For-profit schools vital for Britain's education system


New research shows that for-profit schools must be an integral part of Michael Gove’s education reforms if they are to work.

The report, Schooling for Money: Swedish Education Reform and the Role of the Profit Motive, looks at the role of for-profit schools in Sweden and for the first time provides quantitative evidence regarding how these schools perform. The competition that drove improvements in the Swedish system was only possible because of the high number of for-profit schools that were established, says the report.

The research shows that:

  • Under a system where profit is allowed more children have access to schools that will improve their educational achievement.
  • For-profit schools make the competition that drives up standards possible by increasing the supply of new schools.
  • The impact of for-profit schools tends to be greatest on those from low socio-economic backgrounds.

The educational outcomes of children going to for-profit and not-for-profit schools were significantly better than those of children going to state schools.

Not-for-profit schools did marginally better on average than for-profit schools, but among schools with pupils from lower socio-economic backgrounds, for-profit schools performed better.

In the English education system there are around 24,600 schools; back in August this year only 62 free school applications had been made. This highlights the desperate need to encourage new schools to start up.

The case of Sweden shows that increasing the supply of new schools to create sufficient competition in the system to raise standards requires encouraging schools to start up with a profit motive, yet at present this is being excluded by the coalition.

In Sweden during 2008/2009 13% of schools were for-profit, while only 6% were non-profit schools. If England encouraged for-profit schools we could see a similar take up which could mean around 3,200 new schools.

Mark Littlewood, Director General of the Institute of Economic Affairs said: “It is hardly surprising that we have seen such a low uptake in the free schools initiative when the profit motive has been excluded.

"The case of Sweden shows that it is a vital component of education reform. This is especially the case in providing access to good schools for those from low socioeconomic backgrounds."

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