Why profit making free schools may not be what parents want

Fiona Millar's picture
 18
This story in yesterday's Observer gives us a useful insight into why profit making schools may not be as popular or successful as some people might suggest.  It concerns the management of  the fee-paying Southbank International School in London, which is run by Cognita, a for profit chain run by former Ofsted Chief Inspector Chris Woodhead. Southbank has a number of sites in London and it seems the parents aren't happy very happy with the way Cognita's money making activities are interfering with their children's education. According to the Observer, parents at the school have set up their own pressure group to campaign against what they see as Cognita's tendancy to put the bottom line before their children's day to day experience in the classroom.

Supporters of profit making schools, to which Michael Gove has said he has no 'ideological objection' like to argue that the introduction of unadulterated market forces into the state sector will ensure schools improve and students will get a better education. They usually also like to argue that parents won't care one way or another . However this story seems to prove quite the reverse. The profit motive can take precedence over quality and parents care a great deal about that.

There is of course a distinction within the private sector. There are the privates schools that claim charitable status ( at a cost to the state of around £100million a year) and there are those the choose, like Cognita, to do away with the pretence that they are providing benefit to society more generally ( and in my experience Woodhead is at least refreshingly honest on this point) and go for the bottom line. Until now arguments on the rights and wrongs of these approaches have been confined to a small minority of schools that educate around 7% of the population.

However opening up of the state school market to other providers means that this could become a very real issue to the remaining 93% of parents and pupils. Cognita is in discussions with some free school proposers, and also working with the New Schools Network. The law already allows for free school proposers to set up a charitable trust and then sub-contract the running of their schools to private, profit making, companies.

But as the Southbank parents are finding out, this is not without risks. Private companies that run outsourced services are not acountable in the same way as maintained schools, and if there is spare cash around, many parents might prefer to see that going into their children's education, rather than into the pockets of directors and shareholders. Moreover there are many things that state schools do that are not strictly educational, very hard to quantify, and don't lend themselves to a profit-and-loss approach –  social cohesion, inclusion, child well being for example. Would a company like Cognita be interested in these. Somehow I doubt it.
Share on Twitter

Comments

Allan Beavis's picture
Mon, 11/04/2011 - 14:39

Once again, the example of charter schools in the US can provide the answers to what can go wrong when private management companies take over the running of free schools, as this illuminating report shows http://www.propublica.org/article/charter-schools-outsource-education-to.... It highlights the very real problems when public funds become private once they enter the accounts of management companies.

Recent law suits filed by schools against the very private management companies they have contracted to deliver essential school services such as management, operation, administration, accounting and education reveal schools boards’ dissatisfaction with the companies over a lack of transparency in how they are using public funds and how they have refused to account for how it has spent the money. The schools are arguing that the management companies reap the financial benefits but it is the boards who get the blame when things go wrong and it is the students who carry the greatest risk when the schools fail.

In a case against White Hat Management filed last autumn (a chain that has received $230 million and is responsible for 20,000 students) the state of Ohio and 10 of the schools have asked the court to help the group of schools to “break free from the dominance by private interests”. Suspicion that some companies are putting profits before education is given a byzantine and costly twist in the example of a company counter-suing a school in Florida for breach of contract, when the school dispensed with its services after the company not only refused to account for the monies spent but unilaterally dismissed the school’s head and made other management decisions without board approval.

There are success stories but these have been from very strong boards able to wrest back control by ensuring that their contract with the service provider is water tight, limiting the company’s powers and making them accountable to the school.

Unfortunately this is a lesson learnt the hard way for too many of these charter schools. Not only do they have to wrestle with the stress of litigation but the sudden rupture with the for-profit management company, whose control has included ownership of school property, hiring of teachers, admissions and curricula, may leave them exposed to such a degree that their survival is under threat.

The American example is sounding off very loud alarm bells, warning of the risks of unfettered free market forces let loose into state education. Despite what Michael Gove is trying to persuade us to believe, more and more parents, like those at Southbank International School, are now rejecting the government’s mantra that taking our schools of out LA responsibility will guarantee improvements in standards and that children will get a “better education”.

