Think piece: The folly of the public benefit test

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The "public benefit test" is a misguided attempt to force consolidation in the independent education market, argues James Croft.

This week the long running dispute between the Independent Schools Council (ISC) and the Charity Commission moves towards a conclusion in the courts. While Robert Pearce’s comments on Friday will come as a disappointment to association members hoping for clarity on the question of how schools may meet the new public benefit requirement, I can’t help but think that the issue has become little more than a distracting side-show.

The government has already made it quite clear that the Chair of the Commission must desist or be relieved her responsibilities; a future resumption of her unsuccessful attempts to force consolidation in the sector was always unlikely. In so far as the foray was the brainchild of Labour policymakers, the announcement on Friday that the Commission’s programme of assessments ‘is at an end’ and that irrespective of the outcome of the case ‘the commission intends to review the guidance in the light of its experience of its use’ comes as no surprise either: while politically useful in pacifying interests on the left of the party, this aspect of Labour’s policy excursion into the charitable sector has been far from successful in policy terms. [Continue reading]

Think piece: Free Schools are heading for failure

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So now it’s official: of the 323 free school proposals received by the DfE as of 11th February, 282 were turned down. Less than 50 were given an amber light. It looks likely that roughly ten will open their gates in September. The century of civil servants seconded to process applications can breathe a sigh of relief and go back to whatever it was they were doing before they were so rudely interrupted, for it’s unlikely under the strictures of the new applications process that for 2012 there will be anything like the volume of the first tranche.

With the programme’s capital allocation for the first two years long since exhausted, and the government reluctant to enlist the help of SMBs and private equity backed chains, fewer of these proposals for 2012 can realistically be expected to make it through its new competitive tendering stage. While the Chancellor’s Budget Day announcement that the proposed reforms to local planning process weren’t quite dead in the water offers a glimmer of hope on the horizon, the free school initiative nevertheless seems already to have become the ‘niche programme’ that Rachel Wolf feared it might.

Much as we might wish to think otherwise, this has serious implications for the government’s wider schools reform platform: most especially in respect of its hopes of efficiency gains through school closure. The idea was that by freeing up new school supply, while at the same time rationalising existing management structures through Academy expansion, the government might also be enabled to tackle more proactively the problem of persistent under-performance, at its most acute in areas where deprivation is greatest. But without new schools coming on stream in numbers, the threat of closure rings hollow, and one of the most important mechanisms for turning around these schools doesn’t work as it should. [Continue reading]

Education isn't a zero-sum game

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The government has been criticised for its new "idea" for universities, to allow rich students to buy places at university. Students will be able to pay the fees that foreign students pay in order to guarantee a place in the course they want. Isn’t this just a sop to the rich that will further harm social mobility? Well, yes and no. It will benefit rich students, but it will open a great many other doors as well.

We are living through a crisis in university education. Last year, 188,697 university applicants failed to get a place after clearing, an increase of around 40% on the year before. This kind of shortage is all too predictable – when you set a price ceiling for something, you should expect shortages. For an example of this, look at the 1973 oil crisis. The US and UK imposed price controls and experienced fuel queues and shortages; Japan and Germany allowed prices to rise and consumption dropped in reaction, with fuel going to the places it was most in demand. So it is with university places – there is more demand than supply, so many people will be left unsatisfied. While this is true of the sector in general, it’s also true for specific universities. Demand for Oxbridge and Russell Group universities is far higher than the supply of places.

The government’s proposals would allow some applicants to pay their own way – creating a place that would otherwise not have existed. This is the crucial point to remember. If a girl's parents pay the extra price for her to go to Oxford, nobody else is deprived of a place. And the place is only available if she has the grades that would qualify her for it anyway. Because the sector is operating under capacity (thanks to the fees price ceiling), paying full fees for a place will create an entirely new place. It’s a positive-sum game.

Some say this is unfair because it offers the rich more options than the poor. But to stop people from being able to pay for places just to bring them down to the level of the poor is completely backwards – we should be trying to see how we can raise the poor up to that level. Equality for its own sake shouldn’t be the objective; what we want is to improve people’s lives. So how could we do this? Quite simply: by making sure that student loans are available to everybody with the grades needed for these places, and allowing universities to raise their fees to reflect the supply and demand for places.

