At the ASI, we like the Government’s free schools policy. However, we agree with the outgoing chief of Ofsted’s comments that it would be more effective were private firms allowed to establish and run publically funded schools at a profit.
Here are two good reasons why:
Adding the profit-motive to the mix would bring a host of new providers into the free schools fold. From entrepreneurs to private schools, many people and organisations currently lack the incentive to establish or run free schools. Allowing them to make a profit will change this, directing new talent at the provision of state-education. The rationale for free schools policies is the truth that greater competition for pupils lifts standards. Permitting more (and more diverse) providers to compete, as in Sweden, lifts standards to greater heights. Whilst having third sector groups competing with the state is good, having the third sector, profit makers and the state all competing with each other is better.
Private firms are better placed than most parent, teacher and charitable groups to finance capital expenditures on new school buildings, etc. Encouraging them to provide this finance, by, shock-horror, allowing them to make a return on it, will improve the policy in two ways. First, it’ll ease its impact on the taxpayer, allowing more new schools to be established at less cost. Second, it will accelerate the creation of such schools. If their construction can be paid for privately, The Department for Education will not need to limit their number in line with its capital budget.
Despite these reasons, opposition to introducing the profit motive into state-education remains strong. It’s worth scrutinising two of the more common objections.
‘Having firms profit from children’s education is wrong!’ Really? Let’s go back to basics for a second and consider why we have an education policy at all. A sensible answer is, unsurprisingly, in the name: to educate. It thus seems off the point to quibble about means; if we accept that private involvement with free schools will raise standards, it should not matter whether profits are made.
‘Having firms take a slice of public funding as profit means that less money is spent educating the child than would be with state provision’ So far so true. If the state provides, say, £3000 per annum for a child’s education, the firm can only make a profit if it spends less than £3000 educating the child. However, we must be careful not to make the (rather New Labour) mistake of confusing money-in with education-out. Whilst profit-making firms may spend less per head than the state or voluntary groups educating the child, their expertise and greater incentive to minimise costs likely enable them to achieve better educational outcomes whilst spending less per child.
We have, then, a slight policy adjustment that would yield better results and isn’t all that objectionable. Come on Gove, let’s really set schools free.