Free schools lead to a decline in standards among nearby high-performing schools, but boost attainment among their poorest-performing neighbours, research shows.

The study, published by the right-leaning thinktank Policy Exchange, claims that competition leads to “substantial” gains at both primary and secondary level, and argues that the policy is most effective in areas where there are surplus school places.

The controversial paper also says the opening of free schools should not be limited to parts of the country that are facing the greatest pressure on school places.

It comes on the day that prime minister David Cameron is expected to announce that a Conservative government would open 500 new free schools by 2020, creating an extra 270,000 new places.

Mr Cameron yesterday announced the final wave of free schools before the general election, with 49 new schools set to open.

Researchers compared the percentage of pupils securing the government’s benchmark in each of the 171 open primary and secondary free schools to the three geographically closest schools within their local authority.

The analysis claims the “competitive effect” created by a free school leads to “improved academic standards in nearby underperforming schools”.

And it adds that competition leads to “bigger gains in higher poverty schools” and schools with empty places.

But the report goes on to state that the highest-performing schools are dragged down by the creation of a free school nearby.

“When primary free schools are opened in areas of educational need, schools around them make substantially more progress than the national average,” it says. “Conversely, higher-performing schools make less progress and the very highest drop back.”

It continues to state that lower-performing schools make more progress “than we might otherwise expect” when a free school opens nearby.

“Conversely, the presence of a free school appears to show a decline in the highest-performing schools against what we see nationally when a free school does not open.”

Jonathan Simons, head of education at Policy Exchange, said the evidence “clearly shows” free schools drive up standards of nearby schools in the local community.

“Restricting new free schools solely to areas of basic need will deprive pupils - especially in some of the poorest-performing schools - from achieving better results.

“Ideology must not stand in the way of providing the best possible education system for our children.”

The report recommends that the government should give free schools first priority when it comes to handing over public sector land if it is in an area of “educational underperformance”.

Existing free schools and academies who want to set up more new schools in such areas should be given “expansion grants”, it adds.

The paper was heavily criticised by the NUT, however, which said it “could not accept” its findings. 

“The samples on which the authors base their recommendations are tiny, as they admit in the report, and can in no way be considered statistically robust,” said Kevin Courtney, the union’s deputy general secretary.

“Despite the spurious claims that free schools raise performance among lower-performing schools that are closest to them, the authors are forced to concede that, ‘higher-performing schools make less progress and the very highest drop back’.”

Related stories: