Why is Britain, with one of the most regulated school systems in the world, taking such an interest in Denmark, which gives its schools, teachers and pupils a degree of freedom which, this side of the North Sea, would surely be unthinkable?

The answer has little to do with Denmark’s liberal education system and everything to do with its private schools which, unlike ours, are largely funded by the taxpayer. The interest follows Tony Blair’s decision to introduce new legislation which, for the first time, will open up the possibility of using the private sector to deliver publicly-funded education in schools.

The move has prompted a flurry of activity from politicians and think-tanks, and from companies hoping to take advantage of this potential new market.

Last month, the shadow education spokesman Damien Green returned from a fact-finding visit and declared that parents, teachers and voluntary bodies dissatisfied with the state system should be able to set up schools of their own and, as in Denmark, receive state funding to run them.

Two recent reports also focus on the lessons to be learned from the Danes and other European countries. One comes from the free-market Adam Smith Institute and examines the Dutch and Danish school systems, both of which have a long tradition of publicly-funded, privately-run education.

According to the institute, both these countries already operate the “customer-focused” services that Blair hopes to achieve, harnessing public finance to independent provision run by parents, teachers, churches and other non-profit-making bodies.

The second report comes from CfBT, a non-profit-making company well-placed to benefit from Blair’s plans. This concludes that models for publicly-funded private education in Belgium, Denmark, Holland and Sweden show such a system is feasible in England.

It singles out the Danish model on two grounds. First, its private schools are not predominantly religion-based. Second, it has - allegedly at least - managed to avoid the major risks attributed to using public money to support such schools. It lists these risks as creaming off the middle-classes, sub-standard teaching and fraud.

What is the Danish school system really like? Does it provide the sort of competitive marketplace that the free-marketeers would like? Or does it offer the more inclusive, democratic model apparently favoured by CfBT?

Neither model really explains the nature of a system that, for 150 years, has been founded on liberal education values and the right to “free” schooling.

These beliefs are rooted in the country’s struggle for religious and political freedom that culminated in the mid-19th century with the reform of the monarchy and establishment of democracy. A key figure at this time was Nikolai Grundtvig, a clergyman, educational reformer and politician who laid the foundations for Denmark’s modern education system.

Under the Danish constitution, written (with Grundtvig’s help) in 1849, anyone has the right to establish a private friskole, or “free school”. Provided they have a minimum of 28 pupils and agree to be non-profit-making, they are also entitled to state funding.

The average subsidy per pupil is 75 per cent of the cost of education in a local authority school, or folkeskole. The rest is raised by the school, with parents typically paying around pound;750 a year per child’s education.

Over a century-and-a-half, a wide variety of free schools has evolved, each with a particular philosophical, religious, educational or political outlook. They include a large number of mainly small, rural Grundtvigian schools, Rudolph Steiner schools, academically-oriented schools, German-language schools and, more recently, immigrant schools catering mainly for Denmark’s growing Muslim minority.

In the past 20 years, the proportion of schools in the private sector has grown from 8 to 12 per cent, far outstripping the growth of Britain’s independent sector which remains at about 7 per cent. Though most of the growth took place in the 1980s, the trend continues in Copenhagen and other major cities, fuelled by worries about education standards, indiscipline and immigration from Turkey, Pakistan, Somalia and the Middle East.

This flight from the public sector certainly reflects the customer-focused nature of the Danish system identified by the Adam Smith Institute. It also undermines, to some extent, CfBT’s claim that free schools do not “cream off” middle-class pupils, who account for most of the growth.

The attraction to parents is underpinned by the degree of autonomy given to free schools, which, unlike public schools, can choose or reject children at will. On average, free schools are smaller and tend to be more traditional. They admit fewer children with special needs and fewer from ethnic minorities.

But compared to Britain’s independent schools, free schools are far less exclusive.

According to Lejf Moos, associate professor at the Danish University of Education in Copenhagen: “Pretty ordinary people choose free schools. Up to 85 per cent of the funding comes from the state. Very often the smaller schools cut down on cleaning and parents help out to keep fees low.”

In contrast with the UK, Denmark’s public and private sectors have far more in common than divides them, and teachers move between the two sectors far more readily than in Britain. The explanation lies in the values of Grundtvig, whose influence is felt in public schools almost as much as the free schools he inspired. Indeed, his influence runs right through Danish social and political life.

