13 April 2017

Let the market level the educational playing field

By Ben Clements

Free markets, competition, choice and enterprise have lifted millions of people out of poverty throughout the world. Over the past couple of decades, however, policy-makers have simply failed to produce bold and inventive free-market policies to improve the lives of the bottom third in advanced economies.

Nowhere is the absence of market-based policies more clear than in education. In the UK, educational inequality is worsening: there is a widening gap in attainment between advantaged and disadvantaged students, growing private tuition markets aid already advantaged students, and places at good schools are largely allocated according to geographical proximity.

Unless proponents of free markets directly take on the challenges of social mobility and widening inequality, the British people – and those of the bottom third in particular – will lose faith in the power of the market. And that means fundamentally rethinking, from the ground up, how the UK is going to be a competitive country in the 21st century, and how we can and increase economic freedom, economic prosperity and social outcomes for the bottom third of the income distribution.

A recent report by the Sutton Trust suggested that private tuition in the UK appears to be developing into an industry. Across England and Wales, approximately 25 per cent of state-educated 11-16 year olds have received private tuition at some stage; that is to say, about 700,000 pupils. (This is up from 18 per cent a decade earlier.) Of those parents who do not pay for private tuition, about a third (35 per cent) claimed that private tuition was too expensive.

Moreover, according to YouGov polling in an earlier Sutton Trust report, Parent Power?, privately educated students are twice as likely to receive private tuition as state-educated pupils.

This phenomenon exposes many of the realities about the UK education system – and its increasingly uneven playing field. The absence of market alternatives entrenches advantage for the children of parents who can afford private school tuition, or benefit from proximity to good comprehensive and grammar schools (which they pay for via house prices).

It is essential, therefore, that the government introduces a radical, market-based policy for the bottom third who cannot afford private tuition, rather than let private tuition become another driver of educational inequality. Indeed, the data presented in Parent Power? suggest that there is demand for additional tuition from those parents with the lowest levels of education: they were significantly more likely to agree that they would pay for their child to have a tutor if they could afford it than those higher up the income scale.

So what is the solution? Every time I discuss the state of the British education system, I always hear the same things: how the system is failing, how low our rankings are compared with our industrialised peers, how poorly teachers in the UK are treated.

Yet whenever a free-market idea is put forward, you often hear the same replies: “Isn’t education too important to be left to the market?” “Who will educate our children?” And, most importantly for this paper, “What about the poor?”

Yet if most people were simply to look at some of those countries outperforming the UK, they would see how the free market can help improve the British system. Anyone who has looked at the PISA rankings will know that South Korea is an academic powerhouse, with students ranked seventh worldwide in maths and reading (compared with the UK’s rankings of 27th and 21st respectively). Even more disconcerting, according to the data, is that some 22 per cent of 15-year-olds in the UK do not reach Level 2 – the baseline level of achievement – which means they cannot solve problems routinely faced by adults in their daily lives.

What is amazing is not the achievement of South Korea in relation to countries such as the UK, but rather how it was achieved by market alternatives.

A fundamental part of the Korean model is the “shadow education system” that supplements a student’s primary education. This functions as a private, after-school tutoring service. It’s similar to how a free-market system would enable a company to operate: compete to provide the highest quality of goods and services, and make those goods and services as widely available as possible to the most amount of people at the lowest possible cost. It also innovates in terms of engaging the parents by updating them on their child’s academic progression.

This approach to education differs radically from the experiences of most of the bottom third in Britain, who cannot afford private tuition and drop their children off at school without any real incentive to engage and monitor their child’s progression. The incentives unleashed by the market-based features of this policy provide both accessibility and motivation: as they compete for more students, tuition providers have to market their prices accordingly to attract more parents.

Despite the different demographic, cultural and social factors at play, South Korea is effectively preparing their children for the competitive global economy, while the UK is falling behind.

And other Anglophone countries have previously created policies centred on subsidies for private tuition for either low-income students or students of low achievement. For example, in the United States the 2002 No Child Left Behind policy enabled spending on private tuition in some cases. In Australia, the Tutorial Voucher Initiative, unveiled in 2004, allowed parents who qualified under means-tested conditions to spend a certain amount of money to acquire tutoring for their children.

There is a compelling case, in other words, that market-based provision of means-tested tuition vouchers for students of low-income backgrounds should be the next step for policymakers in expanding access to private tuition and, in turn, lowering barriers to social mobility.

But how would this work?

For one thing, it is important that the implementation of a means-tested voucher system for private tuition embodies free-market principles: school choice, competition, freedom to innovate, specialisation and responsiveness to incentives, as well as accountability to credible measures of achievement and reputation.

I propose what I call an “Every Child Counts” policy: the bold, widespread and sustained provision of a means-tested voucher system. Instead of the current Pupil Premium – which throws money at failing government schools – the money would be divided between those who currently qualify for the programme, on condition that they use the money to purchase private tuition for their children.

This policy will empower parents and allow them to take a more active role in their children’s education. Parents might use the funds for regular group tuition, or for one-to-one tuition less frequently. This policy would initially apply only in England, because education policymaking has been devolved, but in the event of it being successful one would hope to see it expanded elsewhere.

While the voucher policy should be both national and universal, its introduction should be steady and regionalised in order to regularly conduct strictly randomised tests and examinations of the programme. Regionalisation will also minimise the disruption created by a steep increase in demand for private tuition.

“Every Child Counts” will largely act as assistance to government schools and reduce barriers to social mobility. But it should also simulate regular markets as closely as possible. It should also focus on subject tuition, which has broader positive effects on a student’s academic ability and knowledge base, rather than tactical tutoring for entrance exams: that means primarily focusing on reading and mathematics.

The success of the policy will initially be measured by regionalised testing of academic performance, and longer-term in the UK’s ranking in the OECD measurements for educational attainment in reading and maths by country.

“Every Child Counts” is a simple, radical, market-based policy which would, on the one hand, reduce the degree to which private tuition worsens educational inequalities between the bottom third and the rest of British society and, on the other, apply market-based principles to make private tuition as widely available as possible. This single policy would increase economic prosperity and improve the social outcomes of a substantial segment of the bottom third of the income distribution.

Equipping students with the skills needed to adapt and compete in this age of competition is more important than ever. The proposal would address squarely the absence of inventive policies in the growing private tuition market and the differing distribution of private tuition according to social class.

And it might also lead to a revolution in British education. School choice and market-based policies in education would be demystified, and the benefits for all pupils, especially those from lower socio-economic backgrounds, would be clear for all to see. Successive governments could then push ahead with implementing school choice and competition to increase attainment throughout the entire education system.

The short- to medium-term impact of this policy is to improve the lives of the bottom third of the income distribution. The medium-to-long term impact is to release a free-market revolution in education, not only in the UK but across the developed world.

This was a shortlisted entry for the Richard Koch Breakthrough Prize, organised by the Institute of Economic Affairs.

Read the winning entry on why Britain needs a free market in taxes, and the other shortlisted entries on why it is time to scrap Britain’s outdated planning laws, how low-cost private schools could transform education and why the best way to help the poor is by lending to them.

Ben Clements recently graduated from the University of Manchester with a degree in Chinese and Japanese and was a finalist in the IEA Brexit Prize competition in 2014