For-profit education is good for the poor
Michael Gove has hesitantly accepted the inclusion of for-profit schools in the coalitions’ proposed school-choice reforms – a quasi-voucher scheme under which school funding would follow the pupil. This represents a clear improvement over his party’s previous rejection of the profit motive in education. But the half-heartedness of Gove’s position may still stifle much of the reform’s potential, and this could play into hands of those who reject school choice and parental autonomy outright.
The education secretary was eager to emphasise that “school improvement will be driven by professionals not profitmakers”. Only if teachers and parents in a particular area were clamouring for a profit-driven school, would he “sit down and have a cup of tea” with them to see what could be done.
The purpose of a school choice agenda is to make education provision more market-like – but Gove’s description has nothing to do with how markets work. The main case for market competition is that we cannot know in advance which way of delivering a particular good or service works best in which context. Successful business models do not arise from tea parties between ministers and prospective customers or suppliers. They arise by being put to the market test, with profit acting as a feedback signal. Unless a business idea has been tried in this way, we can speculate but we cannot know whether it will be a success or a failure. After all, Walt Disney was initially laughed at; distributors told him that a talking cartoon mouse was a ridiculously silly idea.
But there is a more tangible reason to let entrepreneurs enter the education sector with no ifs and buts. Opponents of school choice argue that only highly educated, committed parents would make use of the opportunity to set up their own schools. Kids from privileged backgrounds would pull out of state education, leaving their disadvantaged peers behind. And indeed, according to an Ipsos Mori survey, only a minority of parents say they want to know more about how local schools are run, or be more closely involved in it.
However, a lack of interest in the nitty-gritty of service provision only becomes a problem when a sector has to rely on idealism alone. Had the survey question been “Would you like to know more about/be more closely involved in the production of coffee machines?”, the share of positive responses would probably have been close to zero. But this does not prevent the market for coffee machines from flourishing.
It is precisely the oppression of the profit motive which would largely restrict the benefits of a voucher system to the privileged. Evidence from experimental school voucher programmes in the US, conducted with control groups, shows that children from disadvantaged backgrounds benefit more than others from market forces in education.