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Flow of Ideas: articles - The Profit Virus - The Business Takeover of Schools |
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 A Capital Friendly Culture for Further EducationAcademy ChainsAfter the Hillcole GroupAgainst What We Are WorthAmbassadors of Capital in SchoolsAn Educational Mansion House for BusinessApprenticeship and the Use-value Aspect of Labour PowerArtistic OutlookAyers Rocked In His Own UniverseB GenerationBourdieu on CapitalBourdieu on Cultural CapitalBourdieu on Social CapitalBrown PFI MonsterBusiness Sponsorship of SchoolsBusiness Takeover of Further EducationCambridge University OccupationCaught in the Storm of CapitalCo-payment in Hospitals and SchoolsCold Hands and Quarter MoonCommunitarianism for SchoolsCompulsory Consumption and Uni-NannyConforming Schools Conforming KidsCopy/South DossierCreating MonstersCreeping Privatisation in Higher EducationCritical MassCritical Pedagogy and CapitalismCritical Space in EducationDelivering E-LearningDigital Rights ManagementDistillationDorothy L. SayersDouglas Kennedy: best-selling novelistE-learning for Free at the BBCEdison Schools in the UKEducation and Inspections Bill (2006)Education As Culture MachineEducation FireworksEducation for DebtEducation IncorporatedEducation Markets and Missing ProductsEducation RepetitionEducation the HSBC WayEducation White PaperEducation, Globalisation and the Learning SocietyEmployers and School LeaversEvaluating Different Teaching MethodsEverything Louder Than Everything ElseFinance and FearFive Endings of DesiresFoibles, Frolics and PhantasmsFreedomFreewillFrench New Wave CinemaFull Report Ruth Rikowski's Book Launch for Globalisation, Information and LibrariesGender and Spokesperson in Group Work IssuesGlobal TradingGlobalisation and Education RevisitedHabituation of the NationHigher Education and Confused Employer SyndromeHitchcock: classic auteurHuman capital, the knowledge economy and businessIn Retro GlideIn the Dentist's ChairKids in the Land of No DreamsKM CritiqueLazy Brit KidsLearning in the Earthworks of CapitalLearning InvestmentsLearning to the MaxLibrarianship and Human RightsLifelong Learning and the Political Economy of ContainmentLSBU StrategyMarketisation of the Schools System in EnglandMarx and Education RevisitedMarx and the Future of the HumanMarxism and Education RevisitedMarxist Educational Theory UnpluggedMaturity and FreedomMcDonaldization and EducationMichael JacksonMichele RobertsMiss Allison and Novel WritingMoneythought in Higher EducationMrs Thatcher and Holes in the Kitchen FloorMulticulturalism and Faith SchoolsMy Tony BlairNew Ideas in Ruth Rikowski's Book - Part 1New Ideas in Ruth Rikowski's Book - Part 2New Labour Policy for SchoolsNietzsche's SchoolNihilism and Educational ValuesNo Learner Left UnhassledNotes on the Confessions of John DenhamOn Education for Its Own SakeOn Education StudiesOn the Capitalisation of Schools in EnglandOn Transhumanism and EducationOpen AccessOutsourcing Public ServicesPeter Wilby on School PrivatisationPlanet of the CapitorgPlatoPlaygound Risks and Handcuffed KidsPoems by Gregory RikowskiPoems by Victor RikowskiPost-Fordism and SchoolsPost-Fordism in Primary SchoolsPostmodern Dereliction in the Face of Neoliberal Education PolicyPowerPointlessness in Higher EducationPrivate Schools as CharitiesPrivatisation of Schools in EnglandPrivatisation of Student DebtRaces in the Imperial WarReadings for Teaching CourseRecruitment and Labour PowerRevealed Recruitment Criteria through the Use-value Aspect of Labour-powerRobotic EthicsRuth Rikowski Updates (Archives)Ruth Rikowski Updates (Archives)School Fees and the 1944 Education ActSchools: Building for BusinessScience Fiction Films and HorrorSecond Time as FarceSnowballs and Risk in SchoolsSocial Contract Theory and Political ObligationsSocialism is not DeadSpeed of Life - Part OneSpeed of Life - Part TwoStroppy Individuals and Oppositional Cultures in SchoolsSustainability Policy at London South Bank UniversityTen Points on Marx, Class and EducationThe Business of Becoming a Business for AcademiesThe Capitalisation of Schools - Federations and AcademiesThe CBI and the Business Takeover of SchoolsThe Commodification of EducationThe Education White Paper and the Marketisation of SchoolsThe Evolution of Federations of SchoolsThe Last Parents EveningThe New Japanisation of SchoolsThe Profit Virus - The Business Takeover of SchoolsThe Standards Language-game for Schools in EnglandThe Which Blair ProjectThree Types of Apprenticeship - Three Forms of MasteryTony and Caroline BennTony Benn: Letters to GrandchildrenTransportTurney's and PPUUninspiring TowersUniverse of Capital and My SpaceUniversities in a Neoliberal WorldUtopia and EducationWhat Can Nietzsche Teach YaWhen Bullies Roam the SchoolWhen the Bowers BreakWhy Employers Can't Ever Get What They WantWill Hutton and His E-FossWolf on Marx Without SparksWomen in World Wars
| The Profit Virus: The Business Takeover of SchoolsPreface This is the original draft of an article written for the very first issue of the journal, Mediactive (Rikowski, 2003). It proved to be very useful for writing my critique of New Labour’s Five-Year Strategy for Education (Rikowski, 2005). For the actual article, references to the ‘profit virus’, ‘contagion’ and nearly all other medical metaphors had to be dropped. It was also edited down some. Other aspects of the language were toned down for academic consumption, too. However, this draft was provided for students on the Recent and Contemporary Issues in Education (EDU1003) module, as they were doing an essay on New Labour’s policy of encouraging businesses to run schools. They used it for 2004 and 2005. In the light of these developments, other students, as well as those from Northampton, might find this useful. So too, hopefully, might academics and education activists. Thus, I thought it worthwhile reproducing here in The Flow of Ideas. References Rikowski, G. (2003) The business takeover of schools, Mediactive: Ideas Knowledge Culture, Issue 1, April, pp.91-108. Rikowski, G. (2005) Silence on the Wolves: What is Absent in New Labour’s Five Year Strategy for Education, Education Research Centre, Occasional Paper, May, School of Education: University of Brighton. Glenn Rikowski, London, 19th February 2007 The Profit Virus: The Business Takeover of SchoolsGlenn Rikowski, School of Education, University College Northampton February 2003, Northampton Private sector involvement in school life is increasing: a ‘profit virus’ is taking over schools and local education authorities. The New Labour government is supporting businesses in this enterprise. This article examines the ways in which businesses are virusing the school system and why it is happening, and indicates some of the forms of resistance to the ‘profit virus’. Introduction Since New Labour’s 1997 general election landslide, education policy has largely been built upon that of previous Conservative administrations [1]. As Ken Jones has