For-profit schools: some evidence of why I’m far from convinced

student_ipad_school - 175Labour’s shadow education secretary, Tristram Hunt, this week called on Michael Gove to rule out profit-making schools, arguing “Beyond 2015, whether it admits it or not, the Conservative Party intends to introduce the profit motive into English education”.

The Tories have sidestepped the issue and instead invited Labour to turn its fire on the Lib Dems: they claim that Nick Clegg’s advisers Julian Astle and Richard Reeves were behind-the-scenes cheerleaders for profit-making schools. The mercurial Dominic Cummings, Gove’s former special adviser, has made the same allegation. This may very well be Tory mischief-making, we don’t know.

We do know, though, that Lib Dem MP Jeremy Browne has publicly embraced the idea – his book, Race Plan, advocates for-profit education providers entering the state sector:

“many aspects of state-funded education are already provided by suppliers that make a profit [exam boards, text book publishers, building contractors etc] … so there is no great principle at stake about profits being made when education providers are paid using public money … so long as they are delivering a high quality service free at the point of use.”

It’s a valid point. Those who say that profit has no place in schools rarely extend the logic of their argument to argue for the nationalisation of Pearsons or Balfour Beatty or Apple, yet all make profit from their work in schools.

The aim of those like Jeremy who argue for profit-making schools is not disreputable: they want to ensure pupils in poor areas have the chance to attend good schools and reckon that’s more likely to happen if that’s backed up by a financial incentive. I can see the logic. So why am I not persuaded?

My scepticism is based on a report just published by the Nuffield Foundation, Quality and Inequality, authored by academics from Oxford University. This report tries to answer the question: Do three- and four-year-olds in deprived areas experience lower quality early years provision? Here are its headline findings:

    1) Private and voluntary (not-for-profit) nurseries and preschools catering for disadvantaged areas and children are lower quality than those serving more advantaged areas and children;

    2) The reverse is true, however, in state-maintained schools – the quality for three- and four-year-olds was equally as good and sometimes even better in disadvantaged areas.

Our findings suggest that government-maintained schools are doing a good job in meeting the needs of the most vulnerable children. … However, the maintained sector cannot provide for all disadvantaged children; and recent data suggest that just under 30 per cent of three- and four-year-olds living in the most deprived areas and receiving funded early education, do so within the PVI [Private, Voluntary and Independent] sector. Our findings suggest that these children are losing out.

Within our sample, quality was lower in PVI settings located in deprived areas, with more disadvantaged user-bases, and attended by individual children living in disadvantaged areas; and it was lower largely in the dimensions of quality which we know to be most important for children’s development – the quality of interactions, and support for children’s language and learning.

Most worrying is the fact that the quality gap between PVI settings serving the least and the most disadvantaged was largest in relation to the quality of support for communication, language and literacy. A clear gradient was evident, with quality decreasing as deprivation increases. This may reflect the challenges inherent in providing for children who are more at risk of language delays or behavioural problems, or who speak English as a second language.

However, it does not change the nature of the problem: that the PVI sector is not effectively rising to this challenge and offering comparable quality for disadvantaged children. Given that we know the outcomes gap between children from low-income families and their better-off peers is not reducing; and that it is particularly evident in relation to language and communication skills, these findings are of serious concern.

“These findings are of serious concern” – that last line bears repeating. This report is, it’s true, specific to the early years sector. We cannot automatically assume that children would also lose out at profit-making primary and secondary schools. Perhaps such schools would prove better able to serve the most disadvantaged communities than their counterparts in early years. However, this evidence from early years means I am less than starry-eyed about the idea profit-making schools are the answer for pupils in disadvantaged communities.

One other point… The report is clear that the biggest single explanation for the better quality of government-maintained provision was having better-qualified staff – employing a graduate makes the most difference to the quality of provision:

The findings suggest that having a graduate on the staff team may help settings to maintain overall quality standards; to support communication and language; to meet children’s individual learning needs; and to provide for children and families from different backgrounds, even in areas where there is great diversity. Given that all government-maintained provision is graduate led, this is likely to play a significant part in the ability of schools to maintain quality standards when catering for disadvantaged children.

We should be careful about reading directly across from early years to schools, but again this evidence suggests the Lib Dem insistence (in the face of Conservative opposition) that teachers should have a professional qualification has a pretty reasonable basis.

* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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  • Eddie Sammon 29th Jun '14 - 10:26am

    Thanks for this. It is good to see some careful thinking. Anyone determined to outsource something will end up getting ripped off and possibly damaging the service too. All options should be on the table.

  • All private and Religious Schools should be banned simple they cause division

  • Stephen Tall, Thanks for a very carefully written piece. Your conclusion that state run schools are better than schools for profit seems to fit the experience of most advanced industrial societies around the world.

    If it were not true Gladstone would one might assume have left schools to the free market. Is anyone really suggesting that education in this country would be better now if we had not had state schools since 1870?

