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Should the Private Sector Invest in Schools ?

Mounting demographic demand begets more good school places in the country. There is a national shortage of good school places, especially in areas such as London, where the number of primary age pupils is increasing fast. In 2011 in England, 17 percent of pupils did not get into their first preference school and 3.5 percent did not get into any of their preferred schools. In London, specifically, 34 percent did not get into their first preference and 6 percent did not get into any of their preferred schools.

In the future, government spending is to be constrained owing to the record-high economic deficit. So permitting for-profit provision to invest in schools would give way to the opportunity to create more good new schools, as well as providing both additional capital and expertise. Furthermore, as highlighted by the Social Enterprise Schools report by Policy Exchange, the expansion of independently-run schools could be quicker too if private sector involvement was allowed.

Private companies already provide education to many of the most vulnerable children and yet their involvement with the school education system in Britain still remains relatively low. Local authorities and state schools have been subcontracting school improvement programs to private companies for a number of years now, and in certain instances, school inspections are also contracted out to profit making providers. Prospects Services Ltd. for example, covers a £71 million contract to deliver the Early Years inspection services for the North of England.

Profit making companies are permitted to operate publicly funded schools in both Sweden and the USA. Figures from 2008 indicate that 64 percent of Free Schools in Sweden are operated by for-profit companies, while 56 percent of Charter Schools in the United States are managed by profit making providers. Prior to the 1990s, there were very few private schools in Sweden. Education reform in 1992 introduced free schools, which allowed privately run schools offering primary or secondary education to receive public funding for each student.

In the United States, meanwhile charter schools were introduced in the late eighties, offering more management flexibility than traditional public schools. Charter schools are primary or secondary schools and they receive public money as a result their increased flexibility in management, receive less funding than public schools in the same neighbourhoods. A good number of charter schools have been established by teachers, parents, or activists who felt restricted by traditional public schools.

Its not surprising that the government hasn’t taken more steps to spurn on private sector involvement in school education because trends showcase that successive governments haven’t really approached launching any initiative to permit any form of profit-making in the direct delivery of state funded schooling. The Coalition government for one made it clear that all state-funded schools must operate strictly non-profitably. In addition, where the expansion of the Free Schools programme is concerned, the Secretary of State for Education, Michael Gove, has stated that he does not think for-profit involvement is necessary. Free Schools are basically state-funded schools set up by groups of parents, teachers, charities, trusts, religious and voluntary groups.

Opposition has also come from the trade unions here. This is in stark contrast to when Labour was in government. Tony Blair, during his tenure as Prime Minister, voiced his support for increased choice and competition in schools. In the foreword to the 2005 Better Schools for All white paper, Blair remarked:

“Many other countries have successful experience with school choice. There is increasing international evidence that school-choice systems can maintain high levels of equity and improve standards. Swedish parents can choose an alternative school to their local one, including a diverse range of state-funded independent schools. Studies have found that schools in areas where there is more choice have improved most rapidly.”

The emerging schools marketplace is being built on the principles of fairness and equal opportunity, and this occupies a hefty portion of government policy. Furthermore, the government is working to provide access to school education for the poorest children by ensuring good new schools are established, especially in deprived neighbourhoods. The pupil premium was introduced in September 2011, and it allocates an additional £430 per annum (raised to £600 per annum from April 2012) to poor children, eligible for free school meals. Pupil premium also covers children who have been looked after for more than six months.

Private sector investment could really help here by both building and operating schools. Besides, attracting investments could help to build up reserves for schools from one year to the next, which could contribute towards managing budgets flexibly and meet basic capital requirements, in addition to expanding to meet increased demand. Public opinion with respect to for-profit provision of state services has actually revealed more positive results than the government’s stance on the situation. Research from The Parthenon Group in 2010 concludes that 60 percent of parents would consider sending their child to a for-profit private organisation that had experience of running schools.

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