The for-profit revolution


Education Secretary Michael Gove has long floated the idea of schools being run for profit. In a speech to the Policy Exchange think-tank shortly before taking office he encouraged for-profit companies like Serco to set up schools.

“If Serco or anyone else wants to set up a new school…we will allow you,”

The UK currently has only one for-profit school, IES Suffolk, but more look set to be on the way. Plans leaked to the Independent in July show that Mr Gove wants academies and free schools to become profit-making businesses using hedge funds and venture capitalists to raise money.

This could have a massive impact on learning in this country. Currently one in four of England’s 7.3 million state pupils are taught in schools with academy status. Just over 3,000 of England’s 27,000 schools have converted to academies, while over half of secondary schools and 10 per cent of primaries are academies.

Critics argue the path for privatisation has already been laid with the government also announcing plans for 180 new free schools to be built.


In further education, the government used the 2011 Education Act to pave the way for colleges to be run for profit.

In April 2012 Barnfield college become the first college in the UK to announce that it would be seeking talks with private equity investors.

Adult learning, which forms a key part of further education provision, is also increasingly becoming dominated by for-profit companies.

Companies owned or backed by five private equity funds won more than £300 million from the Skills Funding Agency in 2011-12.


Universities minister David Willetts is a big champion of for-profit education and wants to see more alternative providers in higher education.

In 2009 he remarked: “It is clear that under a Tory government, universities may find themselves vying for students with more private rivals setting up in Britain too. There are American university chains that are looking to come into Britain, talk of mergers between British and American universities. “

Since coming to power the government has doubled the amount of money for-profit companies get through student loans. For-profit providers can now receive up to £6,000 per year for each student who takes out a loan to study, compared to £3,000 before.

In addition, the government plans to take 20,000 student places away from traditional universities and allow for-profit companies to bid for them.

For-profit higher education providers already receive over £100m of taxpayer-funded student loan money, despite not being subject to the same regulation as public universities. The government admitted in 2012 there is no official oversight of how many students are completing courses and that ministers are not monitoring the quality of courses being provided by for-profit companies.

A large share of this money is going to US companies, such as Apollo, which own BPP University College – the UK’s largest for-profit university. Apollo has been subject to a series of multi-million dollar legal actions in America over its recruitment of students and alleged misselling of degrees.

Support services

Schools, colleges and universities have already begun outsourcing important support services to private companies.

In 2012 Capita was awarded a £1.7bn contract to provide support services to schools in Staffordshire. Over 4,000 school workers, including cooks, cleaners and caretakers were transferred over to Capita – the biggest transferral of local authority staff in the country.

In higher education many institutions have outsourced important services too. For example, the University of Sussex plans for all its non-teaching work to be delivered by private companies.

235 of its staff now face being employed on inferior terms and conditions to their former colleagues with different pension rights than before.