Academy trusts are drawing-up plans to open their own private special schools to solve the SEND places crisis, including tapping-up wealthy donors to foot building costs.
Last month, Schools Week exposed how firms backed by private equity investors were making millions of pounds in profit from private special schools as the government failed to open enough state school to meet soaring demand.
“The heart of this is to get a better deal for children and parents by disrupting a market that is not functioning for the good of the sector or those it needs to serve,” said Tom Legge, PAG’s managing director.
He said previous SEND free-school application waves showed a “significant gap between areas requiring additional specialist provision, and the ability for local and central government to fully meet this need”.
The government approved fewer than half of the 85 applications from councils to open SEND free schools in 2022.
‘High performing’ MATs involved
About a year ago, PAG began a “proof-of-concept” project on plugging the gap with private schools. However, rather than being run by firms, they would be run by a multi-academy trust.
Legge said the multi-academy trusts (MATs) involved wanted to remain anonymous at this stage, but they tend to be “high-performing”, with senior executives who are “committed to the sector and so desperate to try and do something”.
Trusts cannot borrow on the open market, meaning it is highly unlikely they have enough spare cash themselves to fund the capital costs of opening such schools.
However, Legge said one MAT has secured an initial donation from a wealthy philanthropist to assist with build costs. Its project is at an “advanced” stage.
Discussions have also been held with “ethical social investment funds” to gauge interest “as there is huge return for society and relatively low risk to investment considering the nature of the projects”.
High-net-worth individuals are also interested, Legge added. He is “agnostic” about funding “as long as it is ethical, helps reduce costs and disrupts the market”.
Trusts would have trading subsidiaries
The MATs would run the private schools through their own trading subsidiaries, which are used already by some to generate income through commercial activities such as letting out school facilities.
Legge said private schools could be set up as either charitable organisations or private companies underpinned by public law principles, meaning “the lion share of any profits generated went back into the education system and not into shareholders’ pockets”.
Council spend on independent and non-maintained special schools (NMSS) in 2021–22 more than doubled over six years to £1.3 billion. The average cost of these places can be more than double that of a state special school.
Legge said the aim is to “bring those prices down while making sure the quality stays up”. Trusts are used to “needing to cut cloth, to seek efficiencies and economies of scale” to keep their costs down, he added.
Another issue with state schools is some can take many years to open.
Ben McCarthy, managing director of AMR Consult, which is also working on the project, said the new route could slash up to nine months off the average state free school open time. Schools would also be built to current government standards.
He added PAG is also working with individuals and “education-adjacent” organisations who want to deliver high-quality SEND services at a lower rate than the larger firms running private schools.
Susan Douglas, chief executive of the specialist Eden Academy Trust, said “looking at solutions in a timely and efficient way would be good”. Two new schools approved in 2017 for her trust have yet to open.
But Warren Carratt, chief executive of Nexus Academy Trust, warned it is “one to watch with cautious interest”.
He added: “There are so few examples of ‘Magwitchian’ philanthropy to give me confidence this won’t bring anything other than more high-cost independent provision at a time when there is such a stark and unjustifiable difference to the state sector.”
Ministers’ SEND and alternative provision implementation plan, published in March, pledged to “re-examine the state’s relationship with independent special schools to ensure we set comparable expectations for all state-funded specialist providers”.
Legge said PAG made the DfE aware of its plans and will be looking to engage further as projects unfold.
The Department for Education said conversations with PAG are commercially sensitive.
A spokesperson said: “We are already working to open high-quality special free schools, with 40 new special free schools announced in 2023, in addition to 106 that have already opened.”