Making money from schools

Why would anyone want to take the risk of running a ‘for profit’ school when there are so many easier way to make money out of state education? At one time, companies and foundations from the USA and Sweden were going to revolutionise schooling in England, while making a profit at the same time. Seems it didn’t happen quite that way. The academies that both the Erudition Schools Trust and the Learning Schools Trust opened have all been re-brokered away from the groups that originally founded them and now both of the groups are seemingly no more.

Another education experiment originally from the age of new Labour capitalism has bitten the dust. But, that doesn’t mean you cannot make money from schools. Books, furniture, resources, services such as accountancy, human relations, payroll and legal services, as well as construction and the maintenance of school buildings and facilities can all be offered at a profit. Then, as regular readers know, there is the recruitment industry that thrives on helping schools find staff.

Many years ago, in 1999 to be precise, the then Education Select Committee started an inquiry into ‘The role of private companies in the management and supply of state education services’. I don’t think it was ever completed.  I noted in my written submission that J S Mill had taken the view  in his essay  entitled On Liberty that the role of the state was to ensure the education of its citizens and not necessarily to operate the schools. The question was, and still is, how can The State achieve its end of educating its citizens without paying more of taxpayers’ money than is necessary?

The National Audit Office and the Public Accounts Committee are there to see that where possible public funds are used judiciously. I would say wisely, but I am not sure that is always the case. Mill, was convinced that the State should not necessarily run the service of education. But are politicians and these days, educationalists, any better at obtaining value for money if the service is run by others: sometimes not.

In 1999, I pointed out that the CEO of an education company with a turnover of £48 million earned £122,000 whereas a Chief Education Officer, remember them, of an authority with an education budget of more than £150 million didn’t even earn a six figure salary.  Presumably, the difference was the price to be paid for risk. You can find the same differentials today between CEOs of MATs and chief officers in local authorities, but with, in my opinion, less justification.

Some of us do try to challenge the orthodoxy, by taking the disruptive approach allowed by new technology. TeachVac www.teachvac.co.uk is one such attempt. Like Twitter, Facebook and many other on-line service sit is free to users and makes its money in other ways. In the case of TeachVac, analysing the growing amount of data and using it to provide additional paid services.

With growing concerns about school funding it is time to develop mechanisms for driving down private sector charges to schools. The government’s recent initiative in IT procurement is a good example of what can be achieved.

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4 thoughts on “Making money from schools

  1. Shortly before the 2010 election, Policy Exchange published a document co-authored with the New Schools Network, the taxpayer funded charity which promotes free schools, called ‘Blocking the Best’. This advocated running schools for profit. It said all that would be needed was to make schools ‘independent’. They could then outsource their operation to for-profit firms. Academies are, of course, technically independent.

    Michael Gove gave the keynote speech at the document’s launch. He told the audience he would allow groups like Serco to run schools if they wished to do so. Link to the YouTube clip here: http://www.localschoolsnetwork.org.uk/2011/10/gove-is-in-favour-of-profit-making-companies-running-state-schools/%23sthash.hzb5uyax.dpuf

    • Janet,

      But academies are charities and cannot make a profit but must not make a loss. As I said, why do the heavy lift of running the school if you can make more money just by providing the services. But, Gove wasn’t a businessman.

      John

      • When edu-businesses or similar companies sponsor schools or set up multi-academy trusts, they can then sell their services to their academies. They have a stable customer base which can’t buy its services elsewhere. In theory, such related party transactions have to be properly procured, at cost and listed in accounts. But as Margaret Hodge, ex PAC chair said, all trustees need do is raise the costs. And the NAO said ‘at cost’ would be difficult to evidence especially for services where costs were subjective.
        There must be some money to be made or there wouldn’t be so many organisations with no experience in education setting up multi-academy trusts. Neither would for-profit groups such as GEMS and Wey Education be registered as approved sponsors if they didn’t think MATs could be a vehicle for giving shareholders a return. http://www.localschoolsnetwork.org.uk/2013/08/how-many-academy-trusts-are-a-vehicle-for-investors-wishing-to-profit-from-running-englands-schools/%23sthash.bmgq1hei.dpuf

      • Janet,

        I agree there should be a price tariff for services and close scrutiny by the EFA where there are related party transactions as per the finance handbook.

        As you know, I set up TeachVac to challenge the cost of recruitment to schools and we now have a stable working model for the sector providing a growing number of teachers and schools with a free service. We need a procurement organisation run on social enterprise lines otherwise the funding cuts won’t affect the profits of private companies but will affect the quality of education our children receive. thanks for all your comments.

        John

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