argued, this was a strange mixture of modernisation, archaism (e.g. traditionalism in the school curriculum) and Marketisation [2]. However, New Labour has dug deeper and faster in a field where the Conservatives made only limited contributions: the business takeover of education. This is a wider conception of the commodification of education than outright privatisation. Privatisation of education entails schools, colleges and universities turning themselves into privately owned enterprises charging customers for their ‘products’. However, the business takeover of education involves corporate capital running public education services for profit, and this includes but typically falls short of outright privatisation. On this broader front, New Labour has opened the door much wider to business interests than the Conservatives dared. This article outlines the main ways in which the business takeover of education has proceeded. It also offers explanations regarding why it is occurring and points towards forms of resistance to the process. The principal focus is on the business takeover of schools in England. Before exploring New Labour’s project of letting for-profit operators rip into public educational services, it should be noted that from 1979 to 1997 the Conservatives paved the way for this project. A series of policies created education markets or quasi-markets that have become the foundation for New Labour’s romance with education businesses since 1997. The Conservatives also developed some early attempts to entice private operators into schools. Thus, a brief outline of these Conservative policies and initiatives is required. 1. Conservative Carcinogens The Education Reform Act (1988) was the cornerstone of the Conservative marketisation of schools in England and Wales. The Act established the Local Management of Schools (LMS) where individual schools gained control over their own budgets. School governors and the head teacher (now a de facto chief executive) gained powers (over staffing, resources and school policy) that previously resided in the Local Education Authority (LEA) [3]. Individual schools were turned into semi-autonomous business units, competing for pupils and marketing their ‘products’ to parents. Services such as school improvement, equal opportunities, payroll, advisory and others remained largely under LEA control. Under the 1988 Act, parents received the right to vote on schools becoming grant-maintained (GM). A shift to GM status meant the school was funded directly from central government. The higher levels of funding for GM schools attracted some down this route: 17 per cent of secondary schools by 1998 [4]. Market information for school choice was provided by the Standard Attainment Tests (SATs) and examination results. These were worked up into league tables and published, supposedly facilitating informed choice. The SATs were linked to attainment targets within a National Curriculum, and the Office for Standards in Education (Ofsted) provided the inspection regime that generated comparative data within the new schools’ market. Although the 1988 Act was a framework for a competitive market environment it did not directly nurture business penetration of state schools. Conservative schools policy in this sense was quite timid, but there were three significant developments. First, the Assisted Places Scheme (APS) was established under the 1980 Education Act. The APS enabled talented pupils from LEA schools to go to private schools through subsidies. This was a straightforward case of state subsidies for the private education sector, though private schools in the UK had always received generous treatment through tax exemption based on their charitable status – something New Labour had promised to look into prior to its 1997 general election victory. Secondly, from 1986, fifteen City Technology Colleges (CTCs) were established. The idea behind these was that business folk would contribute substantial sums towards their start-up costs. The CTCs were to rejuvenate education in inner-city areas through providing high quality science and technology-based curricula. However, the Conservative government discovered that companies and entrepreneurs were unwilling to part with cash for schools when they did not control the curriculum, pay and conditions of staff, and where profit-making opportunities were hard to discern. Only around 20 per cent of the CTC’s capital expenditure came from business sources, with public finance making up the shortfall [5]. Finally, in November 1992 the UK Treasury under Kenneth Clarke launched the Private Finance Initiative (PFI) where ‘the private sector Designs, Builds, Finances and Operates (DBFO) facilities, usually for 25-35 years (7-15 for equipment)’ [6]. The most significant elements were finance and operation. These gave business interests new opportunities for profit making in the public sector. Private rather than public finance was to power capital programmes in the public services, with the state paying back over a period of time – both for the original construction and for the use of the building and facilities. The PFI was spectacularly unsuccessful from the Conservative government’s perspective, and very few contracts were signed up to New Labour taking power in 1997. Under the Tories, the PFI was failing to address the backlog of school building, repairs and refurbishment arising from years of underinvestment [7]. 2. New Labour’s Business Bug Enters Schools When New Labour came to power in 1997 the immediate focus was on higher education, with the dramatic announcement to abolish student grants and bring in a student fees regime. This was a significant move towards the privatisation of higher education – with more of the costs of higher education being placed on the backs of the ‘consumer’ – building on the Conservatives’ policy of gradually moving from a grants to a loans-based student finance system. On schools, New Labour embraced the marketising regime enshrined in the Tories’ 1988 Education Reform Act. There were two main departures from the Conservative script. First, the APS was abolished on the basis that middle-class children were benefiting from it more than those from working class backgrounds. Secondly, the GM schools were phased out. In many other respects, New Labour nurtured the business takeover of schools on a scale that the Conservatives could not have imagined prior to 1997. This section catalogues some of the main developments. Education Action Zones (EAZs) Once in power, New Labour moved quickly to set up the Education Action Zones (EAZs) that were trumpeted in its 1997 election manifesto. EAZs were heralded as being about raising standards in deprived areas. They also had other functions: innovation in provision, the establishment of new partnerships (including business partners) to address issues of school performance, and the development of multi-agency working to ensure that local public services were operating ‘joined-up’ policies and thinking to