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Profit is the key to success in ‘Swedish schools’

Anders Hultin, an architect of the Swedish government’s voucher system, says the Tories’ plan to emulate it will fail unless they encourage a new breed of education entrepreneurs

30 September 2009

12:00 AM

30 September 2009

12:00 AM

Anders Hultin, an architect of the Swedish government’s voucher system, says the Tories’ plan to emulate it will fail unless they encourage a new breed of education entrepreneurs

For us Swedes, it is gratifying to see David Cameron put our free schools model at the heart of his reform agenda. He has chosen well. In a few short years, the voucher system has transformed education in Sweden and led to the creation of almost a thousand new schools. But the Conservative leader has failed to grasp a key aspect of their success. To flourish, these schools must be allowed to make a profit.

This isn’t just one of a long list of pessimistic predictions — it’s the only crucial criticism; he can ignore the rest. The doubts I hear about school choice in England now are the same ones I heard when I helped draft the policy as an adviser in the Swedish education and science department in 1992. Who on earth, we were asked, would want to set up their own school? Surely low-income parents don’t want choice — they just want their local school to improve. Our political opponents thought the policy such a dud they didn’t even bother to attack it. Even we had our doubts. Our proposal was fairly simple: anyone could set up a school, and be paid the going rate (or, at the time, a bit less) that the state-run schools were receiving. But in our heart of hearts, we did not expect a rush of applicants. This is a symbolic policy, I was told by a colleague. It was in our manifesto, so we had to honour it.

Isn’t it strange how little faith government places in the people whose lives it seeks to organise? Once we put our ‘symbolic’ policy into practice, and handed power from government to communities, the effect was extraordinary. A thousand flowers bloomed. Or, more accurately, the number of independent schools grew from 80 to 1,100 — educating 10 per cent of all pupils at the compulsory education age and 20 per cent of those in upper secondary. The drive and energy came from outside government: we in the education department just paid the bills. This, perhaps, explains the success: it was a grassroots-led revolution. Where communities were unhappy with their school, they did not need to petition parliament or local government. They could find a school provider, and set up a new one.


But an audit of the new schools reveals a striking statistic — and this is where David Cameron and his education spokesman, Michael Gove, should take note. Of our new breed of successful ‘free schools’, 75 per cent are profit-seeking. Why? Well, what happens is that the schools tend to expand as fast as demand requires — if they are oversubscribed, they will open a new school rather than ask parents to add their name to a waiting list. But in order to expand, they need to have made money. Without the profit element, the Swedish example shows that the number of new independent schools would be very small and most of them would have a religious purpose.

In fact, the Swedish model that gets so much international attention today would not exist without the acceptance of profit-making organisations. It is a simple matter of incentives. Why should an enterprising teacher set up on their own, and make a career out of innovating in education, when that could mean financial ruin? The solution to these problems is profit. Not a vast profit; some schools make no profit at all. But they behave like businesses, treating parents as customers — and this is what counts.

Take, for example, Carlsson school in Stockholm: an excellent institution, but one run as a not-for-profit charitable trust. Because it lacks proper incentives to expand, it deals with surplus demand by asking parents to form a queue. And it is a very long queue. Parents who are considering Carlsson for their child must send in an application when their child is born. Many miss the cut. And thanks to the school’s strict first-come-first-served policy, along with the academic calendar, many of those children who do make it are benefiting from the time of year in which they were born. It is best to have a birthday between January and April if you want to get into Carlsson.

If Carlsson School was run by a profit-making organisation, its natural response to the waiting list would be to expand, not become more selective. Nor would it show off about the length of its waiting list. Instead, Carlsson School would be not one school, it would be an entire group of Carlsson Schools. That is how all successful businesses work. It is how Kunskapsskolan, the school chain which I founded after I left government, works. Profit-seeking schools respond to greater demand with extra supply: this is in the best interests of children, parents and society.

The Conservatives could, of course, keep their ‘Swedish schools’ profit-free and rely on groups like Carlsson School to roll out their agenda. The advantage of a no-profit policy would buy a little piece of political protection from their ideological enemies. But is it really their ambition to create a small number of very good schools with long waiting lists? Such schools may be free to the users but, like the best state schools in England today, they would be exclusive, luxury destinations for a few privileged people. Is that really the education revolution Cameron has planned?

Sometimes I am asked if the Swedish system would work in England. I have lived here for some years now, and can think of no country better suited to it. Reading the newspapers, I am stunned at the lengths parents go to in order to place their child in a good school — or, at the very least, save them from bad ones. There are stories about parents who send their child to live with relatives to get into a better catchment area; stories about councils spying on parents who they suspect have given a false address to get onto the waiting list.

The huge demand for school choice is perhaps one of Britain’s greatest untapped resources. The Conservatives will find a great appetite for new schools — and huge inventiveness among desperate communities. But Mr Cameron has a choice. Does he want to roll out the supply of these new schools quickly, or slowly? That is to say, will he allow profit-making schools, or leave it to the groups who all too often regard waiting lists as a badge of honour?

Is he worried that schools making money will mark him out as right-wing? He shouldn’t be. Just a couple of weeks ago, Sweden’s Social Democratic party made a clear statement dropping its opposition to profit-making schools and saying that its sole concern is whether schools are performing well or badly. They could hardly do otherwise. After 17 years of this educational experiment in Sweden, it is clear that the for-profit chains have greatly helped social mobility. They have given low-income parents a choice of school that only the rich in England have. It would be odd to think that the Swedish left is more relaxed about profit-seeking schools than the British Conservative party.

Mr Cameron has spoken eloquently about how schools reform can change the balance of power between the government and the people. And so it can: but he will need to move quickly. He must make these tough political decisions in his first few weeks in power.

Teachers can be entrepreneurs, too. There is indeed a schools revolution waiting to come to Britain — but one that can only reach its potential if the Conservatives realise that ‘profit’ is not a dirty word.

Anders Hultin is a former adviser to the Swedish government, co-founder of the Kunskapsskolan chain of schools in Sweden and chief executive of GEMS UK.


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