Profit-Making State Schools, Why this is a terrible idea (part 2)

In profit warning part I ( ) I argued that neoliberal pressure to allow schools to make profits were absolutely nothing to do with raising standards or improving outcomes for students. The motivation behind allowing companies to cream off profits from running state education is purely about profit and the enrichment of the elite who will own the largest stakes in these companies.  If profit making companies are allowed to run schools, then standards will actually drop as they have done in the liberalised markets for energy and rail.  Nor will the tax-payer make any savings, as the government will fund these schools places at least the same level as non profit-making schools, and pressure from neo-liberals may even create the same kind of distortions we are going to see in the NHS as ministers bend over backwards to create favourable conditions for profit making for private enterprise.

Allowing market forces into education will not work for many reasons.  When people talk of market forces and competition, it is interesting to probe what particular markets they are holding up as successful and vibrant examples of the capitalist genre. One such ‘market’ is food retailing and the domain of the supermarkets. It is true that competition to win the ‘weekly shop’ has led to unprecedented choice and value for Britain’s shoppers. The large supermarkets constantly innovate to get us through their doors, and for those resistant to the might of the big chains, many towns offer alternatives such as traditional markets, organic outlets and so on.  As an example of competition and the profit motive driving up standards, it is hard to argue with food retailing, although the bullying tactics of the large supermarkets in squeezing margins out of their suppliers such as dairy farmers do reveal how even this text-book capitalist template has its negative consequences*.

Schools are not supermarkets; education is not food shopping.  If Tesco was a school, you would get to visit the supermarket as prospective customers on an open day and the manager would show you a powerpoint presentation of the facilities, for this is mostly what happens when parents set out to choose schools. If you liked it, you could put your name down and if successful you would then be allowed to shop there for the next 4, 5 or even 6 years. You’d better hope you made the correct choice, as you would only be shopping there and you wouldn’t be able nip along to another school to take account of a special offer, or a juicy 3 for 2 deal.  You could transfer to another supermarket if they had a spare slot for a customer and you could bear doing all of the paperwork.  This is the fabled ‘choice’ held up by Neo-liberals as the consumer pay off for accepting a privatised alternative to a state service. The choice here though is nothing but a chimera; you can’t shop around, split your shop up to get the best value or stop going to a particular store altogether as you can do with your weekly shop. Once the decision is made, you are captive, and captive customers can do nothing to influence the quality of the service they get.

Profit making schools will probably do many things to ensure that they deliver a healthy profit to shareholders and senior management of the parent company. Firstly, as a school’s main budgetary outlay is staffing, particular the cost of teaching staff, they will seek out the lowest paid teachers (those with little experience), and whenever possible employ unqualified teachers on the lowest wages. Michael Gove’s announcement in July 2012 that unqualified teachers can now work in academies and free schools suddenly makes sense, paving the way for a way for profit making chains to commence the profit-seeking race to the bottom.

Profit making schools in Britain may also look to the Charter Schools of America for handy tips on how to boost the bottom line.  Reports on the Noble Network of Charter Schools in Chicago ( ) reveal how they see parents as nice little earner on the side, and have created a system of ‘disciplinary charges’ to fine parents of students they believe have broken school rules. Some students have racked up hefty fees for their parents for what seems like trivial infringements.  The potential for abuse here is astonishing.  Schools needing some extra cash can simply mete out detentions to students (whether justified or not), and then soak the parents for ‘administration fees’. The ultimate irony is that a student with a poor disciplinary record is far less likely to be offered a place at another school, so the family is trapped into handing cash over.  Schools will also no doubt be tempted to inflate other costs for parents, the school trip could no longer be a cost-neutral exercise, but have a hidden surcharge to boost the coffers, and the uniform could only be bought from the school, again with added margin to rip off the parents and enrich the schools shareholders.

The blind belief in the power of the markets, despite the overwhelming empirical evidence of failure in energy supply, rail transport and so on is a very real form of coercion through which the state forces people to accept a second-rate service simply to increase the wealth of a narrow elite.  Profits created are either the result of cartels (as with energy), or state funded monopolies (rail, and education if that ever comes to pass) being handed tax payers’ money. Nor does the state itself shrink as most free market advocates would wish, as government still has to fund these services through general taxation and have regulatory oversight to correct the most egregious failings of these quasi-markets create.


* This was written before widespread contamination of Beef by Horsemeat was discovered in UK and Irish foods. Rather than modify the blog, I merely ask the reader to reflect on how the failure of the supermarket supply chain impacts the arguments made here about the perfectibility of markets.

This blog was originally published on The Backbencher

Profit-Making State Schools: Why this is a terrible idea. (Part 1)

Gove’s education reforms, in particular his expansion of the academies programme and the launch of free schools, are moving inexorably to the moment where companies will be encouraged to run schools for profit. Gove let slip at the Leveson enquiry that he would be happy to see Free Schools make a profit in the second term of a Conservative administration and Think Tanks such as Policy Exchange have been agitating for quite a while to let providers make a profit from state education. A recent posting on this site  ( called for the ‘profit motive’ to be allowed into education so that the ‘disgraceful situation’ of only 7% of state educated people getting top jobs could be remedied.

