Education Notes: Gove may have gone but the market marches on

New Education Minister Morgan is qualified to oversee privatisation as a corporate lawyer

The replacement of sacked Education Minister Michael Gove with Nicky Morgan, Education Secretary and Minister for women and equalities means more of the same – a constant stream of educational ‘reforms’. The process of transferring state education to the private sector is the real agenda being carried out behind a smokescreen of teaching and learning initiatives. The banking and private equity sectors have been waiting on the sidelines for the opportunity to take over state provision and buy up the education sector. Morgan is well qualified to oversee this buy-out being a corporate lawyer.

Education as an emerging market

In the past ten years education has become Britain’s seventh largest export. This now extends beyond further and higher education to buying schools and institutions primarily in the underdeveloped economies. Now the vulture funds are turning to the home market. The ‘free’ schools and academies, which now account for over 50% of the total, are the target of corporate buy-up; secondary markets in management, curriculum design and educational publications will be created.

Investment opportunities

The sustained attack on state education by Labour and ConDem governments deliberately undermines local authority (LA) control of schools. Duties of care and the statutory rights of children are under threat; even the right to a school place for every child is no longer guaranteed. A recent report from Catalyst Corporate Finance confirms that there is chaos in education provision as it is auctioned off and as the state surrenders its responsibilities to market forces.

The report describes this as a ‘golden moment’ for private equity to buy into educational provision because deregulation of the state system is government policy. It says:

‘The Coalition government’s abolition of procurement “quangos”, LA budget cuts and the erosion of control over school decision-making is influencing how businesses are selling to schools and attracting new strategic players looking to exploit this much larger and more fragmented market.’

The competitive climate generated by government policies offers market opportunities:

‘As competition in schools and university places rises, there has been a corresponding rise in school and parent spending on services. Tutoring services alone are worth over £1bn per annum in the UK and we are seeing some brands gaining a foothold in this sector such as Explore Learning, backed by Graphite Capital. The company has grown its turnover from £8.6m in 2009 to £19.7m in 2012 and is seeking to expand in the UK and potentially overseas.’

Another area of future market opportunities comes with the rise of digital learning:

‘The e-learning sector is the fastest growing market in education. Worth an estimated $91bn globally, it is forecast to grow at an annual rate of 23% up to 2017. Both strategic corporates and private equity investors have recognised the potential in this sector, evidenced by Capita’s recent acquisition of Creating Careers ...’

Government collusion

This accelerating financial interest in the education market has been made possible with the collusion of the Department of Business, Education and Skills. Every government cut becomes a potential investment opportunity for the private sector, every change in legislation delivers rights to the private sector, as Catalyst Corporate Finance notes, ‘Caps to Further Education funding and the sector’s reclassification to the private sector mean more institutions are reassessing their operating models. In the independent sixth form college market, private equity is developing a scalable offering by using established private colleges to set up new schools, expand into primary and secondary provision and target the international market. An example of this is Sovereign Capital’s acquisition of three London-based independent sixth form colleges, the Astrum Education Group.’

Does it matter?

Does it really matter that services from pre-school care to postgraduate studies, are becoming commodified? After all, educational provision in capitalist Britain has always been under-resourced and rationed out on the basis of class and race. It has also been reactionary, dull and ineffective historically, never achieving more than 75% functional literacy. Generations of pupils have no happy memories of school. When splendid new academy buildings designed by world renowned architects are on offer, or cosy little ‘free’ schools run by loving parents are opened, does this not mean that the private sector (or public/private finance) can offer better opportunities than the state? But it does matter, because the success of private investment is dependent on the continued expansion of capital and there are limits to the underwriting of state finances for businesses. When education companies go bust, the services go bust. What is lost is not just a concern for shareholders but impacts on the very conditions of life for the working class.

‘Easier to start a free school than a fish and chip shop’

These words of one teaching union leader indicate the extent of Sweden’s for-profit friskola disaster. The then centre-right governing party brought the private sector into schools, hospitals and care homes. The results are disastrous. In the words of The Economist, ‘The streets of Stockholm are awash with the blood of sacred cows’. Sweden has plummeted down international educational rankings. Last year JB Education, owned by private equity company Axcel, declared itself bankrupt, causing panic among its 10,000 students. The Halsans company chain of pre-schools cut its food budget to $1.30 per child per day and toddlers were given only crispbread and water.

Socialism is a necessity

Social relations under capitalism are unstable and generate and perpetuate inequalities. Private ownership of the means of production, distribution and exchange cannot deliver continued progress and rising standards of living for all because it is a crisis- ridden system. The investment funds, cartels and private equity banks are ‘instruments of anarchy’. In the words of Rosa Luxemburg, ‘they encourage the further development of the internal contradictions of capitalism. They accelerate the coming of a general decline of capitalism’ (Reform or Revolution). Only socialism offers the possibility of a future for us all.

Susan Davidson

Fight Racism! Fight Imperialism! 241 October/November 2014


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