The inaugural CMRE Friedman Lecture on Educational Reform (2015)

The CMRE Friedman Lecture: ‘School choice matures: lessons for policymakers’ by Professor Sir Julian Le Grand

The inaugural CMRE Friedman Lecture was delivered by Professor Sir Julian Le Grand at the Hoare Memorial Hall, Church House, Westminster on 27th January 2015 on the subject of school choice.

Read about and register here to attend the second annual CMRE Friedman Lecture, by Professor Paul Peterson.

In the past decades, school choice has emerged as an important policy option for improving education worldwide. In the first annual CMRE Friedman Lecture, Professor Sir Julian Le Grand drew upon his experience as a world-leading theorist and architect of public service markets to consider the lessons learned and the road ahead in education.

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Summary

Taking as his starting point the observation that failing public institutions do not reform on their own, Julian argued that in the absence of effective internal mechanisms, some form of external pressure is necessary to drive change. Under the Blair government, which Le Grand served as a Policy Advisor to No. 10, a number of approaches were tried, from a trust-based model involving increasing resources and professional responsibility, to a high stakes, target-driven, command and control model, directed from the centre.

While a ‘short, sharp shock’ proved useful for galvanizing some, however, a managed closure model proved necessary for others whose records indicated systemic failings. Nevertheless, despite the effectiveness of this approach for turning around seriously failing schools, it was much less so for motivating coasting schools, and even less so for turning above average schools into great ones.

This experience kept live the option of applying external pressure to reform via increasing competition in the market – which Julian argued was generally less damaging to the motivation of staff charged with service delivery than the more directly interventionist models outlined. In that all forms of external pressure, he maintained, have adverse consequences for the intrinsic motivation of staff, the question is which form is most effective and least damaging.

Accepting that marketisation may be effective for improving efficiency, isn’t it the case that increasing competition would introduce further inequity in respect of access to good schools? The classic response to the choice proposal is of course precisely that people don’t want choice; what they want is a good local school. But of course, this begs the question of how we are to go about getting them. Essentially there are two ways, either via monopoly and standardisation, or through the application of external pressure in the form of choice and competition. The chief argument against the latter is that choice is too difficult for the disadvantaged and that they aren’t interested enough consistently enough to make it work for them. Julian maintained that this is patently untrue: the less educated and less well-off are the most disadvantaged by the present system. They do not lack motivation to take advantage of the opportunities open to them; they merely struggle with access. Surveys consistently show that their interest in school choice exceeds that of the middle classes.

This is not to say that the middle classes would not gain further advantage from increased school choice. Cream-skimming – discrimination in favour of pupils which are easier to teach and which therefore don’t cost so much – needs to be taken seriously. This entails some sort of compensating mechanism, along the lines of the Pupil Premium (what Julian originally conceived of as a ‘positively discriminating voucher’).

This voucher was intended to have two purposes: a) to give teachers more resources to address the educational needs of the disadvantaged; and b) to offset the incentive to discriminate against them (or more ambitiously, to incentivise schools to recruit them).

In respect of a), reports indicate that on the whole the resources do seem to be being used quite effectively (and there are even cases of schools being put under pressure by middle class parents to widen access to programmes currently funded/targeted in this way).

In respect of b), offsetting the incentives on schools to discriminate, the latest research, now it comes to it, in fact isn’t showing much evidence of this behaviour in our school system. For the additional funding to have any positive effect on recruitment of disadvantaged pupils, on the other hand, the value would probably have to be significantly higher than it is at present.

Turning to the issue of segregation, Julian stated that all the evidence suggests this is a much greater problem under choice-based systems than it is under catchment-based systems, and that some form of lotterised admissions process in cases of over-subscription would optimise the choice mechanism for equity. However, this seems politically unpalatable, at least at the present time.

Addressing his remarks to the specific issue of religious segregation, however, Julian argued that although he could see a case, on performance, for faith schools, he confessed to a certain degree of uneasiness about whether to a degree this might have something to do with subtler forms of discrimination, and, more profoundly, questioned whether the social cost of faith schools more generally was not too great. Notwithstanding that faith is broadly speaking a motivational force for good in people’s lives and in society as a whole, it is extremely difficult to rule on whether the beliefs and practices of a particular institution are entirely benign. In Northern Ireland among Catholic and Protestant communities, and with respect to Muslim communities, adherents of widely diverse religious views within those broad religious traditions, coexist. Generally moderate religious groups may accommodate more extreme beliefs. The potential for disharmony, and even perhaps social disorder, is always there. Schools, in Julian’s opinion, ought therefore to be secular institutions. Religion should be studied, but should not inform instruction or be used for instructive purposes.

Having excluded faith leaders from the business of school, Julian went on, in the final part of his address, to consider whether and what role the private sector should play in provision.

Considering the arguments against private sector participation, Julian stated that he had never had much sympathy with the moral view that no one should make a profit from education, which seems to him ‘illogical on many grounds’. First, because of the artificial way in which the distinction is made the provision of education (teaching and learning) and the support and specialist services which make it possible. How is that teaching and learning materials may be provided by publishers, examination services by examining boards, supply teachers by employment agencies, nursery education by early years providers, not to mention SEBD and Special school provision, for-profit, but not mainstream schooling itself. Second, there is no good evidence to suggest that the model systematically undermines education quality to support the position that private providers should be excluded on performance grounds. Thirdly, the statement that it’s wrong to make a profit out of education is illogical because it appears to suggest that whatever the model providers should only ever be allowed to break even (or run at a deficit). Profit is but the surplus of revenue over cost, or income over expenditure – the logical end of this argument is that the schools should be encouraged to be loss making.

Setting confusion aside though, is there something else underlying the concern about profit? Observing the spectre of the plundering and profiteering corporate beast is the background, Julian posited that the real objection seemed not to be to the making, but to the way profit, on the corporate shareholder model, is distributed, and conceded, ‘reluctantly’ that there may be a valid point here. This is not about diverting money that could have been spent on the service – after all, there is a cost of capital that has to be born somehow.

Professing a general belief in the effectiveness of markets for harnessing self-interest to the benefit of others, Julian argued, however, that some organisational models work more effectively this end than others. For Julian, the point at issue with the corporate shareholder model concerns how the structure creates a distance between the owners and the delivery of the service, which gives very differently motivated people space, as well as license, to make decisions that might not be in everyone’s best interests.

Motivation for those who work in public services, and indeed for us all, is complicated – we all work from a mixture of motivations and the balance is affected by contextual drivers. We are susceptible to move between these two poles, as it were – but whereas self-interest in front-line staff may be tempered by daily, face to face contact with the people they serve, in a corporate shareholder model, owners make their decisions at a remove from the customers whom their company ultimately (ostensibly) serves. This weakness can result in decisions that run counter to the interests of quality – especially in public service ‘quasi’-markets where information symmetries may always be exploited by the service provider.

For Julian, the answer lies in the promotion of the mutual model of ownership, with schools owned and operated by their employees. Drawing on the research and experience of the Mutuals Taskforce, on which he served, Julian said that around the world and in many different sectors of service provision, mutuals did at least as well as (and usually better than) their private sector counterparts in terms of user preference/satisfaction, staff motivation/satisfaction (on such measures as absenteeism, staff turnover, etc.), profitability, productivity, and resilience to economic turbulence. While as yet we’ve not seen many experiments in this regard in schools, we should open up the range of ownership and management structures allowed onto the frameworks to accommodate enterprise on this model.

James Croft