the benefit of children’s academic attainment. Each EAZ also had its own local programme and priorities as set out in its bid for funding from the Department for Education and Employment (DfEE, now Department for Education and Skills). Twenty-five EAZs were functioning by 1999, and by 2001 there were seventy in operation [8]. There was an initial government input of £500,000 for each of the first twenty-five EAZs. This was to be supplemented by a further £250,000 if the zone could raise the same amount in cash or in kind from business sponsors. Furthermore, David Blunkett (then Education Secretary) argued that he wished to see businesses playing the lead role in some zones [9]. In the event, businesses did not find the EAZs sufficiently attractive as sites for money-making and marketing opportunities. As Bernard Regan has calculated, on average only £11,473 in hard cash was actually delivered to the first twelve EAZs to be established [10]. Yet New Labour had learnt some valuable lessons from the EAZ experience. First, the CTC model of encouraging businesses to invest in education with few real business benefits was probably never going to work. Secondly, aspects of ‘innovation’ regarding EAZs taking control of teachers’ pay and conditions failed to take off. Although the teacher unions were alarmed that these might happen through EAZs, in the event, as businesses played a minor role in EAZ management other partners steered well clear of anything so controversial. What New Labour learnt was that the ground for these developments had to be cleared by central government. Thus, the continuing development of performance-related pay and various moves to ‘free up’ teachers’ pay scales. Thirdly, the lack of ‘innovation’ in restructuring the social relations of teaching and learning – principally through bringing in more classroom assistants – to allow businesses to make cost savings on staff, also yielded an important lesson. A major push to get classroom assistants to take on teaching roles (e.g. in delivering the Literacy Hour) was required. Schools Minister (and then Education Secretary) Estelle Morris’s enthusiasm for classroom assistants is in line with education business leaders’ cries that they require more ‘flexibility’ in staffing schools. In September 2002, Morris argued for scrapping the national pay structure by 2006 [11]. In short, from the EAZ experience, New Labour learnt important lessons regarding what was required to nurture the business takeover of schools on a significant and sustainable basis. Outsourcing This has been more successful for New Labour. Drawing on experience from the United States (e.g. Edison Schools), and having had discussions with leading education business leaders from an early stage after taking power in 1997, New Labour hit on a relatively successful way of ensuring that businesses can make profits out of schools. The model is simple. Basically, private companies sign a contract to run an education service – from schools, to services such as school improvement and equal opportunities – and then attempt to make a profit by running the service lower than contract price. This model was already in place in that school cleaning and meals services following this format had been developed by previous Conservatives administrations. These had made their profits by depressing wages and worsening staff benefits and conditions. And that was the problem for education businesses attempting to make profits out of frontline education services: they did not have control over teachers’ contracts and conditions of service. Nor could they easily replace teachers with cheaper classroom assistants. Hence, there is much unfinished business on the outsourcing front for New Labour. Estelle Morris’s resignation as Education Secretary last autumn was a real problem for New Labour. She had been in negotiations with trade unions in the months prior to her resignation regarding bringing in more ‘flexible’ arrangements in teacher contracts and the use of classroom assistants that appeared to be yielding results. The deal was to pay teachers more in return for ‘modernisation’ of the teaching force. These negotiations were disrupted with Morris’s resignation, and Charles Clarke stepped into the breach as new Education Secretary. The other problem with outsourcing from a business perspective is scale. Education business leaders had urged on Tony Blair at an early stage that if they were to make significant profits from outsourcing then they had to control vast swathes of schools [12]. Education Act 2002 partially addressed this issue by letting companies control federations or chains of schools. Whether anything short of mass auctioning of schools will really solve the scale issue to the satisfaction of education businesses remains to be seen. Richard Hatcher and Bernard Regan give many examples of outsourcing [13]. From the first British state school being placed in the hands of the private sector (King’s Manor, Guildford) in 2000, outsourcing of frontline education services has gathered pace. A number of writers have produced interesting and disturbing case studies of the business takeover of schools and LEAs, such as Melian Mansfield (Haringey), [14] Gwen Sanderson (Leeds), [15] and Andy Robertson (Hackney) [16]. Some cases of outsourcing seem almost unbelievable, such as the fact that Walsall has contracted out most of its education services to Serco, a company involved in running asylum detention centres and the electronic tagging of criminals [17]. The Serco example is interesting from another aspect. It indicates that large services companies are now moving into the schools’ outsourcing business, making life more competitive for smaller, specialised education businesses. PFI and Schools When it attained power in 1997, New Labour set about resuscitating and developing PFI by setting up Partnerships UK to take it forward. From being a moribund Tory initiative, under New Labour PFI has become a significant and controversial measure for financing public infrastructure and capital programmes. A National Audit Office survey indicated that in the early 1990s school buildings required a £4-5billion programme for repairs and modernisation [18]. Under New Labour, the PFI has partly filled the gap. A report in the Times Educational Supplement in October 2002 indicated that David Miliband (School Standards Minister) was negotiating a £45billion programme of secondary school building and infrastructure projects through PFI [19]. Should the deal come off, then it would be virtually compulsory that schools and LEAs worked through the PFI for capital projects. Information and Communication Technology (ICT) Capital Programmes in schools such as the National Grid for Learning and the EAZs have meant that ICT capital has made significant strides in the schools sector. Richard Hatcher has noted that e-learning is ‘the fastest growing sector of the education industry’, and schools are a significant market [20]. City Academies In March 2000, the