Without profit, Free Schools won't help the poor


The Guardian reports today that most of the first Free Schools approved by the government are in affluent, middle-class catchment areas:

Research shows that the 10-minute commuting area around the first wave of free schools is dominated by middle-class households, appearing to undermine coalition claims that they are empowering working class families. The areas have 57% of better-off, educated and professional households compared with the English average of 42.8%. There are also a higher-than-average proportion of Asian homeowners in the free school catchment areas – 5.3% – compared with 1% in England as a whole. Just 29.1% are categorised as "hard-pressed" or of "moderate means", compared with 36.9% for the country.

Well, what did you expect? Setting up a Free School isn't easy, and it takes a lot of time and dedication. Who's surprised that it's mostly fairly wealthy parents who have the time and energy to bother?

As long as there's no reason for people with a comparative advantage in this sort of thing to set up Free Schools for people who can't, this trend will continue. That's a bad thing – the people who need better schools most are poor people, who have few enough chances in life as it is. Free Schools, with more local control and independence from the state, would be a great option for lots of struggling kids. The programme is a good one – if only the option was there for more of the people who most need it.

So, what can we do to encourage people to set up Free Schools in poor parts of the country? Create incentives for them to do so: allow the management firms to make a profit on the schools they're running. We published a paper last year arguing just this. Profit doesn't affect outcomes for children, but it would be rocket fuel for the Free Schools programme. If people are serious about improving school choice for poor children, they need to get serious about harnessing the power of profit.

Update: The report's author, James Croft, has weighed in in the comments section:

It's widely held that business-led educational ventures maximise profit at the expense of pupil outcomes. This is one of those myths that has arisen because of misleading (and often politically motivated) press coverage of occasional instances of things going wrong blown out of all proportion. The truth is that in contrast to other ownership models proprietorial school businesses, whether directly accountable to their owners or to shareholders, are tightly managed and rarely engage in the sort of profiteering that compromises quality for short-term gain. They know their markets and they are keenly aware of the expectations of their customers.

My study found that of the 489 proprietorial schools operating in England in 2010, 87 educate their pupils for less than the ‘revenue only’ maintenance figure of £5,320 (33 of which by £1,000 or more), at the same time apparently able to make a modest profit. A further 71 were doing so for less than the combined revenue and capital figure of £6,240. In addition, according to a third benchmark, allowing for total fee remissions of up to 10 per cent,154 a further 41 were found to be educating their pupils on fees less than £6,864, on a comparable basis to that of schools in the state-maintained sector. This represents 41% of all proprietorial schools. As a group they outperformed equivalent trust schools on key teaching and learning related criteria by a significant margin (on all criteria for those inspected by Ofsted, and 3/5 for ISI). There is widespread evidence of generous bursary provision for the disadvantaged too - something I hope to be able to detail more fully in a forthcoming study.

Bang goes the theory that for-profits are interested in only one thing.