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Free schools must be allowed to make a profit, says think tank
Released 21/04/2011
Michael Gove is being urged to allow profit-making companies to open and run free schools without the need to become a charity first, without this change in legislation the free schools revolution will fail, says the Adam Smith Institute
The government must allow profit-making companies to open and run free schools, a think tank has urged today, without the need for a charitable vehicle or trust framework, as is currently required by existing legislation.
In a report released today, the Adam Smith Institute endorses the spirit of the free schools programme, but argues that unless the profit motive is introduced, its impact will be limited.
Tom Clougherty, executive director of the institute, said: "The idea behind Michael Gove's reforms is that if you let independent providers open schools within the state sector, you will hugely increase the supply of good school places. That will create choice and competition, and drive up standards. But unless you allow for-profit companies to enter the market, it is very hard to see where all those new school places are going to come from."
In 2008 the Conservatives set a target of 3,000 new schools to provide 222,000 extra school places. The state education system as a whole will need to provide 350,000 extra places by 2014. Yet so far, only 323 applications to open free schools have been made. Just 41 have proceeded to business case stage, and only a handful will open in September 2011. The Adam Smith Institute believes that for-profit schools can and should fill that gap.
‘Profit-Making Free Schools: Unlocking the Potential of England's Proprietorial Schools Sector', by education expert James Croft, provides the first in-depth, empirical analysis of England's existing for-profit schools. It identifies 489 of them, which - perhaps contrary to expectations - are overwhelmingly non-selective, secular and urban or suburban. Moreover, 41% of these schools operate on fees less than or on a par with the average per-pupil spend in the state sector. Both this subset of inexpensive for-profit schools, and for-profit schools in general, significantly outperformed the independent sector as a whole in Ofsted inspections between 2007 and 2010.
Crucially, Croft also finds that these for-profit schools have significant spare capacity relative to their size - although they only have 15% of the total number of pupils educated in the independent sector, they carry 25% of the sector's spare capacity. The report says this, coupled with their proven ability to add capacity, suggests that for-profit schools are the ideal solution to the Department for Education's problems.
Croft adds: "There is no evidence to suggest that trust governance guarantees solid educational outcomes. Nor is there any evidence to suggest that for-profit management compromises standards - in fact, the opposite appears to be true. So why shouldn't we have profit-making free schools? My research suggests they would provide sorely needed additional capacity and deliver a good education at an affordable price. The government should be welcoming them with open arms."
The report concludes by proposing that the government remove any requirements relating to corporate or legal structure from the free schools legislation so schools would no longer have to be run via a charitable and public companies, private companies, partnerships and sole traders would all be able to participate in the free schools programme.
The report also advocates measures that would make it easier for existing for-profit schools to convert to free school status, and suggests that the government set up a bursary scheme that would allow children eligible for the pupil premium to take advantage of spare capacity in independent schools.