government announced the establishment of the first City Academies. They have the task of raising achievement in disadvantaged urban areas. Education Act 2002 renamed them as simply ‘Academies’, as now rural areas can establish them too. There is an initial capital investment of £10million, of which 20 per cent must come from private sponsors. However, New Labour seems to have learnt lessons from the EAZ and CTC experiences and it appears that private sponsors have much greater control over City Academies. Thus, private sponsors have been easier to obtain. Eleven of the first seventeen City Academies reached private sector sponsorship of up to £2million. The key point is that sponsors can appoint a majority of school governors and can thereby gain effective control of school policies. For example, advertising agency mogul Sir Frank Lowe appointed eight out of the thirteen governors at the Capital City Academy in Brent, north London. As National Association of Schoolmasters and Union of Women Teachers’ deputy general secretary Chris Keates has noted, ‘These schools are run by businesses and we have concerns about their accountability’ [21]. Specialist Schools The specialist schools programme was started with the fifteen CTCs in 1994. The Tories added Language Colleges to the programme in 1995 and Arts and Sports Colleges in 1997. In February 2002, Stephen Timms (then School Standards Minister) announced the start-up of 149 new specialist schools [22]. Education Act 2002 pointed towards a massive expansion of specialist schools, thereby ending the comprehensive schooling era. The 2002 Act and a number of recent statements from Ministers and the Department for Education and Skills indicate that all schools should move towards specialist school status [23]. The 2002 Act established new specialisms, including Business. The key point about specialist schools is that they require £50,000 from business sponsors as start up money. They then get a one-off £100,000 capital grant plus £123 extra for each pupil for four years. This gives large corporations a relatively cheap entry into school life, where they can then push their products and curriculum priorities [24]. Other Examples This sub-section outlines briefly just a few of the other ways in which New Labour is encouraging the business takeover of schools and school-age education. 1. The BBC has plans for offering online educational services for schools. However, commercial operators in this field have complained that such a move would drive out private investors. The government’s response to these private sector fears is that the BBC plans for online schools services will come under constraints to ensure that private operators such as Granada, Heinemann and Pearson can compete effectively. There will be a review of the BBC’s activity in this area in two years time [25]. 2. The Independent/State School Partnership (ISSPs) scheme began in 1998. There have been five rounds altogether. In May 2002, School Standards Minister Stephen Timms opened the fifth round, with a £778,000 package for funding 32 new ISSPs [26]. Leading public schools such as Eton and lesser independent schools have been invited to form partnerships with state sector schools. In October 2002, David Miliband (Schools Minister) called on the old public schools with endowed foundations to devote resources to working with the Academies (previously City Academies) established under Education Act 2002. None of the old public schools responded to this, fearing that fee-paying parents might object [27]. 3. One of New Labour’s early business-friendly moves was to insert a clause in its 1998 School Standards and Framework Act that gave the Education Minister ‘the right to order the contracting out of school services to private tender if a Local Authority is deemed to be “failing”’ [28]. Consultancy firms are prospering under this regime. For example, in early 2000 David Blunkett (Education Minister) sent Price Waterhouse Coopers into Leeds, Rotherham and Sheffield LEAs following bad Ofsted reports [29]. 4. Private companies are advising on the closure of small school sixth forms. The Learning and Skills Council, established in April 2001 to administer non-higher education post-compulsory education and training, aims to rationalise sixth-form study [30]. 5. In January 2000, a private operator, Cambridge Education Associates (CEA) won a £100million contract to run the government’s new performance-related pay system for teachers. CEA employs 3,000 regional assessors to monitor the system, introduced in September 2000 [31]. 6. Parents’ fears about state sector school standards and the need for their children to compete effectively has led to a boom in private sector tuition. Some home tutoring companies such as Stepping Stones Tuition, Personal Tutors and Top Tutors have thousands of tutors on their books. Personal Tutors has 10,000 registered tutors nation-wide. Though not taking over schools directly, these companies feed off the competitive drives raging within the marketising school system [32]. 7. The contracting out of LEA services and whole LEAs is gathering pace, with the early example of Islington, where Cambridge Education Associates won a seven-year contract worth £11.5million in January 2000, providing the model. However, as early as 1999, Estelle Morris (then School Standards Minister) announced that the long-term plan was to contract out at least 10 per cent of all LEAs to private companies [33]. At the end of 2000, the Department for Education and Skills (DfES, then known as the Department for Education and Employment, DfEE) set up 11 pilot programmes exploring ‘innovative’ ways for the delivery of LEA services. Grants ranging from £50,000 (the Wirral) to £350,000 (Oxfordshire, West Berkshire and Wokingham) were awarded to LEAs to develop new models of delivery in partnership with private companies and the voluntary sector. The DfES ran a consultation on the results of the pilots in the summer of 2002, and further action is expected [34]. 8. On 25th June 2002, Estelle Morris, Education Secretary, launched the Innovation Unit. The basic idea of the Unit is that it provides ideas and funds for projects to enable schools to ‘work in new ways’, including working with the private sector. The Directors of the Innovation Unit were appointed in September 2002. Joe Hallgarten, a researcher at the New Labourite think-tank the Institute for Public Policy Research, has argued recently that the Unit might help schools form innovative companies [35]. Schools can set themselves up as companies under Education Act 2002. 9. Some LEAs are now setting up long-term Strategic Partnerships with private companies. Essex and Surrey have developed contracts that open up hundreds of schools to private companies. As Jim Kelly notes, ‘The government has imposed private sector companies on some councils – such as Islington, London – in response to poor standards. But councils such as Surrey and Essex are volunteering to seek external expertise and may go on to try to sell educational services to other councils’ [36]. Again, Education Act 2002 encourages such developments. 