Ignite Lab

The Prime Minister made a point of praising his government’s innovative proposals to ease the banking crisis last week and indeed the apparent willingness of political and economic leaders in Europe and North America suggests they may have come up with solutions that go to the root of the issue.  Whether that is really the case, I doubt anyone knows, as the single most disturbing aspect of the current crisis is that nobody, however expert and experienced they may be, appears to really understand the depth, the extent, indeed the simple enormity of the issues and the threats to economic, social and political stability.

However, I’m not going to add any more words to the billions already written about the global economy (perhaps trillions – I am not sure I realised that trillion was a real number as opposed to the smaller end of the unquantified but extremely large ‘zillions’ category).  I’d like to pick up on Mr Brown’s enthusiasm for innovation and to start some thinking about how it could best be channelled.

Away from the banks and the cabinet tables, millions of people are trying to understand what the financial crisis could mean in their everyday lives.  At an individual level this is incredibly difficult because there is so much we do not know and cannot predict.  What would have seemed unthinkable weeks or even days ago is today’s reality.  However, government and business can and should (and presumably will) think through scenarios that could conceivably arise over the next few months and use the insight this planning provides to both prepare for the worse and at the same time try to prevent it happening.  There are so many aspects of our lives that might be affected, but where some lateral thinking now could minimise or avoid yet more turmoil and destruction in the near future.  What would a ‘meltdown’ scenario look like and how can we avoid it becoming reality?

I’m sure that between us we could think of many such aspects, so why don’t we do exactly that.  Who knows what we (or the government) could do with our insights and our ideas.  Here’s one to get the ball rolling, to do with education.  Some 500,000 children are currently educated in almost 1,300 schools in the independent sector.  I’m not sure what the total school population of the UK is but I am going to guess that the independent sector accounts for over 5% of that total.  Many of them are there not because their parents are wealthy but because they make considerable financial sacrifices to fund a private education.  And therefore many of those parents will be finding it harder than ever to continue to pay the fees during a recession.

In the early 1990s a significant number of independent schools closed and the number of children being educated privately dropped substantially.  It took the best part of a decade for numbers to return to their pre-1992 level.  As a result, more pressure was placed on the state school sector.  In an even moderately pessimistic scenario the same thing would happen again.

When any school, whether private or state, closes, the overall capacity in the system drops.  If this happens on a significant scale, two things will happen.  The pressure on an already stretched state system will grow, at a time when additional funding will be hard to find, and at the same time perfectly good (in some cases outstanding) capacity and resources will be lost.  Whatever ministers’ personal views on private education – and the actions of some suggest they’re not implacably opposed to it – this doesn’t sound like a great outcome, but it may well be what happens if the market is allowed to dictate the course of events.

So what to do?  Perhaps the government could take a leaf from its banking book and nationalise some private schools, bringing them into the state system.  Simple, but also clunky and still a solution to a problem as opposed to a strategy to prevent the problem from crystallising.  But as an alternative, how well-spent would a few billion pounds be (only a few billion, hardly worthy of attention in the current environment) learning from a well-established initiative in the health sector.  For some years now it has been common practice for the NHS to fund operations and other treatments that are carried out by or in private hospitals.  The patient benefits from this more flexible use of resources, pressure is taken off the limited physical capacity of the NHS, and spare capacity in the private sector is put to good use.  How could these same principles be achieved in the education sector? 

How difficult would it be, for example, to introduce tax relief on the payment of school fees, thereby taking at least 20% off the cost – a substantial saving that would be the difference between many children staying in the independent sector or having to be accommodated in the state, and between some independent schools staying open and their teaching expertise and facilities being used to the full, and those assets being wasted and lost.  Even if the tax relief was backdated for two years the total cost to the state would probably be between £2.5 and £3 billion - peanuts compared with some of the amounts that have been committed in the past week but also, most likely, less than the cost of extending state school capacity to cope with an influx of pupils that would stretch the current system beyond its limits.  No doubt the government could, as part of a package, also step up the demands on independent schools to become more inclusive, not only in sharing facilities with the community but perhaps also in making a private education available to a wider section of the population.

Controversial?  Probably.  Political suicide?  Unlikely.  Every one of those 500,000 children in the private sector is being funded by somebody and many of those somebodies will be feeling the pinch right now.  Something the government has already thought of?  I’ve no idea.  The right answer?  I don’t know.  I’m trying to stimulate a debate.  So here it is.  Two questions:

• what innovative ideas do we have for avoiding a major slump in the independent school sector and the consequent increase in pressure on the state system?
• education is but one area of our lives that could be fundamentally affected by the financial crisis.  Where else could we contribute practical innovative thinking to the debate? 

Looking forward to seeing your ideas.