Education: Big Money and Free Market?

The Swedish National Agency for Education has just published its latest report on the development of so-called independent or free-standing schools in Sweden. Since freedom of choice for pupils and freedom of establishment for providers were introduced in the early 1990s the number of applications for new independent schools and the number of pupils attending such schools have risen substantially. (I should mention that independent schools are still publicly financed; it is a voucher system of sorts.)

This year 560 applications reached the Agency for Education in its capacity as reviewer and approver of independent school licences. Today 9.1% of Swedish compulsory school pupils and 17.4% of upper secondary school pupils attend an independent school. In some bigger cities, e.g. around Stockholm, independent schools cater for almost 50% of the pupils, while some rural, often northern towns have no or very few independent providers.

Initially most of the independent providers were parent co-operatives or association and trusts, i.e. non-profit organisations, but today most of the schools are owned and run by big education chains, a development which has its pros and cons. Since independent schools in Sweden are allowed to make a profit and filter back that profit to its owners (often venture capital and similar organisations), it makes sense that more and more companies want to have a piece of the cake, and that they want to grow. Economies of scale, makes sense. By the way, this is a very different situation to the UK where profit in the education sector is not allowed. This has however not stopped the Swedish education provider Kunskapsskolan, which is making an entry into the UK education market.

The National Agency for Education, and others, have expressed concerns over the disrepancy between the legislation - and the intent of the reforms - and the current situation and the consequences for society's control over these schools and the school system as a whole. Swedish municipalities are responsible for the education of its minor citizens, but what happens when all or a majority of pupils choose another school? How do they keep the municipal school open or in other ways prepare for having to take in a substantial group of pupils when an independent school close down (for whatever reason: bankrupcy, withdrawal of permit, etc.)?

The Swedish education sector has changed over the last 15 years but the legislation regulating independent schools has not been amended since 1994. The law talks about independent schools as a complement to the municipal schools, for example other types of pedagogical methods, and not big chains with schools all over the country. Despite a completely new and different situation, the regulation about municipalities' responsibility and obligation for education provision has not changed. When an independent school has applied for a permit in a certain municipality the Agency for Education especially looks at the municipality's consequence assessment, including pupil prognoses and possible effects on the schools and education programmes already provided in the region. Unfortunately the quality of the consequence assessments is varying and some municipalities do not have the resources to do one.

Another current topic is how many schools does the sector have room for when the competition for pupils gets tougher? And how long can independent (and municipal) schools compete on different conditions? According to the Agency for Education the risk of over-establishment is huge and the number of applications is a surprise to them. The development in the Swedish school sector has occurred at a time when the age cohorts have been large and growing, but next year is the peak before the numbers start to shrink. The competition will lead to both independent and municipal schools being forced to re-organise or close down. To give an example, in one Swedish municipality last year's applications to start independent schools covered 7,700 education places in a town with only 4,500 pupils.

The Agency for Education argue that the municipalities are badly prepared for tougher competition. Since the municipalities by law still have the utmost responsibility for the education in the area they must always have a preparedness for a transfer of students from independent schools and for having to keep a school open despite a low number of pupils. As government organisations however, municipalities are more slow-moving creatures than independent schools and they cannot get rid of personnel or facilities easily, which means that the cost per pupil increases in such a situation. The ability to plan long-term is diminished. A municipality thus risks both school closures and increased costs for its pupils' education. Since the independent schools do not have the same obligations and responsibilities, they conditions are not the same for the two types of actors. The education market is not a level playing field.

In addition to the "market factors", there are also other differences in conditions between independent and municipal schools. The principle of free access to public records (the famous Swedish offentlighetsprincipen) does not apply to independent schools. The Justice Ombudsman or the Attorney General do not have jurisdiction here. The only inspection that takes place is that of the Agency for Education, and the municipalities have some right of insight into the independent providers in their area. This means that in municipalities with very many independent school the citizens have very little control over a major part of the local school system.

The government is starting to address some of these issues by looking at how to increase national government control (through agencies such as the Agency for Education) over the school system and how to make the conditions for independent and municipal schools more equal, but the "solution" is not obvious. There are also other negative aspects of the present competition in the education sector, such as the methods used by schools (municipal and independent alike) to attract students, for example, through flashy brochures and offering laptops and other perks, instead of competing on the quality of the education and pedagogy. But that's a topic for a future blog post!

Source: Skolverket/National Agency for Education