Should schools set up companies?

Teachers may have an instinctive distrust of commercial practices, but might they not bring benefits to classrooms?

A HEAD of department buys an online curriculum package, with face-to-face support, from a school with a similar intake. A school with "serious weaknesses" buys in consultancy from a self-improvement service owned by several local schools.

A rural school purchases the franchise to run a post office threatened with extinction. A learning mentor buys cheaper childcare from a school-based creche, and increases her hours.

These practices are already emerging, but a clause in the recent Education Act, allowing schools to create, invest in or take over limited companies to provide education services, should give licence to and stimulate the growth of such transactions.

This development should be supported. First, the massive micro-economy of the education world is like a leaky bucket - money flows in and straight out again. If just a small proportion of the additional billions promised by the Treasury were recycled around schools, this could make a massive difference to education funding.

Second, the emergence of a school-to-school market could prove a terrific professional development tool. Schools have always been notoriously poor at sharing best practice. The selling of such practice may appear to go against the spirit of teacher collegiality, but could actually rebuild collaboration, especially if schools establish joint ventures to sell or procure services.

Third, money sets you free. For all the talk of "earned autonomy", the best way to liberate yourself from central control is to find alternative, additional income streams. Generating revenue can give schools the cash to be creative, assertive and subversive.

True, successful schools can get richer, but profits will be reinvested. Education policy should never be designed to prevent good schools from flourishing, unless such success harms other schools.

The way to address inequities is through fairer funding and admissions policies, not through stifling enterprise. The development of a school-to-school market may only be ethical at a time when significant extra spending is being committed to schools. Like other fundraising, schools should never be expected to rely on such income to carry out their core responsibilities.

Finally, there are fears of the market ethos undermining educational and social values. Yet, school companies can be deliberately constituted to enhance such values.

As well as being not for profit, schools could establish mutuals, at arms-length from political control, but not controlled by private external shareholders. They may, however, involve greater participation and control from parents and pupils. Indeed, they may prove just the start of a process that reconstitutes public services as self-governing public interest companies - free from the restless (and generally centralising) whims of transient education officials.

The devil will be in the as-yet-unpublished details, the regulations that will outline borrowing requirements, the supervisory role of the local authority, and how school budgets might be ring-fenced from company failures.

If school companies are to be genuinely innovative, some failures are inevitable. There is a case for schools being unable to spend any of their delegated budgets on these ventures. Instead, there could be a pump-priming role for the Department for Education and Skills's new innovation unit.

We should not fear the growth of a thriving school-to-school market but welcome the ways in which it could set schools free from the blanket weed of Whitehall control.

Joe Hallgarten is senior education research fellow at the Institute for Public Policy Research. For information about IPPR's work on the school-to-school market, email j.hallgarten

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