How to make a profit out of education

Yesterday Nick Clegg quite rightly slapped down the idea that state-funded schools could be run for profit. It is doubtful whether any Liberal Democrat would go along with the idea of mainstream schooling as a business venture based on government funding. That’s not to say that you cannot make money out of schools. Of course you can, as textbook suppliers, purveyors of examinations, facilities companies, bus and coach operators, and a myriad of other service providers including in these days of academy conversions lawyers, accountants and insurance brokers, not to mention those architects who designed the ‘Schools for the Future’ under the Blair government, have all demonstrated. But, as a society we bulk at anyone operating the essential learning experience as a profit-making enterprise.

But that isn’t the experience everywhere. Especially in locations such as The Gulf, where schooling isn’t provided by the State for the children of expatriate workers, there is a flourishing and profit-making private sector in education. No doubt in many cases you pay for what you get. And, this is where the defining line is drawn. In Britain the State has determined both the price and the expected standard of schooling it wants. The fact that thinking is muddled about both these points doesn’t obscure the view that as the investor in education the State doesn’t expect anyone who hasn’t taken a risk to benefit from the spending on education.

Now there is nothing to stop anyone setting up a private school that makes a profit, and there have been examples through history of such schools, especially in the vocational and training fields. Since State Education is not compulsory in England, and is only the default position, any parent can elect to pay a private company to teach their children. Indeed, it can be argued that many do by paying for both tutoring services and for revision classes ahead of GCSE and ‘A’ level examinations. In practice nobody knows how much of any schools exam performance is down to parental spend on such activities. Indeed, it might be worth Osfted asking parents about the steps they take to supplement the school’s own efforts at educating their offspring. In some areas something of a mixed economy might emerge.

There have long been questions about the different cost per pupil of services provided under different arrangements between schools and their suppliers and, as academies in their many different guises proliferate, this is an area that will need tightening up if governments are to achieve value for money with taxpayers’ funds. I don’t expect schools to be the next ‘expenses scandal’ because there are too many potential whistle-blowers around, but a canny Minister might establish a Value for Money Unit at Sanctuary Buildings that can review funding agreements ahead of the creation of a national schools funding formula before the Public Accounts Committee tells him to after uncovering some excesses.

More interesting in its outcome than the debate about ‘for profit’ schools will probably be the effects of the de-regulation of teachers’ pay. Anyone who has read the conclusions in the 22nd Report from the School Teachers’ Review Body may well decide that making this change at a point where the wider economy seems to be reviving, and demand for graduates is increasing, especially in London and South East, might have the opposite effect to what Minsters may have intended, by increasing pay not cutting it.


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