10. Private sector teacher supply agencies are now big business. Feeding off the teacher recruitment and retention crises of the last ten years, teacher supply agencies now receive over £600million a year from schools for supply cover. Some agencies pay teachers £80 a day, but charge schools £170 a day [37]. Many other examples could have been provided, but collectively they add up to a ‘profit virus’ that is sweeping through school services. Education Act 2002 nurtures this profit virus further still, and supplies a legislative framework for deepening and sustaining business involvement in schools. Legislative Framework for the Profit Virus: Education Act 2002 Education Act 2002 became law on 24th July. It was passed on a third reading in the House of Lords at a late night sitting after being defeated twice previously in the Lords on the issue of schools being able to set up companies. The 2002 Act provides a series of measures that encourage further business takeovers of schools and LEA services. The 2002 Act sanctions the following: * School governing bodies can constitute themselves as companies * Once they have set themselves up as companies, schools can invest in other companies * School companies can enter into deals with private sector operators * School companies can be part of a ‘federation’ or chain of schools. Private companies can lead these federations. Last September, David Miliband (Schools Minister) clarified the situation regarding business leaders running federations: they do not need teaching qualifications [38] * Schools can also set up educational services and sell them to other schools * The Secretary of State for Education has the power to form companies for involvement in any area of school life or LEA service [39] The Act also gives the private sector some of what it wanted on pay and conditions. Under the Act, around 1,000 schools are to be given freedom to vary the curriculum and change teachers’ pay and conditions. This derives from the new “earned autonomy” status that top performing schools can obtain. Schools that do not qualify for “earned autonomy” can apply to the Secretary of State for the “power to pilot” such ‘innovations’ [40]. However, in a recent statement, Charles Clarke, the new Education Secretary, has said that eventually all schools will have the power to innovate [41]. This statement was made in the same week that Robert Hill arrived from 10 Downing Street as the Prime Minister’s former adviser to become Clarke’s education adviser, and Hill is very pro-business [42]. Over last summer, Tony Blair made a series of speeches warning the trade unions and telling everyone else that there was no going back on opening public services up to private capital. Estelle Morris gave a series of more specific warnings along the same lines regarding education policy. In April 2002, Morris also warned LEAs about dragging their heals over letting in corporate providers (as Walsall was doing at the time) [43]. Why is all this happening? Why is the profit virus taking hold of schools and LEA services so relentlessly? And why is New Labour supporting these developments? 3. The Business Takeover of Schools: Explanations The question of why the business takeover of schools is happening is complex. It is also part of a more general phenomenon, manifesting itself at the international as well as national level, of corporate capital seeking to make profits out of state financed services. There are basically four strands of explanation that fit tightly together and reinforce each other. These are: that businesses are seeking to expand their operations in the public services – for a variety of reasons; secondly, that the New Labour government is seeking to build up indigenous education businesses that can bring in export earnings and compete internationally; thirdly, it is part of New Labour’s economic strategy for developing a ‘knowledge economy’; and finally, that the process is given urgency by the World Trade Organisation’s (WTO) General Agreement on Trade in Services (GATS). These interlocked explanations are addressed in turn. Corporate Pressure Over the last decade, corporate pressure on New Labour to open up state schools has increased. When New Labour came to power in 1997, it presented itself as a business-friendly government that would give the ear to business needs and concerns. Kevin Meany, head of the one of the UK’s biggest education businesses, Nord Anglia, had talks with government officials at an early stage about the best ways for facilitating more private sector involvement in state schools. American education businesses such as Edison Schools also wanted more of the action in British schools. Furthermore, pressure was also coming from larger services companies who were seeking to minimise investment risks. From the late 1990s, a whole series of economic developments made foreign investment risky. There was the collapse of some currencies (and some economies) in the Far East; risks of loan default (e.g. Russia, and more recently Argentina); continued deflation and poor economic growth in Japan and weak growth in many western European countries (especially Germany). The dot.com bust at the turn of the century was a blow to investment by corporate and venture capital. The corporate scandals of Enron, WorldCom and others have made the businesses of profit making and share trading riskier. More recently, share price collapses around the world, terrorism (9/11), war (Afghanistan) and threat of war (Iraq, with attendant oil price worries) has dented the confidence of many sectors of capital. Tony Blair’s New Year speech to the nation was gloomy as he catalogued some of ‘challenges’ upcoming in 2003. Within the UK, many traditional areas for investment have been performing poorly. Domestic manufacturing has had a hard time for some years. Profit rates in UK manufacturing are historically low, at around 4 percent. While profit rates in services are currently at 15 percent [44]. These international and national trading and stock market uncertainties should be contrasted with the relatively cosy option of virusing state financed services for profits. The UK public sector rests on huge revenues that companies can tap into. The UK education budget approaches £60billon. State education contracts for the private sector in the UK are now worth £2.5billion annually; hence, there is plenty of room for this profit source to be expanded [45]. Corporate capital is interested in capturing an increasing stake of this education business. Taking on the World: UK Education and Training Businesses as Exporters The pressure for capital to invade the state education sector might be clear from the above account, but what is less clear is why the UK government is encouraging this. The positive government response to the business takeover of schools can be explained with reference to a number of factors. First, there