Education is now being ‘worked-over’ in a classic neo-liberal pincer movement with the end game being the state allowing companies to take tax-payer money for providing a service, and extract a profit from this.  The first part of the pincer movement is to comprehensively rubbish the existing state run system. Gove has been working hard at this from his time as shadow education secretary to the present day. He frequently cites the International PISA studies and England’s position in them. He relishes statistic showing Britain has plummeted down the league tables for Maths, Science and Literacy like a football pundit commentating on a team’s slide from Premiership dominance to 2nd division obscurity.  The media have followed Gove’s lead and the general perception is created that schools are failing, that students leave with limited literacy, no understanding of science and mathematical skills equal to the average South Korean child at the age of just 6.

How uncomfortable it is, then, when the very same international comparative measures show a different story.  The company Pearson conducted a meta-analysis of the international comparative measures (such as PISA, TIMMS and PIRLS) and found that the UK came 6th in the league table of education systems in the developed world ( The combined school systems of England, Wales and Scotland beat the Netherlands (7), and beat Germany (15), and Sweden, the model for Gove’s free schools did not even figure in the top 20. Finland was the only European country to beat the UK, the other 4 countries were those Asian countries which always do well (Singapore, Hong Kong, South Korea) largely as a result of the extremely high intrinsic value placed upon education culturally.  This composite did merge the English, Scottish, and Welsh systems into one but English schools are the largest proportion, and the Scottish and Welsh performance is very close to the English number.

The conclusion is quite clear, the crisis in education we are constantly being told about is a construct, a convenient fiction, or a downright lie (take your pick). If the advocates of profit-making schools confronted reality, then they would have to admit that, whilst not quite world-beating, the schools in the UK are well above average and better than countries such as Germany so often held up as shining examples of economic prosperity and productivity.  Of course the doom-sayers can always come back and say the measures used in this analysis are not the right ones and they paint a far rosier picture than is really the case, but Gove can’t have his cake here and eat it.  He constantly used PISA scores to denigrate the system and convince people of the need for reform, so he’ll have to swallow it when the same measures show that things are not as bleak as he paints. This is clearly a case of PIRLS before swine.

The second part of the neo-liberal pincer movement is to stress how much more efficient private enterprise would be running state schools. The argument here is that the state is a bloated, slow-moving dinosaur, unable to innovate or act quickly, whereas companies bring new thinking, new methods and can implement these rapidly and effectively. The motivation of a profit to be had at the end of the quarter focuses the company ruthlessly on results and outcomes, and the juicy lure of the bonus gives the organisation a hunger and desire which the dead-hand of the state could never have.

Well if this is the case, and if it is going to apply to schools, then the neo-liberals have some more explaining to do, concerning the liberalisation of the rail network in the UK and the privatisation of energy supply. The bracing winds of the liberalised market were allowed to blow through energy and rail during the 1980s and 1990s, so these are hardly new reforms and have had a lot of time to bed in.  By now, if the logic of the neo-liberals held true, then competition in the energy market should have delivered world-beating service and low prices to UK consumers for electricity and gas and a constant stream of new innovations.  And likewise the rail network in the UK should be one of the most efficient in the developed world delivering great value for the traveller and clean uncrowded trains running exactly to time. The reality is once again very different. The UK energy market is confusing for the domestic consumer with an abundance of tariffs making best value very difficult to assess. In fact the failure of the market to deliver value for the customer has been a source of embarrassment for politicians, most notably David Cameron who promised legislation to force companies to put home-owners on the best possible tariff, but then had to backtrack on this when it turned out to be unworkable ( .  On top of this, the big 6 energy companies are currently being investigated for what looks like a massive and cynical (even criminal), market rigging exercise ( The consumer was promised a competitive market; but neo-liberalism has delivered a cartel.

Rail it seems has done no better from the neo-liberal experiment, UK fares are among the most expensive in Europe (popular commuter routes are sometimes 3x more expensive than comparative German or French routes), trains are crowded and dirty and the tax-payer subsidy for the network is much larger than countries which have retained public ownership of rail. On top of this the bidding process for the renewal of the West Coast Franchise went spectacularly wrong when it was revealed the winning bid had used profit projections for the final years of the franchise which were so exaggerated as to be either the result of gross incompetence or downright lying on the part of the bidders.  Scrapping the bid alone has cost the tax payer over £40M.  All of this profit making seems to come at a cost, a cost largely borne by the tax payer and the customer.

So a simple question should be posed to the profit making school hawks:

What will be different about the contracts and execution of the deals which let private companies run state education to those which have gone so badly wrong in energy and rail? 

And if you have the answer to this question, can you please let the Energy and Climate Change Secretary  and the Transport Secretary know as soon as possible, so they can correct the gross distortion and terrible value for the tax-payer operating in their respective areas.

This blog post originally appeared on the Back Bencher Site .