Investment in kind, not cash;Action Zones

26th June 1998 at 01:00
Industry is generally reluctant to spend hard cash on educating children when it is in business to make profits, argues Francis Beckett

Getting British business to administer and pay for schools has an unhappy history. Most companies believe they are in business to benefit shareholders. In education, captains of industry prefer to be partners not leaders. Government forecasts of the money it could raise from business have generally proved wildly optimistic.

In January, the Secretary of State for Education, was saying that one of the first five education action zones should be led by a private company, but none of the 60 bids received has been. In game-show style, the prize money for each zone was doubled to pound;1 million. The Treasury contribution went up to pound;750,000, while the amount to be raised from industry was left at pound;250,000. David Blunkett says business is putting up pound;19 million, but very little of it is in hard cash. His department says support can be in kind.

The parts of the private sector that have shown most interest in action zones are the education agencies, which are now very big business. They are all involved in bids: TimePlan, the teacher-supply company, bidding in Newham; Nord Anglia, the general education agency (whose chairman, Kevin McNeany, now has a personal fortune of more than pound;20 million) bidding in Barnsley and Somerset; CFBT in Lambeth; and from the US, the mammoth Edison Project bidding in Tameside.

But these companies do not put money into zones. They expect to make money out of them by selling their services (except that TimePlan will be writing Newham a modest pound;20,000 cheque). Nord Anglia, which runs 16 independent schools, is also helping with fundraising, by asking other organisations for donations.

Some companies have been known to make charitable donations in the form of "consultancy", sending out managers near retirement and notionally charging their time at commercial rates so that the donation looks generous.

This is now happening with action zones. In the Newham bid, Laing and Mowlem , two giants of the construction industry, were said to have promised pound;20,000 each. But neither company will be parting with any money. They will be welcoming pupils into their respective training centres in Newham, and trying to interest them in a career in the building industry. This assistance is classed as a pound;20,000 donation.

The Department of Education's document does not mention hard cash. "The partnership will certainly involve a central role for business," it says. It wants to use "business expertise in running the zone" and "to help pupils to move from education into training or the workplace, by developing their employability and by helping to find ways to increase job opportunities".

Until now, Britain's most ambitious attempt to involve business in running schools was the launch of city technology colleges (CTCs). In October 1986, Kenneth Baker, the Secretary of State, announced a pilot of 20 colleges. Commercial sponsors would meet "all or most" of the cost. Soon the Conservatives accepted that one-fifth, about pound;2 million, would do fine, and the Government would pay the rest. Even to get that, it had to offer relentless branding - most technology colleges were named after a company, in one case a tobacco company. Despite personal appeals from No 10, Margaret Thatcher's government was forced to do some creative accounting to show that business was contributing significantly.

David Blunkett may be better prepared than his predecessors, but he may well be disappointed. In Blackburn, some local business people will sit on the action zone management committee, bringing "considerable management expertise to the table. The total value of this assistance is estimated at pound;80,000 a year."

Kevin McNeany, chairman of Nord Anglia, has said that raising pound;250,000 is an unwelcome complication. Shirley Wright, its head of training and consultancy, says: "We are not a charity." That is true. The company's donations last year totalled pound;387. Its profits shot up by 49 per cent to pound;2.42 million. Its shares shot up when the zones scheme was announced. Mr McNeany says he would like to run schools but "it's not politically possible in this country".

The US entrepreneur, Benno C. Schmidt Jnr, chairman and chief executive of the Edison Project, does not agree. He met British education ministers to talk, not about making a donation, but about the possibility that his company might be hired to take over failing schools. He drafted Tameside's bid for a zone and hopes to create a subsidiary, Edison UK. He would expect to raise pound;20 million, mostly in Britain.

Mr Schmidt's plans are ambitious. One action zone will not do: "The commitment of resources, time and energy necessary to create and launch Edison UK is disproportionate to the goal of creating a single EAZ," he says. He wants assurance from the outset that he will "have the opportunity to work closely with and manage other EAZs, andor have the opportunity in other ways to work with schools, LEAs and communities".

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