Gawain Little: Who stands to benefit from the for-profit schools frenzy

Last week (July 2013) reports that the Department for Education was exploring the full privatisation of our schools hit the headlines.

The "cash for classrooms" scandal as the Independent called it was based on a proposed redesign of academy regulations, leaked to the paper by concerned civil servants.

Under the alleged proposals academies and "free" schools would become profit-making businesses using hedge funds and venture capitalists to raise money.

They also included recommendations that schools should be able to sell off land leased to them by the local authority.

The entire story has been strenuously denied by Education Secretary Michael Gove and Deputy PM Nick Clegg.
Possibly the most interesting denial, however, came from "free" school owner and cheerleader Toby Young.

Young wrote on his blog: "Free schools and academies are all, without exception, owned by charitable trusts ... Gove has no plans to allow for-profit companies to set up, own or operate free schools or academies. There is one case of the Education Secretary allowing a profit-making company to manage a free school - IES UK Buckland ... however, the school in question is owned by a charitable trust and IES is employed by that trust on a fixed 10-year contract."

The language of this denial is eerily similar to a call Young made over a year ago in favour of allowing profit-making companies a role in British education. Young told the TES in February 2012: "The Secretary of State should either allow for-profit education management organisations to set up, own and operate free schools or at the very least put a procurement framework in place that enables free school charitable trusts to outsource the management of their schools for such organisations. "I'm sure plenty of management companies would be prepared to bear some of the capital cost of setting up a free school in return for a 10-year contract."

You're left wondering if Young is actually denying the reports about Gove's plans or just complaining that the minister has only taken the first step towards full privatisation.

It's not the first time such ideas have been leaked from the DfE. Similar stories were reported in September 2011, January 2012 and February this year.

So, what would stated-funded for-profit education look like? There are precious few examples to examine because most developed countries have wisely steered clear of introducing the profit motive into compulsory education. However, Chile has a significant for-profit schools sector, introduced as part of a wider privatisation drive under the Pinochet dictatorship. According to a synthesis of research by Rick Muir of the Institute for Public Policy Research, for-profit schools in Chile increased segregation, have failed to raise educational standards and do not perform as well as their not-for-profit equivalents. One study found that "the commercial schools operated at lower cost, which they attribute to their ability to pay lower salaries and hire less-qualified teachers. They conclude that this may be why these schools are underperforming."

And then there's Sweden. There for-profit schools were introduced under a voucher scheme from 1992 onwards. Gove praised this system in 2008, saying: "We have seen the future in Sweden and it works. Standards have been driven up. If it can work there it can work here."

But these claims were dealt a blow two years later. Sweden's National Agency for Education director Per Thurlberg said: "The competition between schools that was one of the reasons for introducing the new schools has not led to better results. The students in the new schools have, in general, better standards, but it has to do with their parents and backgrounds. They come from well-educated families."

Sweden's results in international rankings such as the Trends in International Mathematics and Science Study have declined considerably since the mid-1990s and the system is now seen as a classic example of privatisation gone wrong. Recent studies show that on average Sweden's for-profit schools employ fewer staff and have a higher percentage of unqualified teachers.

A further warning of the dangers of for-profit schooling were provided in May, when JB Education collapsed after owner Axcel, a private equity firm, decided it had to put shareholder returns before students' education. JB Education ran schools that catered for 10,000 children and young people. Chief executive Anders Hultin said: "It's extremely regrettable it will affect the students."

With all this damning evidence against them you could be forgiven for wondering why Gove and the current government are so keen on introducing for-profit schools. There are those who stand to gain - it's just students are not among them. One potential beneficiary is Edmund Lazarus, a close personal friend of Gove and a significant donor to the Tory Party. Lazarus is a founding partner of private equity firm Bregal Capital, which set up private schools company Cognita in 2004. It's headed by former chief inspector of schools Chris Woodhead. In 2012 Cognita and Lazarus were in the news over allegations of improper pension claims. They were mentioned as major potential beneficiaries of the introduction of for-profit schooling and lobbied heavily in 2011 for Gove to widen the involvement of for-profit schools in the system.

The basis for for-profit schools is already being prepared through a series of measures introduced by the current government and the Blair government before it. We have academies and "free" schools totally separated from any form of local accountability. The precedent exists for "free" school charitable trusts to outsource the management of their schools to for-profit organisations. The pension liabilities such private providers would have to take on have been substantially reduced through the gutting of the Teachers Pension Scheme alongside other public-sector schemes. Lib Dem Chief Secretary to the Treasury Danny Alexander said while the pensions "reforms" were being pushed through that "the new pensions will be substantially more affordable to alternative providers ... we are no longer requiring private, voluntary and social enterprise providers to take on the risks of defined benefit that deter many from bidding for contracts in the first place."

But of course the key way these "alternative providers" have secured profits in those countries that allow a public-funded for-profit sector to operate in education is through employing less qualified staff and paying teachers less. The government has already removed the requirement for children in academies and "free schools" to be taught by qualified teachers and is in the process of deregulating teachers' pay so every school sets its own pay levels.

Those who don't want to see our education system go the way of Chile and Sweden, with falling standards and increasing inequality, should be standing shoulder to shoulder with teachers in their fight against pay deregulation and to protect fair pensions.

Labour's shadow education secretary Stephen Twigg says the Labour Party is fully opposed to for-profit schooling. If that is so it must not only promise our children a qualified teacher in every classroom but must commit to reverse changes to teachers' pay and pensions, and to bring academies and "free" schools back within the local authority schools family. Only then will our children's education be free of the dangers posed by marketisation and schools for profit.

Gawain Little is Oxfordshire secretary of the National Union of Teachers and on the union's national executive. This article appeared in the Morning Star on 8 July 2013.