Profit-making schools


  • In September 2014 the Education Secretary Nicky Morgan said she had not ruled out the possibility of introducing for-profit schools.1 Her predecessor Michael Gove also stated that he had “no ideological objection” to free school providers making a profit from running schools and that he was “relaxed” about for-profit schools.
  • However, a report published by the think tank IPPR systematically reviewed the international evidence and concluded it did not support the claim that an expansion of for-profit providers will improve standards.2 In Chile and Sweden not-for-profit independent school providers generally out-performed for-profit providers, while in the United States the evidence from a small number of cases was mixed.
  • The report concludes that schools should remain public institutions, situated at the heart of local communities and run in the public interest, with innovation and reform driven by the not-for-profit and public sectors.
  • The IPPR report also showed that those countries that have introduced extensive market reforms are not those at the top of the international performance league tables. The report argued that international OECD (PISA) evidence demonstrates more competition-oriented systems tend to produce higher levels of school segregation between children from different backgrounds.
  • Sweden, where the free schools experiment originated in the early 1990s, has slipped dramatically down the Programme for International Student Assessment (PISA) rankings and there is clear evidence that free schools have increased educational and social segregation.
  • SNS, a prominent Swedish business-funded think-tank, issued a report in September 2011 that ran counter to its usual pro-market stance. It concluded that the entry of private operators into state-funded education had increased segregation and may not have improved educational standards.3 
  • A 2011 report on Swedish education published by Skolverket, the Swedish National Agency for Education stated that: “Results from PISA 2009 shows that the Swedish 15-year-olds reading comprehension and skills in mathematics and science have declined in the 2000s. In reading comprehension and mathematics Swedish 15-year-olds perform on average when compared to other OECD countries. In previous PISA studies, Swedish students performed above average. In reading comprehension nearly one fifth of the Swedish students do not reach up to the level of knowledge that the OECD believes is essential for continued learning. In science Swedish students for the first time perform below the worldwide average.”4
  • It went on to state that: “In equivalence Sweden is now an average country according to PISA 2009. The main reason for the relative decline between 2000 and 2009 is that the equivalence in Sweden has deteriorated. The differences between high and low performing students have increased, the differences between high and low performing schools have increased and the importance of socioeconomic background have strengthened.”
  • The report’s author, Dr Jonas Vlachos, an associate professor of economics at Stockholm University, found that students who entered gymnasium [sixth form] from free secondary schools on average went on to get lower grades over the next three years than those who had entered with the same grade from municipal secondary schools.
  • The report also provides clues as to how free schools make their profits. While 86 per cent of teachers in Sweden’s municipal-run compulsory-age schools (aged seven to 16) had teacher training qualifications, the figure for free schools was just 67 per cent. And while the teacher/pupil ratio in municipal upper secondary schools was 8.4 per 100 pupils and 11.0 in county council schools it was just 7.0 in free schools.
  • Sweden’s state secretary for schools Bertil Östberg recently admitted that “free choice has led to bigger differences between schools” and said that “Now we have got these big companies and they are often owned by venture capitalists and they have seen education as a good way of earning money.”5
  • As in Sweden, free schools in England can employ unqualified teachers who are outside national pay and conditions arrangements, to determine their own curriculum and to set up in premises without the usual educational facilities offered by state schools.
  • In contrast, Sweden’s Scandinavian neighbour Finland provides an example of a schools’ system which has dramatically improved its international standing not by market experiments but by increasing the morale, the training and the trust shown in its teachers. The NUT’s ‘Lessons from Finland’ report sets out the reasons for the success of Finland’s education system considers what Britain could learn from the Finnish approach to education. Read the report here.
  • England already has its own example of a for-profit provider failing to deliver an adequate standard of education. In March 2014 IES Breckland, a free school in Suffolk, was judged ‘inadequate’ by Ofsted and placed in special measures. IES opened in 2012 as the first free school in the country to be run by a for-profit company, after the parent-led trust behind the school entered into a 10-year contract with the Swedish education provider Internationella Engelska Skolan (IES), worth £21 million. The report found that: “The school’s leaders have failed to provide a safe and orderly environment for students to learn and achieve their full potential”.6

1 Richard Vaughan (3 September 2014), ‘Nicky Morgan on for-profit schools: “Most people wouldn't like it, but I'd have to think carefully about it”’, TES [online]. Available here.

2 Rick Muir (August  2012), Not for Profit: the role of the private sector in England’s Schools, London:IPPR. Available here.

3 Richard Orange (10 September 2011), ‘Doubts grow over the success of Sweden's free schools experiment’, The Observer [online],
Available here.

4 Skolverket – Swedish National Agency for Education  (2013), Facts and figures 2012: Pre-school activities, schools and adult education in Sweden, Stockholm: Skolverket. Available:

5 Helen Warrell (27 August, 2014), ‘Free schools: Lessons in store’, Financial Times.

6 IIan Seath (March  2014) , Inspection report: IES Breckland, 21–22 January 2014, Ofsted.  Available here.

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