From Public Good to Social Enterprise and Profit - Is This a Good Thing?

England is rapidly moving to a social enterprise model for the delivery of learning at all levels of its education system. By January 2013 some 2,600 English schools (12% of all schools and over 50% of all English High Schools) had opted out of the control of Local Education Authorities (equivalent to an Alberta School Board) and are free to set their own admission standards, recruit teachers to teach (including teachers without a teaching qualification), set teacher pay levels and receive the same funds as a publicly managed school would receive. There are 28 local authorities where at least 1 in 5 schools is now an open academy. In almost all of the 129 local authorities, at least 1 in 5 secondary schools is an open academy. There are 10 local authorities where at least 1 in 5 primary schools is now an open primary academy. Schools are converting all the time – by May of 2013 an additional 150 schools had converted.

At this time academies are not for profit organizations. The ruling Conservative Party has made clear that, should they win an outright majority in the next election, academies can elect to become for profit organizations.

Similar developments are occurring in Sweden, where Free Schools have been operating since 1992. By 2010 some 75% of Swedish school students attended a school owned and operated by a for profit company, subsidized by the States grant of per pupil funding.

Not all is well in Sweden. In 2013 JB Education, which supports the education of over 10,000 students in Free Schools in Sweden indicated that it was to close several of its schools since it could no longer fund these “loss making operations”. Some of Sweden’s private school companies operate schools in the UK. 

Charter schools are similar to academies in England and Free Schools in Sweden. Alberta has just thirteen Charter Schools, all of which are not for profit.

Private sector investments in education K-12 are rising. Both Pearson and News Corp are now investing directly in owning school systems and other investments are focused on technology. In the US alone in 2012 educational investment topped $1 billion, including investments in post-secondary education systems.

What is happening here in England is very simple. Public assets and responsibilities are being transferred initially to non-profit organizations which are building brand and presence so as to get ready for their future for profit status. The country is consciously shifting from a model of education "as a public good" to a model of education "which is a private social enterprise" subsidized in the name of public good. Control has shifted from elected public officials at a local level - the Local Education Authority - to bureaucrats for a national government, who take their instructions from a Minister appointed by the Crown. Removing local control and contracting out the future of a society is essentially what is happening here.

Several issues arise, but these three strike me as worth of exploration:

1. What are the benefits of a social enterprise approach, especially one which is likely to lead to privatization - the declared aim of the UK Conservative Party? Are the benefits to be experienced by learners, the community and society or is it simply a means of transfeering public funds to private interests?

2. What is lost to a community and society by ceding control of a major future resource - the knowledge and skills capacity of nation - to third parties?

3. What happens, as is now the case in Sweden, when some of the major "owners" decide that they can no longer take the losses of an education system and hand back their assets to the State or a new private sector player?

A related example to this is the debacle over what we refer to as P3's (public-private partnerships) but which the UK refers to as the Public Finance Initiative (PFI). By 2014 the value of the PFI sector in the UK will be app.  ₤140 billion and will eventually cost in excess of  ₤300 billion. But there all sorts of issues. In the National Health Service (NHS), where the PFI took a strong hold, there are challenges.  Barts Health NHS Trust in London says the construction of new medical facilities at its two main sites will cost £1.1bn, but the document reveals that the eventual cost will be £7.1bn by the time the contract is fully paid off in 2048-49. That will cost the trust an average of £115m a year at today's prices for the entire duration of the contract. To pay for this staff costs will need to be reduced - nurses versus profit will become a real challenge.This has already raised a red flag in the eyes of the Public Accounts Committee.

Further, when a school or building built with a P3 is no longer needed, payments still have to be made. What sense is there in this?

There are complex challenges here, I know - governments are seeking to manage expenditure, but what looks superficially like a smart move may in fact be very costly and not just in terms of money.