is the need to keep public expenditure under control (based on the belief that private companies are more efficient). Secondly, New Labour’s belief that the private sector is more dynamic than publicly-run services means that it looks to private companies and private education providers to generate ‘innovation’ in state schools. Thirdly, there is always the hope that (eventually) the private sector can be persuaded to put in serious sums of money into the system. Finally, as George Monbiot has noted, ‘New Labour is mightily concerned that the private companies taking over schools and other public services can develop rapidly into export earners’ [46]. It is this more than anything else that explains New Labour’s yearning for greater business penetration of schools: to build up national capacity for generating export earnings from the UK’s fledgling education businesses. The fact that the government has a ‘preferred suppliers’ list of education services contractors fits well with this policy option [47]. In a symposium at the World Trade Organisation in Geneva in March 2002, the UK government presented a paper outlining the nation’s expertise in privatising public utilities and services [48]. The implication was that we have the consultants, the corporate lawyers and other advisers to smooth business takeovers and privatisations across the globe. These UK-based skills and competencies are up for sale in the international arena. A key area is consultancies and construction under PFI and Public-Private Partnerships (PPP). As George Monbiot has indicated, the know-how and experience that UK companies have built up in infrastructure projects, especially in hospitals and schools, can be exported around the world to the benefit of UK-based companies [49]. The British Consultants and Construction Bureau (BCCB) recently won a global “Partnership in Trading” award for promoting such schemes internationally. The award highlighted the ‘BCCB’s contribution to the opening up of new markets such as Kosovo, Serbia, Sierra Leone and now topically Afghanistan’ [50]. International Financial Services of London produced a report in December 2002 showing that ‘International interest in the UK’s private finance initiative and public-private partnerships is growing’ [51]. That education and training services are viewed as export earners specifically and directly can be seen from the work of the Education and Training Export Group (ETEG), which is running its web site through the British Council. The ETEG works closely with Trade Partners UK, which in turn is part of British Trade International; a government body responsible for helping UK companies secure overseas sales and investments. The Department for Education and Skills is the other key ETEG partner. The ETEG originated from the Education and Training Sector Group (ETSG) in the Department of Trade and Industry Overseas Projects Board that was set up by the Tories. The ESTG aimed ‘to maximise the profitable education and training export business won by Britain’ [52], and its successor organisation, the ETEG, shares these aims. The ETEG ran a conference on ‘Profit Through Education’ in 2000, and another one was held in 2002. The ETEG web site is fronted by an announcement that UK companies can ‘Profit Through Knowledge, Export Success Through Education’. The ETEG runs an online newsletter called Exporting Education. There is also a link to the Global Education and Training Information Service (GETIS) which has reports on the UK’s market priorities for education and training services. Trade Partners UK also runs a magazine, Overseas Trade that had an ‘Education and Training Supplement’ as part of the current (January 2003) issue. One article notes that UK education and training exports are worth £8billion a year to the UK economy, and urges UK education and training exporters to build on this [53]. The Knowledge Economy Nurturing exports in UK education and training services is an aspect of New Labour’s economic policy of developing a knowledge economy. This policy was announced formally in 1998 with the fourth Competitiveness White Paper, Our Competitive Future – Building the Knowledge Driven Economy. In the knowledge economy, knowledge, rather than tangible commodities, becomes the principal commodity form. Knowledge is also the main resource for generating value through commodity production. Although higher education is at the core of this strategy as far as education services are concerned, building up school services export capacity is also an element. Companies such as Nord Anglia, for example, currently sell schools services in the Ukraine and Russia. These developments are to be encouraged and expanded under New Labour’s knowledge economy policy. However, as Jonathan Rutherford argues, by subsuming education services under the imperatives of the knowledge economy, education as a public good is devalued [54]. Education becomes infected with the profit virus incrementally. International Trade Pressures Finally, the pressures for developing UK education businesses for indigenous and global markets are being intensified by international trade developments. World education expenditure by governments is over two trillion dollars [55]. Corporate capital is keen to establish and penetrate global education markets. It is being aided and abetted in this by the World Trade Organisation’s General Agreement on Trade in Services (GATS). The GATS seeks to open up 160 service sectors – including education – to international competition. It is developing trade rules to create a ‘level playing field’ for international services companies. The GATS process is progressive: trade liberalisation of services has no limits and once a sector is opened up to GATS disciplines the process is irreversible [56]. The UK (via the European Union) signed away its primary, secondary and higher education services in 1994 under the GATS. The EU commitment of these education services to GATS applies only to ‘privately funded education services’. However, as I have argued elsewhere, every time a private sector operator runs and finances services in UK schools (through outsourcing and PFI, for example) those services become internationally tradable commodities under GATS imperatives and rules [57]. A strengthened GATS comes into operation in 2005. Thus, there is some urgency to develop UK education services operators that can face intensified foreign competition in a more liberalised trading environment, and to ensure UK that companies are well placed to maximise export earnings. This explains New Labour’s frenzy to develop UK education enterprises: a more powerful post-2004 GATS regime raises the stakes and compresses the timetable. Internationally, the whole process aids the profit virus in schools and other education sectors to globalise. Conclusion: Signs of Resistance and Immunity Processes of the profit virus invading schools are being resisted, at a number of levels in the UK. First, at the local level, there are many