More places would be created and the places lottery would be done away with – if you want to do medicine at Oxford, you’d better be prepared to make the same sacrifices that your competitors are willing to make. The proposals announced today will only entrench priviledge if people continue to insist on artificial depressing place numbers through the fees cap.

The importance of a sense of privilege in education

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In DfE statistics released last week on standards of pupil behaviour in state-maintained schools, nationally 91.7 per cent of schools were judged good or outstanding in 2010 inspections: Christopher Cook of the FT concludes from this that ‘behaviour doesn’t appear to be a problem’. This, of course, depends on which way you look at it. The DfE’s statistics show that nearly 2,000 schools inspected failed to meet the standard; the behaviour of pupils at these schools was judged to be merely satisfactory, which, in DfE speak, means the opposite.

My examination of Ofsted 162A inspections of independent proprietorial schools (PDF) offers a startling comparison. On this measure proprietorial schools charging fees less than or on a par with the national average per pupil spend in the state-sector, 97.84% were judged good to outstanding. Unlike the majority of independent schools, these schools are non-selective and, with fees at the most accessible end of the spectrum, often include a high proportion of first-time buyers of independent education. This would seem to bear out James Tooley’s thesis that pupils’ awareness of the cost of their education, the sacrifices their parents are making to enable them to benefit, and of the privilege, leads them to value their education in a way that they would not otherwise. This ‘stake’, or sense of investment, also works to keep parents on board too.

Interestingly, these schools also outperformed the ‘all independent school’ group of which they are a subset (including all charitable trust schools) on the quality of provision for pupils’ spiritual, moral, social and cultural development: 93.53% were judged good to outstanding, as against 80% overall. For-profit schools at the lower end of the fee spectrum appear to be more strongly values-led, and more attentive to the needs of the whole child, than charitable trust schools. Far from undermining performance, the need to make a profit appears to focus minds on the quality of educational outcomes.

Profit-Making Free Schools

Profit-Making Free Schools: Unlocking the Potential of England's Proprietorial Schools Sector

Key Points

The need to increase supply

The need for increased supply is indisputable:

1. According to the Department for Education, by the 2014/15 school year, pupil numbers will rise by 8%.
2. An extra 350,000 places will be required to meet this demand.
3. 29% of all schools are currently oversubscribed.

So far, the Free Schools program has not succeeded in meeting this demand:

1. The Conservatives had originally set their sights on 3,000 new schools, which they hoped would expand overall capacity by 222,000 places (15% of provision on today's pupil numbers).
2. There have only been 700 expressions of interest (March 2010) have issued in just 323 actual applications, with only 41 proceeding to business case stage, and a handful set to open in Sept 2011.

Proprietorial schools can fill the gap

Can profit-making schools fill in the gap that charitable schools have failed to fill? Yes.

1. There is excess capacity in the profit-making schools sector, so the urgent need to provide places for children can be met in short time.
2. There are currently 58,000 unfilled places in mainstream independent schools in England. The vast majority of these are in good schools where students achieve higher results.
3. Profit-making schools operating at the lower end of the market (at fees approximately equivalent to the average level of funding in a state-maintained school) perform at least as well as non-profit schools.
4. The profit motive will enourage schools to be established where there is a need, but where parents do not have the free time to engage with the complicated Free Schools application and management procedures.

Does profit harm outcomes?

The chief arguments against profit making free schools is that they commodify education, reducing it to simple targets and league tables, and produce worse educational outcomes than non-profit schools. The evidence does not support this view, suggesting instead that proprietorial schools has played a vital role in Britain’s education system:

1. Proprietorial schools have a long and rich history of providing quality education in the UK.
2. For-profit nursery education currently accounts for 74% of the early years education market.
3. Non-selective independent schools at the lower end of the fees market (where fees are similar to per student expenditure in state schools) perform at least as well in standard league tables and exam results as all independent (including non-profit) schools.
4. In respect of proprietorial schools, the highest concentration of spare capacity lies in some of the most successful schools operating in the most competitive market conditions.

Proprietorial sector overview

The proprietorial system is already strong in England. There are 489 independent mainstream proprietorial schools in England educating pupils at the statutory age, which together provide for 82,528 pupils.