Janet Downs's picture
Mon, 11/04/2011 - 15:32

It should come as no surprise. The purpose of a profit-making company is to make profit. And it won't make a profit if it challenges all of its surplus back into its business.

Cognita is owned by Englefield Capital who say on their website http://www.engcap.com/eng/sectors/education-and-training/

"Englefield believes that education and training has huge potential as a sector, benefiting from strong underlying social and economic drivers and attractive business models. It benefits from positive demographics, undersupply, low or negative correlation to the business cycle and is recognised as increasingly valuable in the labour market. The sector has the advantage of visibility of revenues, costs and cash flow, low price elasticity and asset backing."

Not a lot to say about educating children there, just the potential to make money.

Will Jackson's picture
Wed, 03/12/2014 - 17:29

Janet, the link above no longer works. I wonder if the statement you have put has been removed - because it is an appeal to profits through and via children's lives.

There is also the Centre for Market Reform of Education - http://www.cmre.org.uk/
There is a personal link between director James Croft and Chris Woodhead.

The same type of capitalistic language is used here too: but when I asked Mr Croft where are the children's needs being considered, of course he didn't bother to reply.
No money it doing that I guess.

"We believe that the best education systems, worldwide, give schools the freedom to tailor their offerings to the market, and parents the freedom to choose the education that best-suits their children’s needs.

We are creating a forum for independent and innovative thinking about the way we resource and provide education in the UK that will, in turn, encourage educators to devise their own solutions.

The Centre will publish four research reports a year and organise a variety of forums and events to encourage enterprise and initiative in education with the long-term aim of changing the policy framework in which schools and other educators work.

In 2012-13 we are progressing projects considering policy options for demand-side reform of state provision; ‘portfolio’ education and the growth of education outside and beyond school; disruptive innovation and the role of the education entrepreneur; and for-profit schooling."

Rosemary Mann's picture
Wed, 13/04/2011 - 21:22

What parents want ! This is an interesting discussion as, as a parent of a pre-schooler who is starting in reception this September, I don't remember anyone asking me about what sort of system and educational provision I want for my child. Should we not be consulted more openly?

My involvment in education is limited. I am a governor but only for a few years. My partner is a primary teacher, having changed careers in his early 40s to train and qualify a few years ago. He loves his job. He is completely dedicated to providing a quality education and gives a lot of his free time to researching and planning lessons and doing the best for all of them. I am a complete novice as a parent entering the school system shortly, albeit by proxy through my child but I am amazed that if as a parent, I wanted to start up a new free school, I would have the ear of government, and be told constantly of my right to have my voice heard, but as a 'simple' everyday parent, no one wants to hear what I have to say.
As a parent, I want a renowned, experienced and competent local provider to provide education and associated facilities for my child. This provider isn't perfect but has as I see it, performed very well on behalf of the children whom it serves. It has produced many excellent results but overall has given most local children a good standard of education.
This provider is my local council. I want it to educate my children, yet I cannot find anyone to listen to me say that. That is why I feel so comfortable about what this website has to offer. It offers a channel for people like me who don't see a lot wrong with the state system but who find the alternatives badly thought through and unsustainable.

My daughter has now been allocated a primary school place at a good school. This school openly considered applying for academy status previously. When I went for the 'tour' the deputy head stated that they were still considering switching. I and a few other parents voiced concern and had lots of question but few answers were offered. I know from other local parents that this is still very much an issue, but as a prospective parent I do not as yet have a voice. But why is that? To an extent this government has carved up the situation to make becoming academies the only option in town if schools are to be adequately funded. That is what I am told by the governors of our 'new school' however I cannot seemingly enter the debate just yet or even find out at what stage decisions have reached. So whilst I am being asked to reconfirm my childs offer of a place before 18th April, I will not be able to find out for some time whether it has serious plans to become an academy, and what that may mean for my child. I have however tried to push the doors open but they remain firmly shut. The silence is deafening. It shouldn't be that way and frankly for 'new' parents to be treated as such does not bode well for the future. These things should be transparent as they may change someone;s decision to send their child to that school. The argument does not belong just to current parents, but also prospective parents.

