Is social enterprise the acceptable face of making money from providing state education?

Janet Downs's picture
“The idea of a state-run school seeking profit is likely to provoke a strong reaction,” says the Summer 2012 Academy Magazine, “but James Groves of Policy Exchange argues that social enterprise can help improve standards.”

“Social enterprise schools may be a halfway house” between for-profit and not-for profit schools, argues Groves, and 50% of any “surplus” would be distributed to shareholders. This, he claims, will increase places in good schools and raise standards. This policy is essential, he says, because the percentage of “mediocre or poorly performing” schools outnumbers those judged outstanding. But this negative spin ignores the large proportion of good schools. Ofsted found that 70% of English schools were good or better and just 2% were inadequate.

Groves underpins his argument that for-profit schools drive up standards by citing evidence about USA charter schools and for-profit Swedish free schools. But the evidence he chooses is selective. For example, he quotes a March 2011 report from The Centre for Research on Education Outcomes (CREDO) which showed that Indiana charter school pupils outperformed their peers in traditional public schools. But he didn’t quote CREDO April 2011 which showed that Pennsylvania charter school performance lagged behind traditional public schools. Neither did he quote the CREDO 2009 report which looked at 16 states and concluded that while 17% of charter schools provided “superior education opportunities”, nearly half had results that were no different from the local public schools and students in over a third (37%) performed “significantly worse” than those in public schools.

The above research didn’t differentiate between for-profit and non-profit charter schools and Mr Groves admits that evidence showing any differences between the two is “thin on the ground”. However, a major review of all available evidence linking market systems with efficiency in education found that such evidence was “fragmented” and “inconclusive”. The review’s findings are summarised here.

Groves said that there is already much for-profit provision in England. He cites nursery education but doesn’t say that the cost of this is eye-wateringly high. He mentions for-profit involvement in alternative provision (AP) and Pupil Referral Units (PRUs) but didn’t say that Ofsted had found that PRU success depends on the support PRUs receive from the local authority. Neither did he warn, as Ofsted's Annual Report 2011 did, that AP was “largely uninspected and unregulated” – organisations offering AP were not required to register and there were no evaluation arrangements in place. It’s easy to see how an unregulated sector would attract the attention of those who regard involvement in education as an investment not altruism.

The social enterprise model is touted as the acceptable face of making money from education. However, any provision of services to vulnerable people in the hope of a return on investment risks a reduction in the level of those services – Cognita and the collapse of Southern Cross should act as a warning. Behind the rhetoric about choice, social enterprise and rising standards lies one aim: to transfer taxpayers’ money to the pockets of shareholders.


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Rebecca Hanson's picture
Tue, 12/06/2012 - 21:32

James Grove, Dale Bassett and co.

Why do these people get airtime? For goodness sake.

I hear Alison Wolf is speaking at ACME.

Should I ask her:
"When I was 24 I had all sorts of concerns about the homogeneity in education which was occurring following the introduction of the national curriculum. I spoke to my father about these concerns and he told me firmly that I should not try to express them until I had enough experience in education to express them through the communication routes which already exist. He said I should not try to rewrite education until I properly understood both what it and how it currently operates, otherwise I would end up doing more harm than good.

I rapidly found that by following his advice I was able to have a substantial positive influence on policy, simply by talking to people in authority, sharing my experiences and ideas with them and letting them interpret them within their much wider perspectives.

Would you endorse my father's parent to daughter advice?"

I shan't ask that question. It's not appropriate to the situation (+ I suspect I'll struggle to get the mike back after last years effort). I shall leave it here on this forum instead where it is an entirely fair and appropriate question to ask. :-) Any comments welcome.

Rebecca Hanson's picture
Tue, 12/06/2012 - 21:52

Some people might find this blog helpful if they don't understand the context for my hypothetical question:

Tim Bidie's picture
Wed, 13/06/2012 - 08:54

'any provision of services to vulnerable people in the hope of a return on investment risks a reduction in the level of those services – Cognita and the collapse of Southern Cross should act as a warning.'

Southern Cross was a failure of regulation. Cognita was openly set up as a money making organisation.

The idea that a for profit company is incapable of doing public good is erroneous and illogical.

All for profit companies are set up with intention of performing a public service. After all, if they don't provide any kind of service to the public, they will certainly not make profits and thus be forced to close down.

It is also a mistake to believe that all profits are automatically removed from the business. Successful businesses, particularly in their early years, tend to reinvest every penny of profit back into the business in order to improve their product offering.

We pay extortionate levels of tax in this country.

Measures likely to reduce the public sector's annual call on the exchequer for increased funding are to be commended.

Janet Downs's picture
Thu, 14/06/2012 - 16:08

See new thread about California about problems that arise when taxation is reduced.

Janet Downs's picture
Thu, 14/06/2012 - 16:09

"Cognita was openly set up as a money making organisation". Oh, that's all right then - the company can go right ahead and make as much money as it can possibly get away with by "milking" its schools before some of its parents cry foul.

Janet Downs's picture
Thu, 14/06/2012 - 16:09

Southern Cross - "What went wrong was that Southern Cross took its managerial eye off the ball." The then regulatory body, the Commission for Social Care Inspection (CSCI), raised concerns about Southern Cross's business model and quality of care with its successor inspectorate the Care Quality Commission (CQC) and the Department of Health in 2009. The CQC had no powers to intervene about the financial problems but continued to raise concerns about under-staffing and poor management in April 2010. (FT 1/7/2011 not available freely). The Department of Health under Labour and Conservative administrations did not seem to act on these concerns. Not so much a failure of regulation as a failure by both Governments to do something about concerns raised by the regulator.

Janet Downs's picture
Thu, 14/06/2012 - 16:10

"All for profit companies are set up with intention of performing a public service." - so the near collapse of the global financial system had nothing to do with financial institutions making as much money as possible for a few financiers then? And have these institutions been closed down? No - they were baled out by the taxpayer and those at the top still pay themselves big bonuses. Perhaps Tim can explain what public service they were providing when they brought the world to a near economic breakdown.

Chester Bellucci's picture
Sat, 16/06/2012 - 19:10

Social enterprise is just another word for the exploitation of the masses.The new stage of the crisis is bound up with an intensification of the class struggle. Mass strikes have rocked Greece and the rest of Europe in response to demands for austerity. So far, these struggles have been isolated by the trade unions and reformist political organizations. However, opposition will continue to grow and seek to break free of the treacherous labour bureaucracies.

An entirely different perspective is needed, one that begins with the independent interests of the international working class. The SEP and the International Committee of the Fourth International encourage the growth of working class opposition. The SEP has initiated campaigns to begin a fight back.

What is required above all is the development of a revolutionary leadership, one that proceeds from an insight into the laws of the capitalist crisis and the lessons of history, and has as its practical aim the independent political mobilization of the working class, on a world stage, for the overthrow of the capitalist system.

This leadership will not develop without a struggle. It must be built by individuals who are looking for a means to oppose the attacks on working people and see the need for a socialist alternative to the profit system. Help build the Socialist Equality Party.

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