1. 72% of these are ‘preparatory’ (up to 13). 80% of these also provide early years care.
2. The average school size is 205 pupils.
3. 83% are non-selective.
4. 80% are in urban or suburban areas.
5. These schools are mainly secular. Only 1% are ‘confessional’ faith schools.
6. Average fees are c. £7,500. The range goes from £3000 - £15,000 (with one or two exceptions, schools charging £15,000 were boarding or international schools).
7. 41% of schools charged within 10% of the national ‘revenue and capital combined’ average per pupil funding figure of £6240.
8. Pupil composition is socially and ethnically diverse.

The impact of lower fees on outcomes is surprisingly small. Of the 134 schools charging below the the national ‘revenue and capital combined’ average per pupil, Ofsted’s rankings say:

1. 103 schools judged either good or outstanding on the overall quality of their education.
2. 99 judged either good or outstanding for how well the curriculum and other activities meet the range of needs and interests of pupils.
3. 104 judged either good or outstanding for the effectiveness of teaching and assessment.
4. 107 judged either good or outstanding for the progress pupils make in their learning.
5. Almost all were judged good to outstanding for the quality of their provision for pupils' spiritual, moral, social and cultural development, and on the behaviour of pupils.
6. Nine schools were outstanding across the board.

Policy proposals – Unlocking the potential of profit-making free schools

Proprietorial schools have delivered outstanding results where they have managed to operate, and the government should unlock this potential to give more choice to parents, introduce competition to raise standards in schooling, and increase supply to meet growing demand for schools in the coming years.

1. The requirement that Free Schools applicants be charitable vehicles should be lifted.
2. Requirements for Free School conversion applications should be relaxed in order to allow a greater diversity of schools to operate.
3. Proprietorial schools must be allowed to convert to Free Schools without requiring that their proprietors relinquish ownership of their businesses.
4. The sector must be allowed to develop its own best practices without any formalization of these models. Like all businesses, Free Schools should be free to innovate to produce the best outcomes for students.

Whether schools are operated as charities or profit-making businesses is immaterial to parents and students. Most parents simply want to be able to send their children to a good school – choice and competition are the means to achieve that outcome. What matters is outcomes. Allowing profit-making Free Schools to operate can revive the Free Schools momentum, improve outcomes for children, and unlock the potential of the private sector.

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The English school system is not fit for purpose. The government has concluded that the best way to improve standards is to increase supply. This would increase choice and competition between schools, and address the shortages of supply caused by Britain’s rapid population growth over the past decade. The Free Schools project, introduced by the government in 2010, is the main policy by which the government hopes to achieve an increase in supply. The idea behind Free Schools is a good one, but the restrictive nature of the policy has led to disappointing results so far.

Our new report released today, Profit-Making Free Schools: Unlocking the Potential of England's Proprietorial Schools Sector, takes these problems head-on and assesses the gains that would come from opening up the Free Schools programme to profit-making schools. It looks are the challenges facing the government and the excess capacity currently available in the for-profit schools sector.

In a groundbreaking study, it reviews Ofsted and Independent Schools Inspectorate reports of the profit-making schools sector in detail, and determines that these schools deliver results that are equal to or greater than all independent schools. In other words, there is no evidence that profit damages outcomes. Crucially, this holds true even in profit-making schools that charge fees roughly the same as the state's per student education expenditure. The report concludes that the excess capacity in the profit-making schools sector can be unlocked by liberalizing the requirements for Free Schools. This project has the potential to be this government's most lasting legacy, but for this to happen Free Schools must be given exactly that – freedom. [Key points]

Download report PDF

Schools and social mobility

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Yesterday felt like a parody of politics in this country. A much-vaunted government “strategy” for social mobility was launched which, in policy terms, amounted to essentially nothing. Unfortunately, asking businesses and government departments to be more socially conscious when hiring interns will do little to improve the chances of people born to poor families. But Labour's reaction – attacking Nick Clegg for “hypocrisy” in talking about the need for more social mobility, since he was born into a rich family – was absurd. As Nick Thornsby asked, if Clegg had announced that he was going to ignore social mobility would Harriet Harman say, “Quite right too, given his background”?

