Should we allow schools to make a profit?

The Association of Teachers and Lecturers (ATL) is holding a series of pre-election debates that expand on key themes identified by its members and which shaped its manifesto. Both Martin Johnson and Gabriel Heller Sahlgren were on the panel at the first event, which asked ‘What’s wrong with making a profit from education?’ To find out about coming debates and read ATL’s manifesto, visit atl.org.uk

No

The reforms of the last 25 years to England’s schools have all been based on a market model. The theory is that if schools are independent and set up to compete against each other, with parents choosing where to send their children, the good institutions will prosper and the bad will go to the wall. Overall, it’s said, this will force up the quality of all schools. But while most teachers can see the flaws in this immediately, many politicians – in all parties – remain committed to the idea. One point they miss, or in some cases deny, is what is obvious to teachers: ‘good schools’ get that label because of pupil results, but results are heavily dependent on the kind of pupils in the school.

The coalition government has flirted with taking the market model to its (illogical?) conclusion: since schools have become individual economic bodies, why not increase the incentive to compete by allowing them to be run for profit? But when schooling starts to become a commodity, curriculum and pedagogy become commodities too. When trademarks appear on school websites, it is anathema to professionals whose work depends on sharing good practice – and this is already happening in a few primary schools in England run by a small number of academy chains. These chains are under the control of companies that sell their ‘curriculum products’ to the schools, at huge profit.

Marketisation of education doesn’t lead to improved pupil performance and it is time to challenge the politicians who claim it does. Worse, clear evidence from the US and Sweden shows marketisation increases socially polarised school intakes. It’s too early to observe the same effect in England, but it’s inevitable if present policies continue. Social selection is tantamount to academic selection, and the international evidence is that early selection lowers overall pupil achievement, so increased segregation will result in lower system performance.

One way of making schools more profitable is to make them virtual. A virtual school has no buildings except an office for tutors and administrators. Pupils ‘attend’ by logging on in the morning from a computer, which may be at home, then doing IT-based work all day. Crazy? It’s a growing trend in the US, and the Westminster government has approved a free school due to open this year that will run partly like this, with another fully virtual school in the pipeline. Only someone who sees education as a commodity consisting only of exam results could support such a thing.

This is an impoverished view of education on two levels. First, since the Education Reform Act of 1988, English children have had a right to a universal, broad, and balanced curriculum, which must be far wider than the narrow range of subjects making up league tables. In view of this, the current pressure on schools to focus on this restricted curriculum (which is directly related to the requirement for ‘market information’) amounts to a denial of this statutory right.

Second, education is about far more than the formal curriculum. Primary schools are where children learn to be social, where children experience cultures other than their own. Schools are where children can learn the satisfaction of achievements through group endeavour, can practise their creativity – individually and collectively – and where they can reflect on ethical and spiritual issues together.

Politicians have at last started to realise the work of staff in classrooms is what makes a school. So they now talk about the virtue of collaboration among teachers, within and between settings, as a way of sharing ideas about teaching and learning. Many of them fail to see this idea is at odds with a requirement to compete against other schools.

A primary school is a vital community resource – a social enterprise in which children learn about the people in their area. None of this computes with supporters of marketisation or the money people who wish to commodify schooling. Unless these trends towards marketisation and privatisation are reversed, England’s schools, and the communities they serve, will be impoverished.

Yes

One of the most popular fads in current education policy worldwide is to inject market forces into state-school systems. The hope behind such reforms is to produce choice and competition to ensure that bad schools are forced to improve or go out of business, and that good schools expand – the dream being to produce a self-improving system in which there is continuous pressure to drive up standards.

Yet the profit motive has remained a bridge too far in most countries. Some claim that for-profit schools would only focus on cutting costs at the expense of children’s education. Others argue profits will lead to higher segregation and lower equality because there will be stronger incentives to cherry pick pupils.

At the same time, there are economic arguments in favour of a profit motive. Profit-making actors normally have to maximise quality per pound spent in order to survive, meaning that cutting costs would be an imprudent strategy. For-profit schools also have stronger incentives and ability to scale up excellent schools, because of their access to private capital.

In the age of evidence-based policy, it’s appropriate to note what the research says about profits in education before making up our minds. And, in fact, there’s pretty much nothing that suggests for-profit organisations are worse at running schools than anybody else. In Sweden, profit-making and non-profit free schools have equally strong effects on quality. In Chile, for-profit chains tend to perform similarly to the best non-profit schools, while American for-profits are either better or equal to non-profits. Most importantly, there’s no evidence that state-operated schools are better than their for-profit counterparts. As long as this is the case, we’re all better off – even if it means that owners make a profit. How come? Well, because you can tax profits. If schools produce the same quality for less money and thus make a profit, money is effectively returned to the state coffers via the tax system – which could then be spent on the most disadvantaged children. Counter intuitively, allowing profits would free up more money to education.

In addition, because of the stronger incentives and opportunities to start schools and expand the good ones, for-profit organisations generally produce more competition. The economics of education research shows that competition from autonomous actors produce higher standards, with the best evidence also suggesting that pupils in state schools benefit just as much as those in autonomous schools. For-profit organisations can, therefore, help us increase benevolent competition that provides better outcomes for everyone.

Allowing for-profit free schools would also enable the government to liberalise the current burdensome application and approval process. This would allow many more school places to be freed up and therefore expand choice significantly.

Middle- and (especially) upper-class parents always have a lot of choice in the system because they can pay for private education or move closer to desirable state schools. Increasing the size of the free school programme via the profit motive would therefore most benefit the poor.

For this reason, we shouldn’t be surprised by the lack of evidence that for-profit schools have a negative impact on segregation and equality. In Sweden and Chile, profit-making providers tend to enrol the more disadvantaged pupils, rather than selecting the best and the brightest. This makes sense because these organisations are tapping the markets that have previously been most under served in the state system.

It’s time to allow for-profit actors to run free schools and academies in England. However, it’s best to start with a large-scale randomised trial, again in the name of evidence-based policy. Let’s test the working of profits rigorously before letting go completely. This litmus test would provide us with invaluable evidence regarding whether or not the schools provide worse outcomes, which, as noted, is the appropriate benchmark. The question should be: ‘Do profit-making schools produce worse outcomes than state schools?’ If the answer is ‘no’, we should abolish the ban in its entirety.