‘Low-cost’ schools are an experiment worth backing

22 Sep 2018, 5:00

Don’t knock “low-cost” schools – they have the potential to improve efficiency across the sector, says James Croft

Affordable fee-based private schools have a long tradition in England and, as late as 2012, the best value schools in the independent sector (from the point of view of both education quality and their low fees) were privately owned and operated. But despite much talk of market conditions favouring the advent of a more radical low-fee model, until now we’ve seen little progress.

Among the inhibitors, standardised teacher pay and conditions and increasing regulatory demands on the independent sector have proved particularly prohibitive. The proprietors of the new schools in Durham and (proposed for) north London are to be credited for having found ways – through cutting facilities spend, focusing on traditional curriculum teaching, increasing class sizes, and (in the case of Durham) off-setting lower pay and incentivising younger teachers through a profit-share model. But whether, on reduced back-office staffing, it can stay abreast of regulation, we will have to wait and see.

Related to this is the question of the ventures’ sustainability and prospects for scale, which are also difficult to gauge. Thus far details of the investment model are thin on the ground, but it’s not uncommon for ventures with a purpose to find themselves struggling when they’ve used up what philanthropic leverage they had to command at the opening.

So revenue from fees, as for all schools, will be key. It’s worth noting that since 2012, when there were in the region of 200 private institutions operating on resources equivalent to or less than state-sector schools, most have significantly increased their fees. Whether they charge £52 or £100 a week, they’ll be pushed to maintain this price for long.

In terms of availability of sites, finding appropriate vacated premises in urban areas is always a challenge, and sites for conversion no less so. Those with scope for expansion are even more scarce. So development is likely to be slow going.

But for the DfE, these are experiments worth lending support to. Not because of any competition effect likely to arise as a result of new low-fee schools challenging state schools. It’s unlikely in fact that we’ll be able to draw any more illuminating conclusion than the answer to the question whether the ‘wealthy enough’ middle-class target demographic want them. But because schooling needs to become more efficient.

Choice actually improves equity

While progress has undoubtedly been made, free-schools, of which much was hoped in this regard, have yet to realise their potential. Elsewhere around the world where countries have run reform experiments, at state and national level, there have been significant efficiency gains . Here the legalities of ownership, contracting new providers, and construction outsourcing and procurement frameworks have failed us, as too have inherited soft budgetary practices and inadequate incentives on schools to scale.

If a more capital- and revenue-efficient model can be made to work, at scale, in the independent sector, then the case strengthens for liberalisation of free schools on the question of private ownership of government-funded schools.

As successive CfEE studies of the economic evidence have shown, deterioration in quality does not automatically follow (and in the cases in question it’s unlikely as the evidence supports that the instructional models and methods proposed are sound). Neither, as CfEE research has also demonstrated, does decreased equity follow such reforms. Choice, especially when given impetus through the introduction of a profit-motive to schools, actually improves equity (provided the appropriate supporting measures and safeguards are in place).

The evidence suggests in fact that they are socio-economically much less discriminatory than other types. They won’t always work, but they’ve equal potential as not-for-profits for raising standards, and of key importance in this context, they have built-in incentives to efficiency and scale.

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  1. There is no evidence that ‘choice’ increases equity. The opposite is true. It increases segregation and negatively affects the poorest. Are children eligible for free school meals going to use these low-cost schools? The answer is no.

    James Croft lets the cat out of the bag when he says low pay for teachers can be compensated by ‘profit-sharing’. Professor Tooley is on record as saying his proposed low-cost schools could be attractive to investors. When investors are interested in education (or health) it isn’t altruism – it’s to make money.

  2. John Connor

    Standardized teachers’ pay is an “inhibitor”? Profit sharing? What planet is this guy on? Teach only English maths and science to classes of 45 with a revolving cohort of NQTs which changes every year because they’re cheaper? No child of mine would ever attend such a travesty. Breathtakingly ignorant and worryingly dangerous.

  3. Michael Amess

    ‘Low cost’ school are an experiment worth backing’? Is this an advert trying to encourage investors? Only if you are middle-class can I see this benefiting you. I’m left confused as to whether they mean ‘social equity’ or ‘financial equity’ when they talk about equity… social equity this venture is not.

  4. I wonder if James Croft is on a low pay model as well. Teachers who are expected to have a degree and have £50000 of debt just will not work here. Where will they live? On the so called higher pay that state schools are on teachers in London, South East and many urban areas cannot afford to be rent a basic property.

    I have teacher friends in Australia saying that pay and lifestyle is better. Sir Michael Wilshaw has said the biggest threat to teacher workforce in this country will be the expansion of international schools and there pay they can offer.

    This guy is a joke.

  5. James Croft

    On choice and equity, the research cited (http://www.cfee.org.uk/dislocation) contains a thorough analysis of the literature on such reforms. When school choice measures do not depend on the proximity of pupils to their chosen schools, residential segregation actually decreases. International evidence shows that school choice also decreases the influence of parental background on pupil achievement. Other evidence suggests that pupils of all backgrounds benefit to much the same degree from choice reforms. We make policy recommendations on this basis, including allowing schools to operate for profit.

    On motivation, if you had to be an altruist to work in education, then we’d have a major supply problem. Really? I prefer commitment as a pre-requisite; it’s more realistic – and really it’s not a case of either/or. It’s what works. The other research I cite (http://www.cfee.org.uk/node/174) is a summary blog, but considered in detail in other CfEE research) shows that publicly funded but privately owned and operated schools, on a for-profit basis, are just as likely to succeed as regular public schools. So there’s no reason to exclude them, especially when efficiency gains are required, and when competition effects might be expected to follow. Paul Peterson puts this case well in Harvard Magazine (http://harvardmag.com/pdf/2016/09-pdfs/0916-37.pdf) which he wrote on the back of his 2016 CfEE lecture on the subject.

  6. IGSD is not one of the ‘publicly funded but privately owned and operated schools, on a for-profit basis, [which] are just as likely to succeed as regular public schools.’ which you cite in your evidence. It’s a fee-paying school which Prof Tooley hopes will be an ‘attractive investment’ and will compensate for lower pay for an ever-changing conveyor belt of young, ‘fresh’ teachers by profit sharing.

    The Economist was blunt – IGSD would likely appeal to those parents who desire the ‘kudos’ of their children being educated privately while at the same time excluding undesirables who can’t afford the modest fee. Never mind that the no-frills is less than state schools offer.