Free Schools - Sweden vows to clamp down on for-profit providers

30th August 2013 at 01:00
Regulation of free-school system will undergo 'radical change'

Sweden's education minister has announced plans to "radically change" the country's regulation of its free-school sector to make it tougher for short-term private equity investors to buy and run schools.

The move comes after one of Sweden's biggest free-school chains collapsed earlier this year, prompting a scramble to find new owners and leaving around 10,000 students in limbo.

Sweden has been one of the pioneers of state-funded schools being run for profit - a model that has attracted intense interest from countries around the world. Free-market campaigners in England have urged education secretary Michael Gove to adopt a similar system.

Jan Bjorklund, Sweden's education minister, criticised the short-term profit motive behind some free-school operators.

"Often the whole idea is to go in and make an operation more profitable in the short-term and then sell it on for a huge profit," he said earlier this month. "Companies based on the business model will be ruled out."

The announcement follows the bankruptcy in June of JB Education, which had been owned by Danish private equity investment company Axcel.

"We had a venture capital company that didn't know much about education taking over Swedish schools," Mr Bjorklund said. "They thought they were going to make big money, discovered it wasn't easy, got tired quickly and quit. In my opinion, that sort of behaviour is totally unacceptable. I don't want to see that happen again in Sweden where we have an owner that is so short-sighted."

In the coming parliamentary session, the government plans to introduce a bill that will require a tougher review of prospective operators before they are allowed to take over schools, and institute an "education guarantee", which will give all students who have started an education programme the right to finish it even if their school shuts down.

But Mr Bjorklund gave few details as to how either measure would be designed and implemented, prompting criticism from Anders Hultin, the former chief executive of JB, who said the plans were opportunistic and unworkable.

"It's a typical pre-election year statement," Mr Hultin said. "They talked about a 10-year investment horizon or something like that, and it's really very difficult to understand how that would work."

He said imposing a fixed time frame for investments would drive away potential investors.

"I can imagine if you had that sort of regulation, you would drive the price for this kind of business upwards, and there would be a problem if you didn't have a working mechanism for transferring schools that were not well-managed to other ones," Mr Hultin said.

Mr Hultin, who has now launched his own chain, Free Educational Agencies, from six of JB's schools, said the bankruptcy of JB showed the system was working as it should.

"We now have five or six new owners with a fresh perspective, to invest new money and learn from the past," he said.

According to Mr Hultin, a former chief executive at for-profit school company Gems, the government should instead invest in improving Sweden's schools inspectorate, which he said did not have a sufficient understanding of school finances, and in providing parents with better information with which to judge the quality of schools.

JB is unlikely to be the last casualty of a demographic slump that means there are roughly 30 per cent fewer students at secondary school level this autumn than there were in 2011. Student numbers are not expected to return to 2011 levels until 2020.

The bankruptcy has contributed to the growing backlash in Sweden against the free-school system, but even the opposition Social Democrats remain committed to allowing operators to run free schools for profit.

A cross-party parliamentary committee, set up in Sweden to investigate how to reform free schools, proposed earlier this year that inspectors should have greater powers to monitor and license free-school owners, and that free schools should have more transparent accounts.

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