    You have bent over backwards to give slightly more than the benefit of the doubt to Astle, Reeves and Clegg and their allegesd promotion of “for-profit” schools within government, whilst saying the exact opposite to party members.

    The fact thatJeremy Browne has “come out” as an enthusiast for “for profit school” provides cover for those who have been less open and honest. This adds further credence to the suggestion at the time of Browne’s book publication that he was acting as an “outrider” for Clegg.

  • One problem with “profit-making” schools is what happens if they make a loss – who picks up the tab then?

  • Sadly, considering what has happened to the NHS, I would not be shocked to hear that at least some of Clegg’s inter-circle support the idea of profit making schools.

    The facts are, however, that it has been tried, test and deemed a failure. Even when Maggie went all out to prove it was the best system, it failed so badly that Blair (who was hardly a Socialist) reversed it almost immediately.

    The reasons for its failure are simple, really; in a profit making system, ‘you get what you pay for!’ Poorer parents pay less, so they get less. This is what happened on Maggie’s New Right ideals in a back door way. Schools in poorer areas did worse, so they got less funding, they got less funding, they did even worse.

    Why is this, then? Well, profit making organisations provide services based on the logic of little can they give in order to maxamise profits.

    This has two affects:

    1 = If you pay less, then the organisation providing the service has to give you even less to still make a profit.

    2 = Profit making services are normally more insular in their thinking, so whereas in a overall state system the richer areas cover the deficits of the poorer areas as the money comes from one big pot, in an individualistic profit making system, the richer areas will want to horde their money for their own success, meaning the poorer areas lose out.

    Another problem with profit making in ‘public good’ sectors is that the standards in profit making sectors are based on that concept that if I do not provide value for money/ a good service, the consumer has the option not to use me; however, in a sector like education, you have to go to school and your choice of schools are often quite limited, so that simply does not apply here, thereby giving far too much power to the service-provider.

  • Yes, because comparing the education industry to the mobile industry is a completely logical argument that will win over every debate – or not.

    The only people that convinces of anything are right-wingers who need any logic they can find to convince themselves they are right.

    The fact that I must have education by law, but choose to have a mobile instantly makes this argument hyperbolic and illogical.

  • Sorry, should be ‘must attend’, not have.

  • Stephen Campbell 29th Jun '14 - 1:21pm

    @Alan Jelfs: “One problem with “profit-making” schools is what happens if they make a loss – who picks up the tab then?”

    The British Taxpayer, of course! It’s how our wonderful corporate-run society operates these days: losses are socialised while profits are kept private!

  • Lon Won
    You said — “After all, yes, I’m not demanding that the manufacturers of my mobile are nationalised. Nor my barber, my grocer, my favourite novelists or the pilot of the plane which flew me to New York.”

    And what was your view of the nationalisation of the bankers’s gambling debts when they almost brought down the entire world financial system.?
    Strangely the enthusiasts for private over public always seem to forget the recent experience of the taxpayer bailing out the bankers– odd when you consider we were and still are being told that the reason for the coalition and austerity is to cope with the mess the private banks had made.

  • David Evershed 29th Jun '14 - 4:04pm

    General Practicioners are mostly private partnerships for profit within the NHS.

    It would be interesting to know if GPs in deprived areas provide a worse service than GPs in better off areas in the way that the evidence suggests is happening with private pre-schools. If so then there would be a case for nationalising GPs.

  • David, besides GPS, most working in the NHS would love to see their practices re-nationalised. It does not help that the Government was so woeful during the negotiations and gave GPs an insanely good deal.

  • Stephen Donnelly 29th Jun '14 - 11:26pm

    It is unlikely that there is a simple answer to this question. I am ‘far from convinced’ that for profit schools are the only answer, but I am also far from convinced that they cannot be right in some circumstances. Liberals should appreciate that diversity is always the best approach. Allow different ideas and approaches to compete, and allow individuals to make their own choices.

  • @ Stephen Donnelly – “Liberals should appreciate that diversity is always the best approach. Allow different ideas and approaches to compete, and allow individuals to make their own choices.”
    As a liberal I am fine with this, let individuals make their own decision. In education this could mean having a state provided system without there being any schools making profits and a private system where schools can make profits and be run by corporations. I have no problem with this. I can choose to send my children either to the profit making schools or the non-profit making schools.

    Now when someone says we will replace the school your child is going to be allocated to with a profit making school and because there is not sufficient spare capacity in the system you will be forced to send your child to this profit making school then as a liberal I say that can’t be right if the profit making school has worse outcomes. So as liberals we need to be clear profit making schools are only acceptable if they improve outcomes and don’t make outcomes worse for any other pupils because in the state system there is not the spare capacity for individuals to have real choice.