campaigns around PFI and outsourcing that have been fought out and are currently being fought in schools and LEAs. Mainstream media report these rarely. The Campaign for State Education (CASE) and other web sites supporting principles of state education provide valuable news and information services on these struggles. Parents have fought alongside education activists and trade unions in some cases. Secondly, PFI is being questioned and fought in trade unions most affected by it. At the 2002 Trades Union Congress an anti-PFI motion was passed. Thirdly, teacher unions are resisting some of the ‘modernising’ reforms that would make the business takeover of schools ‘work’. Performance-related pay and the utilisation of classroom assistants as cost-cutting strategy are proving difficult areas for the government. The National Union of Teachers (NUT) passed a motion against the privatisation of schools at its 2000 Conference. The GATS is also beginning to spark significant concern and protest in the world of education. In the UK, the Association of Teachers and Lecturer (ATL) and the National Association of Teachers and Lecturers in Further and Higher Education (NATFHE) have passed anti-GATS resolutions. The Association of University Teachers (AUT) has produced a GATS “impact assessment” that highlights serious concerns regarding trade liberalisation in higher education. The NUT discussed the GATS at its 2002 Conference, and also wrote a submission to the Department of Trade and Industry’s Consultation on the GATS, indicating a numbers of reservations and criticisms. The World Conference of Teachers passed a resolution against the GATS in 2002. Students are also beginning to mount substantial campaigns against the GATS. Faz Velmi describes a 40,000-strong march in Cologne against the GATS on 14th September 2002. The march was a joint mobilisation between students and trade unions. Experiences in many European countries – increases in higher education fees, cuts in teaching hours and library provision, increases in rents and the increased business involvement in higher education – are radicalising students. In the process, the GATS is coming under the spotlight and its links with the business takeover of education becoming clearer. As Velmi notes, ‘This process is gathering speed across Europe, under governments of all political colours’ [58]. Critical reports on the GATS from the World Development Movement, People & Planet and the publication of Jim Grieshaber-Otto and Matthew Sanger’s groundbreaking book on schools and the GATS have fuelled the anti-GATS cause [59]. Increasing numbers of critical articles on the GATS in the education press and in popular political magazines such as Red Pepper have added to awareness of what it means for education. The recent Department of Trade and Industry consultation process on the GATS has uncovered and politicised the WTO agreement further still, giving anti-GATS forces new space to respond to the UK government on the issue. Finally, the business takeover of schools has received a number of bad omens in the last year. First, one of the leading education businesses in the United States, Edison Schools, has failed to deliver on key contracts in Philadelphia and is facing a federal investigation. Edison’s share price has collapsed. A recent report by the UK’s Audit Commission criticised PFI-built schools on quality and cost grounds. Thirdly, many construction companies involved in PFI have seen their share values fall as city analysts predict that profits from PFI may not be as great as expected in the long term. The share prices of some UK education outsourcing companies have also come under pressure recently. The life of the profit virus in schools seems uncertain. Its ability to thrive is likely to depend on many factors. First, the strength of the campaigns and effectiveness of the struggles against all its many strains will impact on its life force. Secondly, the ability of the UK government to come up with a legislative framework that nurtures the profit virus in schools is essential. By itself, Education Act 2002 may be insufficient to yield the numbers of schools, LEAs and LEA services up to education businesses that seem to be required. Thirdly, the deep restructuring of teachers’ pay and conditions is a prerequisite for developing effective models of profit-making delivery in outsourcing. Trade union resistance on these issues may slow the pace of the ‘modernisation’ in schools that education businesses are desperately seeking. Finally, the PFI is a continuing worry for those nurturing and developing the profit virus. Despite these signs, the picture is of a general advance in the business takeover of schools in England today. We also have a government that is desperately trying to make it ‘work’ and attempting to build a politics for its sustainability and health. Whilst there are antidotes, there are no everlasting cures. One feature of the profit virus is that in the social universe in which we live – the social universe of capital – it can never be totally eradicated. Our social universe continually spawns new forms of the profit virus. Schools beware! Notes and References [1] Dave Hill, New Labour and Education: Policy, Ideology and the Third Way, Tufnell Press: London 1999. Hill analyses forty-five New Labour policies for schools from 1997 to 1999. He concludes there is a bias in these towards either a continuation of the Conservative administration’s neo-liberal or neo-conservative policies, or an extension of these education policy trends. [2] Ken Jones, Education in Britain: 1944 to the Present, Polity Press: Cambridge 2003, pp130-135. [3] Jones, ibid. p.133. [4] Jones, ibid. p.166. [5] Geoff Whitty, Making Sense of Education Policy, Paul Chapman Publishing: London 2002, p.96. [6] Dexter Whitfield, ‘Private Finance Initiative: The Commodification and Marketisation of Education’, Education and Social Justice, Vol.1 No.2 (1999), p.3. [7] Whitfield, ibid. p.4. [8] Bernard Regan, Not for Sale: The case against the privatisation of education, Socialist Teachers Alliance: London 2001, p.28. [9] Ibid. [10] Ibid. p.29. [11] Warwick Mansell, ‘Local salary deals may herald end of national pay structure’, Times Educational Supplement, 20th September 2002, p.2. [12] Francis Beckett has demonstrated how leading UK education businesses (e.g. Nord Anglia) and from the US (e.g. Edison Schools) were in discussion with the New Labour government from early on about the best ways to facilitate the business penetration of schools in England. See Francis Beckett: ‘Uncle Sam wants your school’, New Statesman, 21st August 1998, pp16-17; and ‘Privatisation threatens more schools’, New Statesman, 15th November 1999, p.8. [13] Richard Hatcher, ‘Getting down to business: schooling in the globalised economy’, Education and Social Justice, Vol.3 No.2 (2002), pp45-59. Regan, ‘Not for Sale’, op. cit., and Bernard Regan, ‘Privatisation: a further threat to educational initiative and local government’, Forum for promoting