Nowhere is that felt more closely than in the largest group of free schools, which describe themselves as Grundtvigian. According to Mogens Krabek, head of Bording Friskole in Copenhagen - which has 360 pupils between six and 16 on its register - the emphasis in these schools is on the social, personal and cultural development of individuals, rather than on subject knowledge and skills. Teaching core values of self-reliance, respect for community and democracy are particularly important, he says.

“I would be enormously disappointed if our pupils left school as egoists. I want them to become socially-adjusted human beings who commit themselves to communities.”

The emphasis on child-centred learning and pastoral support that is the norm in Grundtvigian schools also characterises the public sector. While free schools have few restrictions on what they teach or how they teach it, they are expected to “measure up” to the educational standards provided in the public schools. Equally, public schools have traditionally had to adjust to compete with the private sector.

In the past 20 years competition from the private sector has increased and, as in other countries, the Danish government has responded by giving public schools greater autonomy. Unlike in Britain, however, where the focus has been on academic results and the 3Rs, competition has tended to confirm support for Grundtvig and the value of a liberal education.

But not even Danish schools are immune to the pressures of globalisation. Ten years ago, the view that Denmark’s education system was the best in the world was shattered by the findings of an international literacy study, which put the country near the bottom, alongside Trinidad and Tobago.

This led to an increased emphasis on testing and measurement which culminated last December in the new centre-right coalition government, forcing all schools for the first time to publish the results of 9th grade tests (16-year-olds).

Yet this is a far cry from the diet of compulsory testing which is the hallmark of the English system. Far less privileged and socially selective, Denmark’s private schools look set to reinforce the benefits of a liberal education rather than the academic hot-house. This could be the key lesson to be learned by British policy-makers.

One other important message concerns Denmark’s liberal funding system. In recent years, confidence in the system has been knocked by a financial scandal involving a left-wing cult, Tvind, which used the system to establish around 30 private schools and is accused of siphoning off millions of pounds of public money to finance commercial ventures including, bizarrely, a South American banana plantation.

The funding of immigrant schools has become a hot political issue, particularly since the terrorist attacks in the United States last September. Doubts are less to do with financial probity, however, than the quality of teaching and the schools’ commitment to democracy and Danish values.

As a result, a new law has been passed which says that, to qualify for funding, schools must agree to “prepare pupils for living in a society with freedom and democracy”.

These concerns will serve as a warning to British ministers as they seek to establish a regulatory framework for publicly-funded, privately-managed schools. Whether they will be impressed by Denmark’s liberal education system is quite another matter.

DENMARK’S SYSTEM AT A GLANCE

Early years: Compulsory education does not start until age seven, but Danes enjoy unrivalled access to state-funded, pre-school education and childcare. Parents can send their offspring to day nurseries from the age of six months until they are three and to kindergarten from three until six.

Primary and lower secondary: Although formal education does not begin until seven, 98 per cent of Danish children start at six, spending their first year in a pre-school class. They then do nine years of compulsory education, usually keeping the same class teacher through the primary years and often beyond. Most attend public schools or folkeskoler, run by the local authority, though one in eight attend publicly-funded private schools, called friskoler. Pupils can leave at 16, but can stay on for a year of specialised study.

Examinations and testing: Testing in Danish schools is common but is used to check pupils’ progress, and results are rarely published. Most 16-year-olds take a school-leaving exam at the end of the 9th grade (in Danish, maths and English, physicschemistry, plus German or French) with the option of sitting an advanced leaving exam in the 10th grade. Sitting the exam is optional, but in future schools will publish results.

Class sizes and conditions: The average number of pupils per class is 18 in local authority schools and 15 in private schools. Pupil-teacher ratios are even lower, with local authority schools enjoying ratios of 10:1 and private schools 11:1. A typical teacher works a 42-hour week during term-time and works for 200 days a year. This is likely to include teaching 23 lessons a week, 40 weeks a year.

Post-compulsory education: More than nine out of 10 pupils stay in education or training after 16. Sixty per cent take job-related courses, lasting between one and four years at privately-run commercial and technical colleges, which are state-funded. One in three pursues academic or general vocational courses, lasting two or three years, in public or private gymnasiums (upper secondary school) or in specialist business or technology colleges. Most of these (70 per cent) go on to higher education.

Cost: Denmark invests more public funds in education than any other country in the world. Comparative figures (OECD, 1998) show that it spent 6.8 per cent of its gross domestic product on education compared with Britain (4.7 per cent) and an international average for developed countries of 5 per cent.