If you let 'School Operating Companies' run schools, is that privatisation?

Written by Laura McInerney, Policy Development Partner

Rumours are out that great swathes of the nation are to be ‘privatised’.  As soon as these words are muttered solemn faces befall the crowd and people start yelling about trains.  No-one is happy that the trains were privatised.  All the problems of the rails were caused by privatisation.  Boo – privatisation – boo, we say to you.

Unfortunately a lot of people doing the boo-ing don’t understand what rail privatisation actually meant. I’ve covered it before in more detail but, effectively, the companies who operate trains (known as ‘train operating companies’ or TOCs) bid every few years for the right to run services along the rail-lines in Britain.  If a TOC is already running a train service and doing so in a way that pleases the government, they are likely to be re-awarded the right to run those trains.  If not, then another train company is given the chance to run the service.

The Education Act 2010 set things up nicely for something similar to happen in schools.  Once passed, if a school fails then the Education Secretary takes control over it and will decide – after a procurement process – who the school will be ‘operated’ by.  At least, that’s the mainstay of the bill.  How this will happen I’m not entirely clear about but the goings-on at Downhill Primary show what is currently possible and in order to avoid all forced conversions becoming a media debacle I expect the process will soon become more concrete.

One could expect a system of franchised or ‘commissioned’ operators will also be the system by which police privatisation – if it happens at all – will eventually shake out.  Groups such as Serco and G4S already supplement the justice system by running prisons and carting offenders around between court and cells, so it’s only a short distance to being installed into more mainstream police services.  And if such groups do a bad job?  Off they pop and another group will come in.

There are great opportunities and risks for any sector moving towards this model, and talking about those opportunities and risks is also important.  People are wrong in their assumption that the trains are worse than they were.  They are about the same, possibly even a bit better, in terms of punctuality and reliability when compared to a pre-privatised British Rail.  Yes, they are more expensive than they were in the early 1990s. So is buying a house.  Pointing out that price inflation has occurred does not prove that the inherent quality of train services has diminished, it merely makes me lament my mortgage.

The advantage to the pubic of a ‘privatised’ (read: commissioned) system is that the government is able to make demands each time the service is up for renewal or take-over.  It is convenient to carp at the TOCs for their ridiculous prices, but it is the government who sets ticket price limits and requires specific levels of punctuality, reliability and customer satisfaction.  In addition the Transport Department can insist on certain levels of passenger refunds, or demand a train to run each day from Point A to Point B.  Bidders either step up to the mark or they can’t enter the race.

Surely it would be beneficial for the DfE to have this sort of commission power. Isn’t it beneficial to demand a set of results, to ask for a document that states explicitly how these will be reached, and then to efficiently hand over to more competent hands if the deal is not being achieved?  It certainly seems a more attractive way of ending the drawn-out process of dealing with failing schools that currently can mean generations of students continue in conditions where few people would willingly send their child.

But what of the risks? And how to circumvent them?  First, the directors of TOCs earn well and, in order to make sure the people writing the bids do a good enough job to secure future profits, bid team wages can also be lucrative.  All newly commissioned schools in the UK will be academies, and even if they operate under ‘not-for-profit’ rules there is no reason why those at the top of the school operating chains could not be handsomely paid.  But money in the pockets of the directors is money not going into resources for children.  If we are being honest about moving to a commissioning system might it be pertinent for the government to limit the % of money paid to leaders?

In the case of the rails, several high-profile and successful TOCs are walking away from their contracts, complaining they are too expensive or difficult to run.  In doing so they force the government to re-run the bidding process; an incredibly complex and costly affair.  What is to stop School Operating Companies from doing the same and giving up their contract when the going gets tough?  Furthermore, the extra cost spent on bids from school operating companies will need to be recouped from somewhere, but where?

Privatisation is not necessarily a bad model but it also isn’t necessarily a good model either. A commissioning model provides the opportunity for bidders to say – upfront - what they will be do to improve a school and be held accountable for their actions. But such a system only works if the Government uses its commissioning power to limit cash-siphoning and walk-aways, and it is implemented in an honest and transparent way with details of the bid open to all upfront.  If not future debate will simply follow the model of any debate about rail: Cue the sad faces and incorrect but constant references to ‘the good old days’.

 © LKMco Ltd. 2011-13