comprehensive education, Vol.44 No.2 (2002), pp84-85. [14] Melian Mansfield, ‘Privatisation in Haringey’, Education and Social Justice, Vol.4 No.1 (2002), pp46-48. [15] Gwen Sanderson, ‘Education Services in Leeds: An Update after Privatisation’, Education and Social Justice, Vol.4 No.1 (2002), pp44-45 & 48. [16] Andy Robertson, ‘Flogging Hackney’, Red Pepper, November 2002, no.101, pp30-31 & 34. [17] From Glenn Rikowski, Schools and the GATS Enigma, A paper presented at the EPRU Education for Profit Seminar, Institute of Education, University of London, 27th November 2002, p.11. [18] Regan, ‘Not for Sale’, op. cit., p.21. [19] Warwick Mansell, Jon Slater and Philippa White, ‘Private building deal for every secondary school’, Times Educational Supplement, 4th October 2002, p.1. [20] Hatcher, op. cit., p.54. [21} Karen Thornton, ‘Fears grow over power of academy sponsors’, Times Educational Supplement, 23rd August 2002, p.4. [22] Department for Education and Skills, ‘Timms steps up radical education reform with 149 new specialist schools’, Press Notice 2002/0015, 5th February 2002, p.1, available from: http://www.dfes.gov.uk/pns/DisplayPN.cgi?pn_id=2002_0015 [23] See Department for Education and Skills, ‘Clarke gives the green light for all schools to become specialist’, Press Notice 2002/0228, 29th November 2002, available from: http://www.dfes.gov.uk/pns/DisplayPN.cgi?pn_id=2002_0228, and Jim Kelly, ‘Specialist schools set for radical expansion’, Financial Times, 29th November 2002, p.2. [24] For example, HSBC bank has sponsored some of the London Borough of Redbridge’s specialist schools and established ‘school banks’ to generate new customers. This ‘catch ‘em young’ policy is described by Victor Rikowski, ‘Future of Global Capitalism: millionaires ruling the millions’, Information for Social Change, Number 14, winter 2001/2002, pp17-18. Available from http://libr.org/ISC [25] Gautam Malkani, ‘BBC schools service to be under scrutiny’, Financial Times, 10th January 2003, p.5. [26] Department for Education and Skills, ‘Timms announces a new set of independent/state schools partnerships’, Press Notice 2002/0094, 7th May 2002, available from: http://www.dfes.gov.uk/DisplayPN.cgi?pn_id=2002_0094 [27] Jim Kelly, ‘Call for Eton to help run state ‘academies’’, Financial Times, 9th October 2002, p.2. [28] Liz Smith, ‘British Labour government orders private consultants into Yorkshire education authorities’, World Socialist Web Site, 7th March 2000, p.1, available from: http://www.wsws.org/articles/2000/mar2000/educ-mo7.shtml [29] Ibid. [30] Jon Slater and Warwick Mansell, ‘Private firms will advise on sixth-form closures’, Times Educational Supplement, 5th July 2002, p.2. [31] Rebecca Smithers, ‘£100m to run school pay system’, The Guardian, 21st January 2000, p.6. [32] Susannah Kirkman, ‘Parents’ fears trigger private tuition boom’, Times Educational Supplement, 19th October 2001, p.1. [33] James Tooley, ‘In praise of the profit motive’, Guardian Education, 23rd November 1999, p.2. [34] National Union of Teachers, DfES Pilot: New Models of Delivering LEA Services, 30th July 2002. [35] Francis Beckett and Jo Hallgarten (Summer Debate), ‘Should schools set up companies?’ Times Educational Supplement, 23rd August 2002, p.13. [36] Jim Kelly, ‘Counties poised to give companies schools role’, Financial Times, 15th January 2002, p.5. [37] Susannah Kirkman, ‘It pays to be greedy’, Times Educational Supplement, 28th September 2001, p.28. [38] Jim Kelly, ‘Business people may run state school federations’, Financial Times, 19th September 2002, p.4. [39] These points have been summarised from Glenn Rikowski, ‘Schools: The Great GATS Buy’, Information for Social Change, Number 16, winter 2002/2003, p.54. Also available online at: http://libr.org/ISC [40] Jim Kelly, ‘More schools given control over pay and curriculum’, Financial Times, 12th July 2002, p.3. [41] Jim Kelly, ‘Clarke promises greater freedom for every school’, Financial Times, 12th November 2002, p.4. [42] Cherry Canovan, ‘Top adviser gung-ho about privatisation’, Times Educational Supplement, 8th November 2002, p.4. [43] Jim Kelly, ‘Warning to councils that hinder help for schools’, Financial Times, 11th April 2002, p.6. [44] Glenn Rikowski, The Business Takeover of Education, a paper presented at the ATTAC London Conference, ‘Still At Your Service? GATS, Public Services and Privatisation in the UK’, London School of Economics, 16th November 2002. [45] Ibid. [46] Glenn Rikowski, ‘Transfiguration: Globalisation, the World Trade Organisation and the National Faces of the GATS’, Information for Social Change, Number 14, winter 2001/2002, pp8-17 (Available from http://libr.org/ISC). See also, George Monbiot, ‘Schooling up for sale’, The Guardian, 8th January 2002, p.15. [47] Bernard Regan provides the DfEE (now DfES) approved list of education service contractors, in ‘Not for Sale’, op. cit., p.50. [48] Her Majesty’s Treasury, ‘Implementing Privatisation: The UK Experience’, Presented at the Services Symposium, 14 – 15 March 2002, at the World Trade Organisation. Available from http://www.hm-treasury.gov.uk/mediastore/otherfiles.pdf [49] George Monbiot, ‘Do as we say, not as we do’, The Guardian, 29th October 2002, p.15. [50] See British Consultants and Construction Bureau, ‘BCCB wins International Business Award 2002’, at http://www.bcb.co.uk/news/ [51] Andrea Felsted, ‘Rising global interest in Britain’s PPPs’, Financial Times, 18th December 2002, p.2. [52] Education and Training Sector Group, ‘The Working of the Group’, Exporting Education, Issue 6, Autumn/Winter 1995, p.2, http://www.britishcouncil.org/eteg [53] Trade Partners UK, ‘Developing a strategic approach’, Education and Training Supplement, Overseas Trade, January 2003, at http://www.overseas-trade.co.uk [54] Jonathan Rutherford, ‘The knowledge economy vs. the learning society’, Information for Social Change, Number 14, winter 2001/2002, pp77-78. Also available from http://libr.org/ISC [55] Cynthia Guttman, ‘Education: a market of 2,000 billion dollars’, The Courier, UNESCO, November 2000, at: http://www.unesco.org/courier/2000_11/fr/doss0.htm [56] For more on the GATS in general and how the agreement affects education in particular, see: Jim Grieshaber-Otto and Matthew Sanger, Perilous Lessons: The Impact of the WTO Services Agreement on Canada’s Public Education System, Canadian Centre for Policy Alternatives: Ottawa 2002. [57] See Rikowski, ‘Schools: The Great GATS Buy’, op. cit. [58] Faz Velmi, ’40,000 march in Cologne: Europe-wide fightback on education!’, Educationet.org, 2002, at http://educationet.org/z0227.html [59] World Development Movement, ‘Serving (Up) the Nation: A guide to the UK’s commitments under the WTO General Agreement on Trade in Services’, WDM: London 2002; Steve Kelk and Jess Worth, ‘Trading it All Away: How GATS threatens UK Higher Education’, Oxford: People & Planet 2002; Grieshaber-Otto and Sanger op. cit. Print Friendly - Print Friendly with links |
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