June 08, 2004
Madsen Pirie says let's have RyanEd

I saw this article in the Telegraph several days ago, but then failed to find it at the Telegraph site. Now I have found it, whether because it has only just appeared, or because it was there all along and I only just found where, I do not know.

Anyway, it is very well worth reading. Madsen Pirie has a different take to the usual right wing buffer position on the private sector, reported on in the Telegraph piece that his piece links to:

Independent schools are too expensive for most people; they provide a service that is bought by only seven per cent of the population. Yet polls have shown repeatedly that most of us would like to send our children to an independent school if only we could afford it.

One of the reasons for their high cost derives, paradoxically, from their charitable status. If they were profit-making companies that distributed their profits to shareholders, there would be incentives for them to keep costs down and operate efficiently. They would try to sustain dividends and share values by seeking savings.

The schools' charitable status has the perverse effect of encouraging them to plough any surpluses into yet more capital investment in facilities and equipment. Money that a private firm would distribute is instead put towards a new library, sports hall or information technology centre.

These additional facilities can be justified as extra selling points. They make the school more attractive to potential customers. The glossy brochure highlights the extra amenities as a competitive advantage, giving the school an edge over its rivals. A school that fails to add a modern science laboratory or an IT centre risks losing potential pupils to those that do. One headteacher recently compared this to an arms race in which schools spend on ever more expensive facilities simply to stay abreast of their rivals.

Let's be clear that it is not the idea of charity as such which is doing the damage here, but the concept of Charitable Status, and what it forbids you to do.

Concluding two paragraphs:

Several educational entrepreneurs are now talking in terms of new private schools that would charge fees not very different from the costs of a state education. The Conservative Party's "school passports" would allow parents to choose such schools as alternatives to their local state schools. These schools would come without the centuries of tradition or the luxurious facilities, but they would offer a high quality education at an affordable price. There could be chains of successful schools reproducing the winning formula and management methods that bring results.

The future of private education may well be one of diversity of products and prices. There will still be luxury private schools at the top end of the market, as there is still British Airways first class travel. But just as easyJet and Ryanair have brought the joys of flight to many more people than could afford it before, so it may be time for new types of fee-paying school to spread the benefits of private education to a wider public.

Presumably Madsen has this kind of thing in mind.

Posted by Brian Micklethwait at 04:50 PM
Category: The private sector