Should firms be able to make a profit from state schools?


The Times columnist Phil Collins (Tony Blair’s former speechwriter not the former Genesis drummer) asked  recently why neither the Tories nor the government are keen on allowing private companies to profit from state schools.  While acknowledging that it might cause problems with the unions, he wrote in the Times on 2 April ‘We are unconcerned when wicked pen-pushers make a dirty profit from supplying our children with writing implements. But woe betide any company that offers to teach kids to read while turning a profit. I know, I know. Pens are not books and being able to write is not the same as learning to read. But we already permit companies such as Edison Learning to manage schools. VT Group makes a living training school staff. Serco makes a healthy return managing the facilities. All of this is profit that comes out of the public grant. And yet, if a company wins a contract in which it promises, on pain of no payment, to teach children to read, the politicians — Tory as well as Labour — think that a principle of scholarly detachment is being breached. But is there really any vital violation if, in return for the gift of literacy, a company gains a capped profit, just like a utility?’

The Tories plans to allow parents to run schools also seems to avoid addressing a rather fundamental problem, with public money  so short, and while  not permitting capital from private sources, where will the funding come from for these new  free schools? Collins continued ‘Charities that run schools cannot be expected to stump up the capital, and it is obvious that the supply of public money has dried up. It is only if a firm can expect a profit that it can be told to provide the start-up capital itself.’

Anders Hultin, one of the chief architects of the free school model in Sweden and a keen advocate of the profit motive, which he claims is an essential driver  of Sweden’s education reforms, argues that there is no reason to assume that the for-profit motive is in conflict with the “quality” of the education. He claims that is akin to saying that the profitability of motor companies reduces the quality of their cars. Hultin also says that he can do more with 90p than a local authority could do with 100p.

We allow for profit companies to run Special schools for our most challenging pupils,to inspect our  schools, to build our schools, to  manage  school improvement services, to run nurseries and to design learning tools used by all our pupils  , but not to run our schools. This makes no sense at all.

Policy Exchange the think tank thought to be closest to Tory thinking, in a recent report conceded that the politics on the profit issue may be a challenge but went on to say ‘if we seek a large number of chains to drive expansion in the schools sector then this is one nettle that will need to be grasped – at least by allowing management fees between schools and private companies. Barring profit reduces the pool of organisations which want to set up several schools, and means those that do exist do not have a direct incentive to expand.’

The Observer in a leader  a couple of weeks ago   opined that if indeed local authorities were not sufficiently accountable for their schools then this must be addressed. However it believed  that this can   best be tackled by   New models of schools, such as academies and not-for-profit sponsors that have the expertise to turn schools around.  But it reaches a very different conclusion on the profit motive to Collins. It opines ‘ But if our sense of public service is so poor that we have to slice chunks from the educational budget to pay for corporate management, we have lost our belief in society. A business ethos is valuable; companies should be brought in to clean the kitchens and children should even be taught how to succeed in business, but the principles of profit and cost-cutting are not those we want at the heart of our schools and the teaching  of children.’ There is a certain irony in the Observers posturing here, given that it likes to turn a profit (or surplus) and its managers have had to cut its costs big time, recently, to ensure its very survival Why? Because it hasn’t… err.. been making a profit.  Everyone knew that education would be one of the main battlefields of the forthcoming election, just announced for 6 May, so hostilities have clearly  begun with a  union predictably  also  joining the fray, threatening strikes if schools are taken out of local authority control. (Tory free schools will be outside LA control)

But the reality is that both private companies and not for profits seek a margin to invest in the future and to accumulate reserves.They have to. As Sister Irene Kraus of the Daughters of Charity said ‘ No Margin, no mission’.   Making a  margin, surplus or profit -however you want to describe it-  is good.  Indeed  its essential if you want to ensure the  sustainability of any enterprise. Its what you do with that profit that matters.And if a private company uses its surplus to reinvest in the school or schools  it is running , who could  possibly object to that? (OK, apart from the unions)


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