As a potential school parent, what consultative rights do I have, and how do I get to express my views other than on a site like this?

If anyone else shares or understands my frustration, please let me know but otherwise any advice would be helpful!

Fiona Millar's picture
Thu, 14/04/2011 - 08:38

Rosalyn. These are important points and worth feeding into Andy Burnham's education policy review. The big weakness in the current policy agenda is that it gives a lot of power to some parents and governors, but shuts out the views of the rest. There should be a requirement for more open and transparent consultation about academy conversion and, if new schools are being proposed, all local parents, past , present and future , should be involved in the discussion about what sort of school it should be, and who should run it.

Tokyo Nambu's picture
Thu, 14/04/2011 - 08:43

"Private companies that run outsourced services are not acountable in the same way as maintained schools, and if there is spare cash around, many parents might prefer to see that going into their children’s education, rather than into the pockets of directors and shareholders."

But in this case, the private company is precisely accountable: it's a private school which people volunteer to send their children to, and the London private school market is hardly one of monopoly provision. I hardly think a billionaire hedgefund manager is in a position where his children have no options, and it would be entirely open to him to use some of those billions to establish a school more fitting to his tastes, or make the owners of his children's current school an offer they can't refuse. 22m to a billionaire is like 2200 to most of us, after all.

"Billionaire hedge fund manager objects to small company making a profit" seems something of a non-story, and few will be keen to turn out on the barricades to advance his cause. He is also hardly an unbiassed observer.

And, of course, anyone who puts their children into a school run by Chris Woodhead and his associates must have a pretty clear idea of what they're getting into: his opinions have hardly been kept quiet. The touching concern for the children of billionaires in private schools run by fringe thinkers is, well, touching; I'm not sure there's much of a read-across into society at large. The much vaunted accountability of schools didn't prevent http://www.guardian.co.uk/education/2003/sep/16/schools.uk2 and although in that case the actions were criminal, the inability of the governance of the school to prevent money flowing out hardly points to strong accountability to parents and the local authority!

Andy Smithers's picture
Thu, 14/04/2011 - 12:15

Rosalyn,
What you describe is the situation for all parents.
Local authorities do not run schools at present, it is the governing body together with the head/senior management team that actually run the school. If you have a problem with the school that is where you raise it.

There is no difference with a school considering changing to an academy and the majority will keep the existing governing body( they are after all the people who voted for it).
It is therefore true to say that most current state schools are under the control of a small number of parents who have the time and knowledge to sit of governing bodies. Nothing much will change in this regard as schools become academies.

You ask what most parents want.
A recent poll highlighted on this site stated that the majority of parents support Free Schools, Academies and more autonomy for Governing bodies.

That is most parents support the current changes. A small very vocal number of parents are undoubtedly against these changes, but the opposition political parties are very quiet about this.

Allan Beavis's picture
Thu, 14/04/2011 - 12:55

Tokyo –

I’m not sure of the point you are making.

In the example of Southbank International School, the accountability of a management company like Cognita, is a private agreement between service provider and school and does not affect the Local Authority, the state or the tax payer. The school is answerable only to the parents who pay for this service directly out of their own pockets. This in fact gives parents considerable power, especially when it comes to questioning the quality of the service being provided and if this is affecting the standard of education they expect.

Parents with children in free schools may find that the fall out of their board of governors contracting out essential services can have serious consequences and they can do very little about it. They have opted out of LA supervision, so no support there. They can complain directly to the DfE and hope they get a speedy reply and a resolution.

And what might be the potential problems? LA maintained schools have years of experience and infrastructure in place to run a school and thus have no need to contract out essential operations. Free school founders, on the other hand, seduced by the government into thinking that anyone can run a school soon realise that they lack the specialist experience or are just too time poor to grasp and implement the financial and operational details. Relief comes in the form of companies like Cognita – reassuringly experienced, big, nationwide, chains of schools, can do it in their sleep – and the free school founders sit back, can relinquish control and let them get on with it while they make the occasional executive decision on the board.

