Education providers have thrown their weight behind Michael Gove after he announced that free schools could be run for profit if the Conservatives secure a second term in office.
The education secretary made his first public admission that he felt schools could "move toward" being run for profit when giving evidence at the Leveson inquiry into press ethics.
While it is unlikely that the move could happen under the coalition, Mr Gove said that the quality of state education would be "augmented by extending the range of people involved in its provision".
His comments provoked outrage from teaching unions, but were supported by Sir David Bell, who until this year was education's highest-ranking civil servant. He said that the profit motive should be trialled in some of the country's most underperforming schools before it was rolled out elsewhere.
"A good place to start would be where all other state interventions have failed, where you have had a successive round of failures and you have tried everything else," he told TES. "In those circumstances it is quite hard to make a moral argument against profit. If you want to make a case for this, start where it's toughest and let's see whether the profit motive generates an improvement that otherwise has not been created."
Teaching unions have long claimed that the free school policy would lead to the "privatisation" of state education, with an influx of for-profit companies. NUT deputy general secretary Kevin Courtney said that free school providers in Sweden had made profits by employing unqualified teachers and feared that schools here would follow suit.
But Mr Gove's comments have been seized on by education providers, which claim the for-profit route is the next logical step to boost performance in state schools.
Trevor Averre-Beeson, founder of Lilac Sky Schools - an approved academy sponsor that runs the management of two schools for profit and is to take over two more from September - said that numerous organisations would be interested in establishing for-profit schools. "It seems completely appropriate that if we do something successful, such as raising pupil attainment or getting a school out of special measures, we would get a bonus on a performance-related contract," Mr Averre-Beeson said. "And if we don't, we would get a fine. I think it makes the running of schools more accountable."
A leading private school provider, which did not want to be named, said that there needs to be more flexibility in education to allow schools to raise money. "The issue is about quality; when you buy a product you don't ask at the point of sale where the profits go, you ask whether the product is any good," the source said. "The consensus is that parents are so fed up with bad-quality education that they would like to see something different."
Rachel Wolf, director of free schools charity the New Schools Network, backed the move towards profit, claiming that it had to be considered if free schools were to expand.
Schools are already allowed to employ educational management organisations (EMOs) to take care of the day-to-day running of a school and these can be profit-making companies. This is the model used by Lilac Sky Schools and also allowed the Breckland Free School in Suffolk to employ the for-profit Swedish provider, Internationella Engelska Skolan.
But author and journalist Toby Young, whose West London Free School was one of the first to open last year, said that this model should go further and allow EMOs to establish their own profit-making free schools, as is the case in Sweden.
According to James Groves, head of education and arts at right-wing thinktank Policy Exchange, the EMO route will become more prevalent as the free school policy gains traction.
"I certainly do believe that there is an appetite out there among for- profit providers, but they are unlikely to be shouting about it," Mr Groves said. "The model being employed with the Breckland Free School is more like what happens in the US and it is more likely that we will see (this) in the future."
The comments from Mr Gove were strongly criticised by teachers' leaders, with the NUT stating that free schools are a licence for the private sector to make money and are not in the interest of the taxpayer.
Mary Bousted, general secretary of the Association of Teachers and Lecturers, agreed, adding: "We fought for a long time to get school free at the point of need for all children. Education is a public good and it should remain so. Private companies should not be able to rake in profits from taxpayers' money."
FREE SCHOOLS SO FAR
24 - free schools are open
79 - free schools have been approved to open in September
330 - free school applications have been made via the New Schools Network to open in 2013
100 - or more are expected to be approved in November
pound;337m - was spent on free schools up to April 2012.
Photo credit: Tom Finnie
Original headline: Businesses queue up as Gove moves towards for-profit schools