Better schooling and a less distorted housing market

In January, Paul Collier, an economics professor who has frequently been published by the IEA, wrote a controversial article for The Independent on how to reform education in the UK, and on 11 October he gave a lecture at Policy Exchange.

Collier distinguishes between who provides the education and how it is funded. On provision, he observes that the state’s comparative advantage is in the delivery of simple tasks on a large scale, which enables it to push unit costs down; the state does not handle complexity and differentiation well. This suggests that as the complexity of education rises, the role of the state should fall: so early years education can be provided efficiently by the state; tertiary education should be provided privately and schools should be characterised by a mix of provision.

Yet the one type of provision and of funding that seems to make most sense – a mix of public and private– is the only type of provision and funding that is explicitly banned. The moment one tries to spend a single pound on one’s child’s schooling (as opposed to extra tuition, which is not an efficient way to spend the money), one loses access to state funding. Consequently, it is only worth paying for a child’s education if one can dramatically increase the total level of funding.

The result is what statisticians call a “bi-modal distribution”, the very opposite of the bell-curve: there is one (large) group in the public sector receiving a certain amount of funding; a distinct (small) group in the private sector receiving a much larger level of funding; and absolutely nobody in the middle.

There are two crucial facts which accompany this observation:

1)       there is no distribution less fair than the bi-modal distribution;

2)       the vast majority of children receive less education funding than would be the case in a mixed system.

We have a system characterised by neither equality nor freedom. Instead, we have a bi-modal distribution and very limited choice. This leaves us with “educational apartheid”. Furthermore, as Collier writes, “the parents least committed to their children determine [the] quality” of education that most experience. This is especially odd as the state subsidises children to the tune of over £1,000 a year through the Child Benefit system, and then gives parents the freedom to spend that money on anything (Fags? Booze? Gambling?) except the child’s schooling.

There is one other way that wealth ensures access to a better state school: through the housing market. This not only distorts the housing market but represents the most inefficient way that money can affect education: a zero-sum game, whereby one can only gain a place at a good institution by displacing another, rather than by adding to the resources available to the good institution (and thus creating a positive sum).

Collier recommends allowing parents to supplement state funding by adding their own money to that provided by the government. This would create a more natural distribution, ending the bi-modal distribution that creates the current educational apartheid. It would push the average level of spending on children’s education up. Even those whose parents did not or could not pay more would be no worse off, and if poverty were the impediment the state could always provide a greater subsidy to the most needy. Finally, his proposals would end the zero-sum housing game that distorts both the education and housing markets.

Even if the state finances some or all of a child’s education, it does not have to provide the education. My understanding is that about one in five of all children leaving state secondary schools are unable to read and write and do simple arithmetic to a reasonable standard. If that is correct, evidently state provision of schooling is failing badly.The advantage of the voucher system is that it enables parents, or others, to add to any state provision of finance in order to pay for a child’s schooling. This would end the ‘apartheid’ referred to and produce realistic competition for many more schools.It really isn’t rocket science.

Whilst a voucher system would be a considerable improvement on the current funding mechanism, it would still give the government de facto control over schools through mechanisms of state licensing and regulation. Ideally, vouchers would be a temporary measure, their value being reduced year by year until education became completely private.

Most parents could afford to pay for education if the tax we pay for the state to provide was left in people’s pockets.
The Collier argument sounds OK and I must have a look in detail, but a first reaction is that early years education is not particularly well provided by the state either. The syllabus is over-prescriptive, the workforce not ideal, the hours taught and excessive holidays are not parent or child-friendly but are largely unchanged from the days of Queen Victoria.

Both Richard and Len are correct, in that the voucher system would not permit a significant reduction in the level of taxation. So, like them, I would regard it as only as step in the right direction.We should also remember that ’school work’ is by no means the whole of ‘education’. For example, I’ve just started a correspondence with my seven year old grand-daughter, who has begun boarding this term. I try to keep my language at a level that she can comprehend; but I have encouraged her, if I use a word she doesn’t know, to look it up in a dictionary.I don’t pretend this is advanced scholarship; but it surely is a form of ‘education’ outside formal ’schooling’.

Based on the little that I’ve heard about the voucher system, it isn’t any better, and may actually be worse than current public education. The problem is that it doesn’t make parents who already don’t care about their children’s education care any more about it. You end up with a lot of schools setup to simply take the vouchers, and they only give a token attempt at education in return.The solution is to make parents pay for at least part of the education. Studies I’ve seen (I think from the CATO institute) demonstrate that the more parents pay for education, the more concerned they tend to be about the quality of it. It leads to the argument of means testing, but that’s another issue.

I wonder whether, in the age of the internet and low-cost educational software, formal education actually hinders many pupils. In particular, bright students will inevitably be slowed down by their less intelligent peers in a classroom setting. Moreover, a set curriculum will divert pupils’ energies away from those subjects in which they have a particular talent.

Some interesting points. @David, I’ve seen the same literacy/numeracy statistics (I’d love to remember where!) and agree that it’s a disgrace. But as the Swedish experience demonstrates, even if most children remain in the state sector, the added competition will improve standards in state schools. Your point about alternative scholarship is correct but Collier is focussing purely on schooling. Richard may be right about schooling being on its way out but that won’t happen overnight – for at least a generation, school will continue to provide most of the child’s education.

Len: “early years education is not particularly well provided by the state either” That may be true in the UK. Those with experience of the Ecole Maternalle in France speak very highly of it. The problem with the UK (and I speak as a former policy manager for a major childcare charity) is that it is over-regulated and under-funded, but Collier’s point is that it lends itself more towards mass-provision than schooling or higher education.

Ian: “the voucher system… may actually be worse… it doesn’t make parents who already don’t care about their children’s education care any more about it”But these must surely be the minority. The problem with education (and most other) policy is that it is orientated around the least caring, least sensible citizen. We all have our freedom curtailed because of a handful of delinquient parents: hence Collier’s point that “the parents least committed to their children determine [the] quality” received by all. At least this system allows the vast majority to provide more for their kids.Also, as I said to David, ALL schools will improve if there is competition in the system.

One way enable the children to get a decent education and live in a cheap house is to avoid school all together and home-educate.Let the children learn they way they did before mass state education.It’s much more effective and efficient than formal schooling from the age of 4-18 for 7 hours each day.Elizabeth

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