Why worry about profits in education? The debate has so far focused much on Swedish for-profit schools, which by various commentators have been accused of decreasing standards. Is this true? Not according to my statistical analysis. In the best model, Swedish for-profit schools perform 16.3% higher than municipal schools, and on par with non-profit schools, in terms of average grades. Also, for-profit schools appear to especially benefit pupils from lower socio-economic backgrounds. I therefore find no evidence that profit-making schools would drive down standards. The opposite is true.
Furthermore, whereas 13% of all Swedish schools are for-profit, only 6% are non-profit. And while education companies start new schools and expand into new municipalities, non-profit schools do not. Instead, they become more selective. Without the profit motive, the incentive to scale up and replicate educational success is simply not there.
Let’s take a look at the programme’s track record to date. By the end of September, only twenty-four free schools will have started – of which four already existed, albeit in different forms. Furthermore, these schools will mostly serve middle class pupils. This is not surprising. The problem is that parents in poor neighbourhoods, unlike those in richer ones, rarely start or actively seek to promote new free schools. Currently, the free school programme suffers from a lack of incentives to enter the education market, especially in poorer areas. And the only way to ensure such incentives is to allow profit-making schools to operate.
The ban on profit-making schools also does not bode well for the effectiveness of the Lib-Dems’ cherished ‘pupil premium’, which would give education companies especially strong incentives to start schools in poor areas. By keeping the ban on for-profit schools, the coalition destroys these prospects.
Rather than pledging to keep the ban on profit-making schools intact, Nick Clegg and the Lib-Dems should pay more attention to available research. Nothing suggests that the British education system would be worse off by allowing for-profit schools to operate. Rather, without for-profit schools, a truly progressive free school revolution – which Clegg claims to support – is impossible.
Gabriel H. Sahlgren was a Visiting Research Fellow at the Institute of Economic Affairs and is the author of Schooling for Money: Swedish Education Reform and the Role of the Profit Motive. He recently graduated with a Starred First in Politics from Cambridge University.