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Status anxiety

If Gove has won a battle for free schools, why are they so expensive?

Toby Young suffers from Status Anxiety

31 July 2010

12:00 AM

31 July 2010

12:00 AM

It has been described as the most radical overhaul of the school system since the introduction of comprehensives. Ed Balls condemned it as ‘the most profoundly unfair piece of social engineering in this generation’. Yet on Monday night, the 2010 Academies Bill was passed by 317 votes to 225.

Clearly, to be condemned so vehemently by the shadow education secretary is a badge of honour and not something I’d want to take away from Michael Gove. The boy done good. But to any impartial observer the most distinctive thing about the 2010 Academies Act is just how modest it is.

Take Section 12, which stipulates that only charities are allowed to set up academies. The coalition’s education policy is often compared to the educational reforms passed by the Swedish government of 1992-93, but that legislation allowed commercial providers to set up taxpayer-funded, independent schools — what we now refer to as ‘free schools’. By insisting that only charities can set up free schools, the coalition is creating a rod for its back since most charities aren’t in a position to raise the necessary capital to cover their set-up costs.

True, the 203 academies already in existence are owned by charitable trusts, but they were paid for by the government. New Labour initially insisted that academy sponsors needed to come up with £2 million to put towards the build costs, but that was a fig leaf designed to give the impression that the cost of creating academies was being shared by the public and private sectors. In fact, the average cost of setting up an academy is £30 million — and that applies whether the school in question is a new build or a refurb. So the question remains: who’s going to pay for free schools? 


To hear some critics of the government talk, you’d think the billions of pounds that have been saved from dismantling the Building Schools for the Future programme are going to be diverted to the free schools programme. In fact, the word from inside Whitehall is that Michael Gove lost that battle with George Osborne — and the Education Secretary will have to find the money to fund his beloved new schools elsewhere.

One suggestion, often mooted, is that academy trusts will be able to set up schools in unused office buildings. As the leader of a group hoping to set up one of England’s first free schools, I’ve been looking into this and it’s far from inexpensive. For instance, there’s an unused office building near me that is just about big enough for a small secondary school. Problem is, it’s on sale for £6.8 million and it’ll probably cost the same again to fit it out. That’s a total of £13.5 million. Not as much as the cost of a new build, but not chump change either. How is my charitable trust going to raise that kind of money?

Lease it, you say, and I’ve looked into that too. The building in question is owned by a property developer and if he’s going to be persuaded to invest £6.8 million in converting it for school use, he’ll want a guaranteed return of £13.5 million plus 8 per cent, i.e., £14.6 million. And like most property investors, he’d expect to recoup over a 15-year period. In other words, my charitable trust would have to promise him an annual rent of approximately £1 million for the next 15 years. But who’s going to guarantee that lease? Even if the government promises to pay my school a sufficient amount per pupil to cover the annual rent, there’s still a risk that the school will fail or have its funding cut by a less sympathetic secretary of state. (Ed Balls, for instance.) Who’s going to insure that risk?

If commercial companies were able to set up schools, as they are in Sweden, raising the money for a new build or guaranteeing a lease wouldn’t be such a problem. But given the government’s insistence that only charities can do so, it looks like the Department for Education will either have to stump up the capital or go into the underwriting business. And, of course, the Treasury won’t allow it to do that, at least not on a grand scale.

I’m a fan of Michael Gove and welcome his educational reforms. But the timidity of the 2010 Academies Act, combined with a parsimonious Chancellor, will mean that very few free schools are set up over the lifetime of this parliament.

Toby Young is associate editor of The Spectator.


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