The examples of the multi failings of Charter Schools in the US http://www.propublica.org/article/charter-schools-outsource-education-to.... reveal the cost to schools and pupils – i) lengthy and costly litigation between schools, state and service provider; ii) profits for management companies provided by federal coffers but with no corresponding improvement in educational standards, iii) a deep-rooted distrust between private sector money influencing the way state schools are evolving; iv) mounting evidence that charter schools (if they succeed and they are as likely to fail) cater to the needs of a minority of averagely well off people….the list goes on.

I think many parents have thought that free schools and Academies are what they want but an increasing number of them are suspicious of why the government are trashing maintained schools and seeing that that the whole construct of these free schools (and not just the private’s sector’s financial exploitation of them) are built on very feeble foundations.

Allan Beavis's picture
Thu, 14/04/2011 - 13:23

Andy –

Under the system you blindly advocate, how can parents expect a fair hearing if their only recourse is to the school board and not to an LA or the Chief Adjudicator, whose role is being neutered by the government? Well the DfE I suppose but to date they have treated many parents and professional educators concerns with a wall of silence or contempt.

Numerous stories here and elsewhere of parents not being consulted about becoming Academies, that they are in fact being rushed through without proper and fair consultation with parents and teachers, often because the DfE are bribing them with increased cash if the convert. Yes I did say bribe – nasty word, like blackmail.

Without the statistics reflecting the outcome of proper consultation all round, you can hold up as many polls as you like but they do not include the opinion of many people who are just now beginning to see that hasty school reform is nowhere near the guaranteed success story Gove is promoting and could prove to be very destructive in the long run.

And forgive me for being blunt – but it is a lie that “most current state schools are under the control of a small number of parents who have the time and knowledge to sit of governing bodies” and you need to get yourself much better informed about schools before trying to perpetrate these untruths. It is only on the boards of free schools and academies where you might find the type of self serving and vain people you refer to.

.

Andy Smithers's picture
Thu, 14/04/2011 - 15:06

Allan,

Equally the blind opposition to academies and free schools on this site is both unhelpful and serves no purpose.

The poll we are referring to that shows that the majority of parents support Academies, Free Schools and more autonomy for Governing bodies may not agree with your minority views but that is no reason to dismiss it.

Proper consultation works many ways.
For example it is the duty of every governing body of every state school to be consulting on whether to convert to an academy. If they are not considering this conversion they are being undemocratic.

So, for those state schools not currently considering conversion to academy status, get consulting.

Of all the recent conversions to academies I have looked at they have kept the same governing bodies before and after and are so equally accountable to parents and the local community.
The idea that parents can currently go to their local authority with complaints about a school if they have had no satisfaction from the Head and governing body is correct, however it is unlikely that this course of action would lead to a positive outcome for any of the concerned parties.

Allan your final sentence in your previous post is shameful, but you are probably not self aware enough to realise it.

Janet Downs's picture
Thu, 14/04/2011 - 17:49

Andy - I am unsure what you mean when you say that any parent in an LA school who goes to the LA with a complaint after having been unable to resolve the complaint with the schools is unlikely to reach a positive outcome. You have no way of knowing this - the outcome could equally well be resolved as not.

However, in an academy such a parent would not be able to consult a local councillor or the LA because the school has opted-out. The parent would have to take the complaint to the Secretary of State. Given the length of time the DfE responds to letters, if at all, the parent would have to wait a long time for their complaint to be considered never mind resolved (and that's based on evidence of how long the DfE is responding to letters at the moment).

Janet Downs's picture
Thu, 14/04/2011 - 17:55

Andy - I should be grateful if you could provide the link to the legislation which imposes a duty on all school governing bodies to consider conversion to academy status and which requires them to consult even if the school does not wish to convert.

Andy Smithers's picture
Thu, 14/04/2011 - 19:00

Janet,

To answer both your points.

There is no legislation which imposes a duty on all school governing body to consider a conversion to academy status, however the legislation on the consultation is to allow the governing body to consult as it considers fit. My point is that this website says that is not good enough and that a Governing body has a duty to consult more widely. By this logic, called for by Fiona and others above, surely any Governing body which decides NOT to look at converting should also be consulting widely with parents and community. It has to work both ways.

