Policy - Market forces: good in theory but not in practice

'Distorted' competition is not raising standards, study claims

Strong competition between schools should encourage high performers to expand and poor performers to improve or risk being closed down, or so the theory goes. But new research has shown that the UK government's attempt to implement a market-led system is damaging the education of thousands of students.

A lack of school choice in many areas, limited expansion of good schools, too many "coasting" schools and poor strategic oversight by the Department for Education has impeded the impact of competition on performance, according to the study by the Institute for Government, an independent charity that works with all main political parties.

"We found evidence of some schools persistently offering poor-quality education without consequences and, conversely, good schools closing down due to the effects of distorted competition," the report said. "This analysis suggests that further change is required before (the Department for Education) can ensure that the market it has created is likely to deliver the best possible outcomes for taxpayers and students."

Governments around the world are turning to market forces in a bid to raise school standards. The US, in particular, has tried to boost competition by introducing charter schools. But a major study released by Stanford University last month showed a very mixed picture of the independently run state schools' success in increasing performance across the board.

The Institute for Government's report backed the principle of competition between schools, but added that action was needed in some areas, such as closing poorly performing schools, addressing uneven funding and cracking down on schools "gaming" their admissions or results.

Sam Sims, a researcher at the institute, said: "Recent reforms have injected significant additional competitive pressure into the schools system. This has potential to raise standards in schools, but our report shows there is still work to be done to ensure that choice and competition are harnessed in the interest of pupils.

"The (department) should now focus on providing public information on the performance of school sponsors and ensuring that competition does not become overly diluted in particular areas," he added.

But headteachers' leaders have questioned whether competition can increase performance among schools at all. Russell Hobby, general secretary of the NAHT union, said that market forces in education tend to widen inequality, rather than narrow it.

"The ability to choose a school is not evenly distributed, and by that I don't just mean some areas are served by only one school," Mr Hobby said. "Parents may not be able to exercise choice because they can't afford to move to a certain area, or they may not even care - it might not be high on their priorities.

"There are also different levels of markets in education, such as a market for teachers. That is a very free market, but schools that have more funding will be able to attract better teachers, so it is not a level playing field."

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