Dexter Whitfield: Articles of faith

Dexter Whitfield: Articles of faith

The marketisation of education is central to New Labour’s plans for its third term in office. Dexter Whitfield examines the beliefs that underpin it and what the new role of the private market will mean in practice

Labour’s education plans are rooted in a panoply of neoliberal articles of faith. They are based in the beliefs that competition drives down costs and limits ‘producer power’ (particularly that of the trade unions); that the private sector is more efficient than the public sector; that individual choice in public services will improve the quality of services; that local authorities and public bodies should be restricted to a commissioning role in order to create the space for the private sector to develop more innovative ways of delivering services; that the middle classes need choice or they will desert public services (reducing them to residual services for the disadvantaged); and that choice will reduce inequality because market forces will provide a more effective equalising mechanism than political voice.

Choice is the mantra of New Labour’s modernisation agenda. It requires schools, like hospitals and other public services, to compete against each other. Money will follow the chosen placement of pupils (or patients or other ‘customers’), forcing a separation between client and contractor, and establishing a ‘procurement culture’ in which private and voluntary sector providers bid to take over service delivery. New Labour’s version of choice also includes vouchers – for instance for childcare – with which users may shop around. It erodes the potential for collective responsibility and solidarity between individuals in favour of a competitive individualism. It pitches public service workers against users and substitutes commercial values for a public service ethos.

The belief is that choice will drive providers to improve and invest in services. The threat of going out of business and ultimate closure is deemed a more effective spur to improving services than mechanisms of democratic accountability and innovations in public management.

The neoliberal agenda and education

The broader neoliberal agenda to privatise public services at national, European and global levels has particular consequences for education. Schools will become ‘stand-alone’ organisations – effectively businesses – employing their own staff, owning their own buildings and playing fields, procuring their own goods and services, and on the basis of all this competing for pupils and administering admissions. The education white paper needs to be seen in the context of this wider picture – it is the government’s way of introducing the market to education in Britain.

Wider neoliberal developments have already favoured the entrance of private financing into UK education. The deregulation of financial markets has helped foreign banks to finance private finance initiative (PFI) projects in Britain and attract foreign firms such as Hochtief (Germany), Skanska (Sweden) and Ferrovial (Spain) into PFI schools. Deregulation encourages British investment, including pension funds, in public-private partnerships (PPPs) and privatisation overseas. Since globalisation is considered a benign force, the increased movement of work to foreign companies is treated as ‘inevitable’.

In the cause of neoliberalism we are in fact seeing a reconfiguration of the state. Its role in service provision is reduced to funding and commissioning. The destiny for local education authorities accordingly is to fund and commission education services in their areas.

Public policy is being increasingly centralised, despite the claims made for localism, self-governing organisations, decentralisation and partnerships. It also means democratic accountability shrinks as transnational companies and consultants gain market share and a bigger role in public policy making.

Markets

The process of creating markets has five parts. The first commodifies or commercialises services so that they can be specified in a contract. The second part requires the restructuring of work and jobs, followed by the reorganising of government to allow market mechanisms to be introduced. In addition, parents and pupils are treated as consumers; responsibility and control over public assets is devolved to unelected bodies; and privately controlled companies are established within public bodies. Finally, business interests are allowed a more influential role in the public policy making process, in addition to new markets for private capital.

Markets require competition between providers. Within education this means the financial restructuring of schools to allow public money to follow pupils. Thus, a successful school (in the sense of attracting the parents of a large number of children) gets a lot of money and those that don’t attract so many parents get less. Success and failure in these essentially market terms are continually reinforced, with no organisation having an overview of educational need across a city or region or the clout to do anything about it. Social need is irrelevant to provision.

Markets also require that private companies and voluntary organisations are able to enter and leave at low cost. They require risk and reward (profit) for service providers and a regulatory framework that does not deter them. Most importantly, markets require excess supply over demand, so that there is ‘spare capacity’ to allow market forces to operate – for example, the closure of poor schools and expansion of popular ones.

A further requirement of a market system is the need for special skills in handling market information. In reality, access to this information (through available time, experience, knowledge and negotiating skills) will vary significantly. An expensive layer of expert brokers and agents will arise – as has happened with social care – to advise the non-expert.

Education may continue to be ‘free at the point of use’ yet have every attribute of a market – except a traditional price mechanism. In theory, education could remain ‘free’ but be provided entirely by the private sector.

The real cost of marketisation

Marketisation is expensive. Choice and competition in education will incur one-off estimated costs of £2.2 billion for establishing self-managing schools, trusts, academies and local education partnerships. There is an additional estimated annual cost of £550 million for increasing school capacity (to create a surplus of places), more dispersed procurement policies, competitions for new schools and the extra cost of PFI projects. Although advocates of marketisation claim efficiency savings, research shows a negative balance once all public sector costs are taken into account.

Market failure

Markets fail to varying degrees for varying reasons. Private contractors fail to deliver the required standard of service; they abuse monopoly power; they foster unequal distribution or access to information. Private firms also resort to techniques to maximise profits that may have nothing to do with the quality of services. These range from exploiting contract niceties; maximising charges where there is a high demand for, or monopoly control over, services; ignoring service failures; and – within education – avoiding involvement with, or getting rid of, difficult or resource-intensive students.

Building Schools for the Future (BSF)

Building Schools for the Future (BSF) is the government’s new national PFI programme to renew the secondary school infrastructure over the next 15 years. Under BSF, a local education partnership (LEP), 80 per cent-controlled by the private sector, with the local authority and Partnership for Schools, (a new education department quango) each having a 10 per cent stake, will be at the core of secondary education. The LEPs will design, build, finance and operate schools, using a mix of public and private investment.

But BSF is not just about the provision of new schools. Local education authorities will have to review their educational vision, developing a strategy for educational provision that integrates a building programme with service delivery, a new ICT infrastructure, teaching, school management and community use. BSF funding has already been made dependent on the inclusion of at least one academy in each local authority area. The LEPs will not only manage educational buildings and land, but also provide support services and school transport.

In this way, New Labour’s marketisation comes from two directions: the private sector dominated LEPs and the business-sponsored trust schools. If the idea of trust schools gets knocked back, the marketisation will continue through LEPs. The government is also almost certain to provide financial inducements if the take-up of trust status is low.

As BSF spreads across the secondary education system, LEPs will have a commercial interest to provide additional services to schools. BSF consortia are already offering to assist schools to transfer to trust status, which would lock them into LEP-provided services – thereby cementing the role of LEPs as the prime service providers in place of the education authority.

The marketisation process is complex and far-reaching, with implications across the entire range of public services. Resistance will only succeed if it challenges the very principle of applying market forces to services whose whole rationale is the use of public money to meet social need in a democratically accountable and responsive way.

Dexter Whitfield’s is director of the Centre for Public Services (www.centre.public.org.uk). His latest book is Modernisation by Marketisation: how the commissioning, choice, competition and contestability agenda threatened public services – the lessons for Europe (Spokesman Books, 2006).

Red Pepper, February 2006