On the other point, if a school governing body and the head decide to deal with an issue/complaint in a certain way what real power has the LA got to overturn this. None, without undermining the school. In reality this will rarely if ever be an effective way to complain about a school.

Fiona Millar's picture
Thu, 14/04/2011 - 20:19

I am all in favour of schools and local authorities consulting with their communities on a range of issues, regardless of whether they are seeking academy status. This is one reason why my own local authority area has just announced an Education Commission to look into the future of education in the borough. As yet, no school has converted to academy status in our area, and this commission will provide us with an opportunity to discuss the future relationship between schools and the LA, admissions, the curriculum we want to see for our children, how resources are shared between schools and early years education amongst other things. I think it is wrong to assume that, given this opportunity, parents , heads and governors will automatically choose a system that doesn't involve working closely with the local authority. Giving everyone an equal say in the future is infinitely more attractive than allowing individual schools, or groups of parents, to take decisions unilaterally which may impact negatively on the rest.

Janet Downs's picture
Fri, 15/04/2011 - 08:50

The DfE says there is no duty to consult widely:

"All schools are required to carry out a consultation but it is up to them to decide whom and how to consult. There is no specified length of time for the consultation and schools have flexibility in how it is conducted"

http://www.education.gov.uk/schools/leadership/typesofschools/academies/...

I do not think the DfE can make it clearer - there is NO need to consult widely as it's up to the Governors to decide how much or how little they do.

Furthermore, the consultation does not have to be completed until the school has registered the Academy Trust with Companies House, which is rather late in the day, don't you think?

http://www.education.gov.uk/schools/leadership/typesofschools/academies/...

Karen Page's picture
Thu, 13/12/2012 - 09:09

Our school is having a problem with Cognita (the company that owns our school) we have started an online forum/protest to protect our school / children / teachers / parents from Cognita who came in recently and dismissed out Head (a very well respected man) and attempted to dismiss a teacher, parents have fought to overturn this decision and Cognita have made it clear that they are not at all interested in parents opinion (which contradicts what they say on our school website that they seek parents opinion) If anyone is having problems with Cognita or have had problems please visit this website and have your say:
http://www.change.org/en-GB/petitions/reevaluate-decision-making-process...

Brandon Anti's picture
Thu, 02/01/2014 - 12:14

Hi. I would be interested to know a year on how forum/protest against Cognita was resolved or whether this still remians an issue?

The IES Breckland free school in Brandon suffolk has a for profit education provider IES (owned by a major US Hedge Fund) who appear to be placing profits before the educational standards of our children.

They recently sacked 6 teachers on the same day, quickly followed by the Principal, who astonsishingly had no previous experience of running a school. We now have several vacancies for subject leaders in core subjects and a school that is not able to attract good teachers because of the alleged poor treatment of staff by the former principal and IES.

The governing body are passive and virtually anonymous having recently taken down their web-site and ignored my complaint.

OFSTED have confirmed to me that they will not investigate further following my complaint.

I have made a similar complaint to the EFA via the DFE website.Not holding my breath.

Our local MP, Matthew Hancock wont intervene.

Our children deserve better. I dont follow politics but why is this allowed to happen. Surely in an LEA controlled school there would have been a third party investigation by now?

Janet Downs's picture
Thu, 04/12/2014 - 09:17

Thanks, Will. Just discovered Englefield Capital was dissolved on 29 Oct 2013. The whole website's been removed. The Brenninkmeijer family offered to buy out Englefield investors in 2009 because Englefield's founder, Dominic Shorthouse, left to set up a new private equity firm.

Ownership of Cognita transferred to Bregal Capital which sold a “substantial private equity stake” to KKR, a multinational private equity firm.

According to FT, regulators are investigating conflicts of interest and high fees charged by fund managers like KKR to the companies they own. These fees apparently can be offset against tax.

These firms wouldn't get involved in education unless there was money to be made. But when market forces are introduced into education, equity goes out of the window.

Add new comment

Already a member? Click here to log in before you comment. Or register with us.