Gabriel Heller

What Stephen Twigg doesn’t understand about Sweden’s for-profit schools

What Stephen Twigg doesn’t understand about Sweden's for-profit schools
Text settings

As a Swede, I’m always intrigued to hear the British Labour Party say how Sweden's free school system has been a disaster. Profit-making schools, says Stephen Twigg, are backfiring. But I’d like to pose a question. If Mr Twigg thinks that profitmaking state schools in my homeland are such a disaster – and one with “with dire consequences for parents and children” – then why does he think that the Swedes haven’t banned them? Has he, from his vantage point of Westminster, spotted a flaw that the Swedes have missed? Or could it be that he has grasped the wrong end of the stick?

Mr Twigg recently wrote a piece for the Independent, lashing out against Michael Gove’s supposed plans to allow profit-making companies to own and run schools in the English state-funded education system. (If only: but that’s another story). Twigg reveals that he visited Sweden. Yet, he seems to have emerged with a view not reflected in the Swedish political agenda – or, for that matter, in reality. He says:

I visited Sweden last year and politicians and education leaders warned me about the problems they have experienced. They said companies were incentivised to make a fast buck from children’s education. This resulted in chaos and a collapse in standards.

In reality, while standards have fallen since the 1990s, this can hardly be blamed on the free schools (which are still in the minority). On the contrary, research shows that for-profit school competition has raised achievement somewhat overall, and that there is no difference between non-profit and for-profit school competition in this respect. And why, Mr Twigg may wonder, do Swedish parents keep their children in profit-making schools? Why do they choose them over the local state school in the first place? Is this a collapse in standards that can only be appreciated in Islington?

There is demand for change in Sweden, and for-profit schools have expanded much faster than their non-profit counterparts to meet that demand. It took about a decade before the positive effects of the voucher reform kicked in, partly because it was only when for-profit schools began entering the market around 1997 that supply increased significantly. Profits generated stronger competition, which in turn generated better results.

So the rise of for-profit schools in Sweden has actually cushioned the fall in standards. Mr Twigg must understand that correlation is not causation: there were other changes at the time of the voucher reform. And as I’ve discussed previously, researchers highlight those changes as key for Sweden’s plummeting down the international league tables. They have nothing to do with for-profit schools or school competition in general.

Recently, a cross-party agreement – only excluding the former communists and the BNP-equivalent, the Swedish Democrats – regarding new rules of the game for the education market was concluded. And guess what? It includes no ban on profits. It is unclear who Mr Twigg met when he went to Sweden, but apparently not anyone responsible for the mainstream parties’ official policy on schools.

Twigg repeats a recent scare story:

When a school group goes bankrupt, parents are left stranded. JB Education runs schools teaching 10,000 Swedish pupils. It was not making sufficient profit to please a Danish private equity group which took it over. The company announced this May that it would sell 19 of its schools, and close the other four.

Yes, it went bust. So what? If schools fail to satisfy parents, the demand falls and it will close. Crucially, the converse is true: good schools see demand soar and expand to meet that demand. This demonstrates the market at work. JB Education lost about half of its pupil enrolments in two years, due to poor reputation in terms of education quality. It paid the price of failure.Parents and pupils simply stopped choosing the provider’s schools. Kids get only one chance at a decent education.

In Sweden, if low-income parents think their kids will not or are not getting that chance they have options, which include alternative state- and independently-operated schools. In England, on the other hand, tens of thousands of parents know their child attend or will attend a failing school, but they can’t do anything about it. Does Mr Twigg thing things are really more humane in England, where failing schools are kept alive – failing pupils, year after year, and inflicting damage on the communities they are supposed to help?

Crucially, school closure does not necessarily spell disorder. What actually happed to pupils in 19 out of those JB Education schools that did not close? Well, not much at all since the schools were taken over by other owners. At the same time, all pupils in the closing schools have been offered places elsewhere. Chaos? Hardly.

Surely, mechanisms to ensure orderly failure of bad schools could always be improved. But by expanding the number of alternatives significantly, for-profit schools are also part of the solution here: it’s only with surplus capacity in the system that pupils can migrate from failing schools with ease.

Mr Twigg also cites an IPPR report, discussing evidence from Sweden and other countries, which he claims shows that for-profit schools are worse than non-profit schools. Yet this report has misinterpreted some research, and omitted findings that suggest the opposite, as I’ve shown previously. Overall, the evidence indicates that for-profit schools are just as good as non-profit schools in terms of raising achievement.

So, again, I would advise Mr Twigg to check his facts and then review his determined policy. For-profit companies are the surest guarantors of social justice in education. They expand as fast as possible, ensuring that more pupils get realistic options. They go to where demand is greatest, which often tends to be areas where education is poorest – in England this means sink estates where pupils are so horribly short-changed. An England where a ‘graph of doom’ shows a strong correlation between wealth of parents and pupil achievement, indicating the inequities of the current system.

The question Mr Twigg needs to ask himself is how much he wants to help those stuck in England’s failing schools. Enough to recognise the very concept of failing schools? Enough to back school reform that will take new schools to these areas? Enough to move beyond knee-jerk reactions to the idea that schools would make a profit within the state-funded education system?

Clearly, the Labour Party has many hard questions to ask itself about education policy. What’s happening in Sweden is part of a global trend towards school reform – the expansion of parental choice – and it’s being done mainly to help the poor rather than the rich. The rich always has choice since they can move houses to get their children into a good state school or buy a private education. The poor do not have these options. By decoupling of school choice from the size of parents’ wallet, we can decrease the unfair advantage of the rich. Since the profit motive is key for producing scale in the system, it is crucial for ensuring that we can do so in practice.

At the end of the day, it’s all about creating a functioning education market that drives quality and equity upward. For-profit schools are a key ingredient for this market. Rather than attacking them, Labour’s focus should be to devise rules of the game that best ensure their success in this venture.

Gabriel H. Sahlgren is Director of Research at The Centre of Market Reform of Education, based at the Institute of Economic Affairs.