The focus on internships is beside the point. People who have managed to graduate from a decent university with the skills that would make them potential hires for good jobs are not the ones we should be concerned about. Many, and maybe most, children born into poor families will receive a terrible education in a bad comprehensive school. The state schools system destroys poor childrens’ opportunities, thanks to plummeting quality and standards. The fact that many university graduates in this country cannot write to a basic standard of English should say enough about the quality of English lessons in many schools in Britain.

The Sutton Trust, an educational charity, has looked into the rates of entry to Oxbridge by children with good A-Levels across the socioeconomic spectrum. The results show that, irrespective of family income levels, students who receive excellent A-Levels have roughly the same rate of entry to Oxbridge. The problem is that students from relatively poor families are far less likely to get those A-Levels than those from relatively well-off families. Students on Free School Meals perform disproportionately badly across the board in A-Level results. Focusing on the school-leaving point (as opponents of tuition fees do) is too late to do anything to help mobility. Likewise with a focus on making internship access more equitable – the people for whom an internship might lead to a good job are not the people most in need of help.

Fifty years of school comprehensivization (an ugly word for an ugly policy) has done enormous damage to the prospects of children from poor families. As Tom wrote this morning, rigid state bureaucracies in healthcare create bad outcomes for patients. Education is no different. What can we do to reverse this? Some propose a return to grammar schools, which may improve mobility but would do little to help those who fail their 11-plus. Competition and choice in schooling drives up standards – allowing profit-making companies to set up free schools would be a start, but a school voucher system like the one Milton Friedman proposed is the probably best option. 

Any discussion of social mobility that doesn’t focus on the failure of the state school system is fundamentally unserious. We need to get real, and get radical.

Paying the piper

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Another bun fight has broken out between the UK government and the nation’s academics. In return for maintaining government funding at £100 million a year, the Arts and Humanities Research Council (AHRC) will have to spend a “significant” amount on studying the Big Society.

Academics see this as a violation of the so-called Haldane principle whereby academics have the right to decide where research funds should be spent. The Royal Historical Society described the government’s stance as a “gross and ignoble” move to favour research into a “party political slogan.” (See this article in The Guardian for all the sound and fury.) Labour MP Tristram Hunt has weighed in with the comment that “it is disgraceful that taxpayers’ money is being spent on this bogus idea.” And petitions are circulating.

Where does one begin to unpack the contradictions and hysteria?

Well, let’s start with the easy one. In that perfect world of ivory tower inhabitants, money rains down from heaven and the priests’ superior intellect will decide where it should go. Of course in the real world, Mr Hunt’s taxpayers actually do want some input. After all, he who pays the piper, calls the tune.

Money from the government will always come with strings attached but in a really perfect world of really independent research, funding would come directly from the people via self-funded think tanks, endowments and the like. (Please click Support Us at the top right corner of this page to get into the spirit of things.)

In any case, academics with any sense of the real world have always pitched their research applications with an eye to prevailing prejudices in the government of the day. Would there have been an uproar under Labour if it sought to steer research into income equality or executive compensation? Just ask climate change sceptics how difficult it is to get government funding.

Most predictably, of course, is Mr Hunt’s dismissal of the Big Society as a ”bogus idea.” Does he have the research to back up this assessment? To be honest, it isn’t clear whether the Big Society is a good idea or not but what is clear is that the policies of the past decade are unsustainable. We simply can’t go on like this anymore.

So if we are saddled with taxpayer funding of academic research, a bit of a nudge to poke around the Big Society seems eminently reasonable.

Will graduates have to pay back double their loans?

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Last night, the BBC reported that under the new tuition fees arrangement graduates could end up paying back up to twice what they had borrowed. This was startling, until the crucial caveat was given that the numbers are in cash terms – they’re non-inflation adjusted numbers. In a report about loans that won’t be fully paid off until 2044 at the earliest, this is a big "but". Over this length of time, inflation can have an enormous impact, and it’s misleading for the BBC to (wilfully?) ignore this for the sake of an eye-grabbing headline.