  • Matthew Huntbach 30th Jun '14 - 9:21am

    Isn’t it rather obvious that if you were running a profit-making school, what you would do is try your best to make sure you take on pupils who are cheap to teach and have good prospects, and make sure your rivals are left with the others. Then you can boast about how good you are compared to your rivals.

    This is so often how competition works – instead of driving up quality, as naive people like Jeremy Browne suppose – it leads to buck-passing and back-stabbing as those in competition fight to get others to do the hard work and themselves to get the credit. Like a hot-potato game, the difficult cases are passed around as no-one wants to be holding them and get their ratings pulled down by them.

    Good grief, do none of you people who go on and on about how competition is the answer to everything, and express great surprise when it doesn’t seem to work, have any sense of feeling about how real human beings work, or any experience of real life where this sort of competition mentality has been imposed? No, I think not. You all come from your posh backgrounds and go straight to work as spads etc , so you never get it, but instead you think you are so clever, and lecture us on your enlightened nature as true “authentic liberals”, and dominate political discourse. No wonder things are going so wrong.

  • Matthew Huntbach 30th Jun '14 - 12:59pm

    Simon Shaw

    There is, quite rightly, more and more emphasis on Value Added rather than crude Outcomes, so again there is little incentive to avoid the poor prospects pupils

    I deal with something similar at university level. According to your argument, we’d be turning away straight A students and taking in grade-C students in order to get better Value Added scores in the league tables.

    Actually, in the old days when I had more freedom over this, I would turn those with a grade A in useless A-levels like Business Studies and Information Technology in favour of those a grade C in Maths, but we’re not allowed to do that any more, due to league table pressures.

  • @Simon Shaw 30th Jun ’14 – 10:07am
    ” There is, quite rightly, more and more emphasis on Value Added rather than crude Outcomes, so again there is little incentive to avoid the poor prospects pupils.”

    I think Simon it is a little more nuanced. I’ve noted that some “high flying” schools and highly rated schools have only mediocre value add figures, but they do take promising pupils and get them good grades in the traditional exam subjects and so top the exam result league tables. Is this invalid? I suggest not. Likewise there are schools that have outstanding value add figures but not so good traditional exam results…

    I think the key is with any system is ensuring that all pupils have a choice of ‘good’ schools in their area, something that I suspect is more cheaply and effectively done via the state funded/not for profit sector.

  • Matthew Huntbach 30th Jun '14 - 4:14pm

    Simon Shaw

    I didn’t actually know there were Value Added league tables in the university sector. I think most people think of the “best” universities as being those to which the best students go.

    Yes, so why do you think it would be any different with schools?

  • David Allen 30th Jun '14 - 4:20pm

    I think this is one of those curious topics on which it is actually wrong to seek evidence based policy.

    When the private sector is trying to break its way into a new market, the plodders and the exploiters lie low. No need for them to be first. The people who lead the charge are the radical innovators, the guys who genuinely believe they can do good and that they can usefully challenge state sector sluggishness with private sector innovation.

    The paradoxical problem is, often they are right. Let them have a go at the job, and they do do it well. Then the floodgates open. Then the plodders, the exploiters, and often the out-and-out rogues as well, pour through.

    Very much the same effect is well known to be a problem with any kind of educational innovation. When enthusiasts claim that some crazy new learning technique is the answer to all our problems, they try it out themselves and through sheer enthusiasm, get good results. Then it gets passed over to ordinary teachers, who aren’t enthused by it, and it degrades rather than improving their performance.

    So don’t try to look at evidence, it will be misleading. Go back to principles.

    When is profit-based competition a good thing? When the winner will be the supplier of the best product, which will sell well to knowledgeable buyers.

    What is the position with schools? The winners are more likely to be those who can do a just-adequate job despite paring costs back to the bone. Excellence, forget it.

    The competitive market can often be a good thing, but I’m not convinced it’s right for schools.

  • Matthew Huntbach 1st Jul '14 - 10:17am

    Simon Shaw

    Because (most) schools are Comprehensives which do not select on the basis of ability. In contrast universities do select on the basis of ability

    Sure, but isn’t one of the points of these “academies” or “free schools” or whatever that they have more freedom over things like selection? So even if they can’t select directly by ability, isn’t it going to be in their interest to try and find ways to select which have that result?

    You seemed to be suggesting that people in making choices of school would look at Value Added ranking rather than raw exam performance. I suspect that is not the case, just as it is not the case in universities. Anyone can put together league tables based on any ranking they like, but in my experience the raw exam performance ones are what most people go for more than anything else.

  • This is so often how competition works – instead of driving up quality, as naive people like Jeremy Browne suppose – it leads to buck-passing and back-stabbing as those in competition fight to get others to do the hard work and themselves to get the credit. Like a hot-potato game, the difficult cases are passed around as no-one wants to be holding them and get their ratings pulled down by them.

    Agreed although this phonomenon also appears in the state sector.

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