Schools Out?

Schools. What to do about schools? Or, more specifically, sold services for schools.

Amidst all the other changes going on at the moment, the eclectic bunch of services that authorities trade with schools probably isn’t a Council’s top priority. That’s not helped by the fact that these services are often hidden away as bits and pieces of people’s time in lots of different places. A trickle of income here, half a person’s time there – but it all adds up. Suddenly you find the authority has tens of millions of pounds in income from schools supporting budgets and salaries in allied departments across the Council. And that income is under threat.

Delegated budgets, Academies, and now Free Schools, have all seen councils’ relationships with schools weakened, but despite nearly twenty years of increasing financial autonomy, it is perhaps surprising how few schools have cut all ties with their local authority. That is now starting to change. Private sector providers are investing more heavily in schools support services, councils are starting to trade outside their borders, and schools are starting to trade directly with each other. Historically, school budgets have been relatively protected, certainly more so than councils’, but financial pressures are growing and schools are starting to look around for a better deal. For those councils that have continued to sell services to schools with little challenge from alternative providers, this is a real threat. So what to do about schools?

Take a step back?

One school of thought (sorry!) is that you should let them go. The authority can step back, the market can step up, and schools step out into the wilds of the free market. That is fine for some services – back-office services, say – where there are established providers and it doesn’t affect the Council who schools buy from, other than losing that income. But what about services like Educational Welfare Officers? Some of the work is statutory (and will continue to be provided by councils) but often there will be additional traded support that schools really value. Moreover, providing these services can directly benefit the Council by preventing future problems developing in schools which may end up in the in-tray of another council department (e.g. if child protection issues arise). For services like this, there is both a moral and financial argument that councils should continue to trade these non-statutory functions. Walking away is not as easy as it seems.

Jump in?

So why not jump in, do more trading and build a business? That is clearly what Staffordshire and Capita are doing with their new joint venture, Entrust, and good luck to them. It is risky though, increasingly so as more people enter the market, and there can’t be more than a handful of deals like this before the market gets saturated. There are other models of course, such as smaller scale trading companies, but the commercial risks remain.

Then there is everything in between, from creating a ‘schools company’ such as Herts for Learning, or creating a strong umbrella brand through which to trade Council services targeted at the needs of autonomous schools, such as EduKent. There are many more, and a blog is no place to appraise the merits and risk of each, but the point is that things are changing fast, and Councils need to seize the opportunity now, or they could lose out.

The good news

It’s not all doom and gloom. Councils are the incumbent providers after all, they have the local knowledge, specialist staff, and crucially have the personal relationships that stand them in good stead to retain (and grow) business with their schools and secure their position as the ‘provider of choice’ for Academies. But unless Councils think about sold services to schools in the whole, they risk losing something they might not know they had. And once that relationship is lost, school’s out for ever.

Matt Siddons is an Assistant Manager in the Local Government Team and James Nettleton is a Consultant in the Education Team at BDO.

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