The calculations are here (XLS), and estimate that a student who borrows £39,000 will end up paying back between £71,000 and £83,000 over the course of their lifetime in cash terms. At the 3% annual inflation rate the BBC assumes, over 30 years money's purchasing power will fall by half. In other words, £94,663 will buy as much in 2041 as £39,000 does today. Bearing that in mind, the £83,000 figure at the end of the loan's term seems quite a bit less daunting.

Of course, it’s not quite this simple – students don’t pay their loans all back in one lump sum at the end of the loan (and more interest would accumulate if they did), they pay them back regularly over the course of the 30 years. A pound paid back in the first year of the loan is worth a lot more in real terms than a pound paid back in the final year. Even so, the headline that graduates will pay back double is pretty misleading. Of course the loans will rise as inflation does – every loan’s interest rate is designed to factor this in.

The BBC hasn’t covered, say, government cuts “in cash terms”, even though government spending is rising in cash terms over the course of this government. It's right not to – nominal values are irrelevant in discussions of future costs and spending. So, why the double standard when it comes to this?

Will graduates have to pay back double their loans?

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will-graduates-have-to-pay-back-double-their-loans

Last night, the BBC reported that under the new tuition fees arrangement graduates could end up paying back up to twice what they had borrowed. This was startling, until the crucial caveat was given that the numbers are in cash terms – they’re non-inflation adjusted numbers. In a report about loans that won’t be fully paid off until 2044 at the earliest, this is a big "but". Over this length of time, inflation can have an enormous impact, and it’s misleading for the BBC to (wilfully?) ignore this for the sake of an eye-grabbing headline.

The calculations are here (XLS), and estimate that a student who borrows £39,000 will end up paying back between £71,000 and £83,000 over the course of their lifetime in cash terms. At the 3% annual inflation rate the BBC assumes, over 30 years money's purchasing power will fall by half. In other words, £94,663 will buy as much in 2041 as £39,000 does today. Bearing that in mind, the £83,000 figure at the end of the loan's term seems quite a bit less daunting.

Of course, it’s not quite this simple – students don’t pay their loans all back in one lump sum at the end of the loan (and more interest would accumulate if they did), they pay them back regularly over the course of the 30 years. A pound paid back in the first year of the loan is worth a lot more in real terms than a pound paid back in the final year. Even so, the headline that graduates will pay back double is pretty misleading. Of course the loans will rise as inflation does – every loan’s interest rate is designed to factor this in.

The BBC hasn’t reported, say, government cuts “in cash terms”, even though government spending is rising in cash terms over the course of this government. It's right not to – nominal values are irrelevant in discussions of future costs and spending. So, why the double standard when it comes to this?

Inspector Ratched

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This week my housemate, who is a teacher, discovered her school was facing the dreaded Ofsted inspection. She has since been living on a few hours sleep a night as she gets all her teaching folders up to speed. It made me reflect on how we evaluate good teaching, and ask myself whether the Ofsted inspections inflicted on teachers really have any worth.

Having taken a PGCE, I remember the prescriptive means by which teaching is assessed. It was a source of much frustration seeing how the National Curriculum and threat of Ofsted inspections stifled creativity as teachers’ time was eaten up teaching to the exam syllabus whilst desperately trying to keep up with their teaching folders and paperwork. My experience of teaching in the state sector taught me that teaching is currently much more a task in box ticking than instilling a love of learning and nurturing children’s talents. In my view Ofsted inspections just place unnecessary extra stress on teachers with no obvious positive educational outcome. As Chris Woodhead pointed out last year the focus is not ‘education, education, education’ but ‘compliance, compliance and yet more compliance’.

Fortunately, Michael Gove has made some steps to free up the teaching profession, including allowing high performing schools to be exempt from Ofsted inspections. However, a lot more needs to be done and the whole mechanism of how schools are assessed needs to be re-examined. Ofsted inspections are costly, unreliable and don’t lead to better schools. If Ofsted inspections fail to improve educational standards then they have very little purpose. Moreover, what’s the point in providing parents with information on school performance if there is still no choice over which school you send your child to?

If Gove really wants to free up schools and teachers it’s time he scrapped Ofsted inspections and continued to push through with his free schools agenda. If un-inspected schools seems a scary, there’s always the possibility of voluntary school assessments run by private companies. Sadly, such solutions still seem a long way off being considered.