For-profit education is good for the poor

Michael Gove has hesitantly accepted the inclusion of for-profit schools in the coalitions’ proposed school-choice reforms – a quasi-voucher scheme under which school funding would follow the pupil. This represents a clear improvement over his party’s previous rejection of the profit motive in education. But the half-heartedness of Gove’s position may still stifle much of the reform’s potential, and this could play into hands of those who reject school choice and parental autonomy outright.

The education secretary was eager to emphasise that “school improvement will be driven by professionals not profitmakers”. Only if teachers and parents in a particular area were clamouring for a profit-driven school, would he “sit down and have a cup of tea” with them to see what could be done.

The purpose of a school choice agenda is to make education provision more market-like – but Gove’s description has nothing to do with how markets work. The main case for market competition is that we cannot know in advance which way of delivering a particular good or service works best in which context. Successful business models do not arise from tea parties between ministers and prospective customers or suppliers. They arise by being put to the market test, with profit acting as a feedback signal. Unless a business idea has been tried in this way, we can speculate but we cannot know whether it will be a success or a failure. After all, Walt Disney was initially laughed at; distributors told him that a talking cartoon mouse was a ridiculously silly idea.

But there is a more tangible reason to let entrepreneurs enter the education sector with no ifs and buts. Opponents of school choice argue that only highly educated, committed parents would make use of the opportunity to set up their own schools. Kids from privileged backgrounds would pull out of state education, leaving their disadvantaged peers behind. And indeed, according to an Ipsos Mori survey, only a minority of parents say they want to know more about how local schools are run, or be more closely involved in it.  

However, a lack of interest in the nitty-gritty of service provision only becomes a problem when a sector has to rely on idealism alone. Had the survey question been “Would you like to know more about/be more closely involved in the production of coffee machines?”, the share of positive responses would probably have been close to zero. But this does not prevent the market for coffee machines from flourishing.

It is precisely the oppression of the profit motive which would largely restrict the benefits of a voucher system to the privileged. Evidence from experimental school voucher programmes in the US, conducted with control groups, shows that children from disadvantaged backgrounds benefit more than others from market forces in education.

There is a huge danger for Gove here. If profit-making schools are not allowed then free schools will only be set up where parents are articulate and/or have access to capital. The free schools are then going to end up over-subscribed and full of people who are already least badly served by the state system. This will provide a field day for the BBC to get in there and make documentaries about the apparent failure of the policy.

Peter Saunders has just written a pamphlet for Civitas, called ‘Social Mobility Myths’, in which he argues that ability and effort are the two most important factors in helping working class children to get on in life. This implies that streaming by ability helps the able, by not holding them back, and also helps the less able, by not making them feel inadequate by comparison. Moreover it enables children who want to do so to get on with their work without all the distraction and time-wasting of those who either cannot or will not make the effort.Let’s have profit-seeking schools that aim for excellence, with taxpayer finance for those (the minority) who cannot afford to pay.

Streaming (which does not have to be explicit – it can just involve different schools specialising in teaching different types of people) also allows specialisation. Teachers can teach the sort of group that they would be best at teaching and use the methods that are most appropriate to the group.

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