the fact that by the time of the next election it would like half of all secondary schools to be academies.  This certainly seems possible at the current pace of conversion.A study by Stephen Machin and James Vernoit at the London School of Economics found  that academy status tends to raise pupil performance and improves the performance of neighbouring schools. The Government takes some pride  in what it sees as the academy success story. But the rapid expansion of the scheme raises other important accountability issues that were picked up by the PAC.   Many academies, it found, have inadequate financial controls and governance to assure the proper use of public money. It said that the DfE and YPLA have not been sufficiently rigorous in requiring compliance with guidance. It added that it  should be made  compulsory for all academies – sponsored and converter – to comply with basic standards of governance and financial management. This should include ‘segregation of key roles and responsibilities, and timely submission of annual accounts.’  It added that  ‘as the Programme expands, there are increased risks to value for money and proper use of public money’ so ‘ the  Department needs to develop sufficient capacity and adequate arrangements to provide robust accountability and oversight of academies’ use of public funds.’ Until very recently Academies were not subject to the Freedom of Information Act which was an absurd anomaly, given the amount of taxpayers money  tied up in these schools.(The SSAT quango which supports Academies is  still not subject to the FOIA-work that one out)

What is clear is that while Academies appear to be performing relatively well against   educational benchmarks (although some  have complained including the Civitas think tank  that there has not been full transparency over what exams their pupils sit) the pace and scope of Government reforms leaves it open to criticism that the administrative and regulatory tail is playing  catch up. The  proposed  abolition of the YPLA which has responsibility for Academies may serve to complicate accountability issues.  Part of the attraction of setting up these schools is that they are autonomous and because they are freed from local authority control they have less bureaucracy and red tape to contend with, which is seen as a real positive. But some are concerned that the regulatory framework within which these autonomous schools sit is not robust enough. Policymakers have tended to focus on the imperative of  freedom of choice rather than the regulatory implications of supply side reforms  and in working out how to put in place an enabling environment that  safeguards the public interest  and  minimises the chances of these  new schools failing  and indeed ensuring  that  a system is  in place to manage  failure and its consequences. The Government has recently tightened up the vetting of Free Schools bids which suggests that  it has its own concerns.  The challenge of course is to strike the right balance between real autonomy and accountability to the Government.

Other countries have introduced supply side reforms, including autonomous state schools and there may be lessons that we can learn from their experiences.  CfBT Education Trust has been investigating  international practice in the area of school reforms and will be publishing a report this summer. The timing could not be better. Watch this space.