Profit Motives

Nick Clegg has derided the profit motive when it comes to the market for education. He is implicitly and explicitly arguing that the profit motive will hurt standards and social mobility.

Perhaps he should read this report, compiled by the Adam Smith Institute.

From the report’s author, James Croft:

It’s widely held that business-led educational ventures maximise profit at the expense of pupil outcomes. This is one of those myths that has arisen because of misleading (and often politically motivated) press coverage of occasional instances of things going wrong blown out of all proportion. The truth is that in contrast to other ownership models proprietorial school businesses, whether directly accountable to their owners or to shareholders, are tightly managed and rarely engage in the sort of profiteering that compromises quality for short-term gain. They know their markets and they are keenly aware of the expectations of their customers.

My study found that of the 489 proprietorial schools operating in England in 2010, 87 educate their pupils for less than the ‘revenue only’ maintenance figure of £5,320 (33 of which by £1,000 or more), at the same time apparently able to make a modest profit. A further 71 were doing so for less than the combined revenue and capital figure of £6,240. In addition, according to a third benchmark, allowing for total fee remissions of up to 10 per cent,154 a further 41 were found to be educating their pupils on fees less than £6,864, on a comparable basis to that of schools in the state-maintained sector. This represents 41% of all proprietorial schools. As a group they outperformed equivalent trust schools on key teaching and learning related criteria by a significant margin (on all criteria for those inspected by Ofsted, and 3/5 for ISI). There is widespread evidence of generous bursary provision for the disadvantaged too – something I hope to be able to detail more fully in a forthcoming study.

Bang goes the theory that for-profits are interested in only one thing.

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