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The Big Read

‘Toxic contracts’: the great British state school sell-off

In 2020, privatisation is no longer the covert, sneaky programme it once was. After the Covid-19 pandemic, the game is exposed for anyone to see, writes Carl Parsons

Pupils on the first day back to school at Charles Dickens Primary School in London
(PA)

Ronald Reagan uttered one of the most stupid and damaging sentences about the role of the state when, in 1980, he said: “The nine most terrifying words in the English language are: I’m from the government and I’m here to help.”

The government should be here to help. Taxes are not a fine, something to diminish our possibilities but investment in our society to make a pleasant way of life for all.

Many public services established with this goal have been partially subcontracted, outsourced or sold off to private sector organisations. Covid-19 has opened the floodgates for the further flow of cash to private companies when existing public services, properly funded, could do a better job.

A government should be the chief executive, through its civil service, often allocating the role to local government or regional organisations, to ensure standards, effectiveness, development and the judicious use of public funds in each service.

Government action after the Second World War led to huge investment in the development of gigantic public services, the NHS, the establishment of nation-wide secondary schooling, the nationalisation of industries, transport and utilities and a massive council house building programme to make sure there was coordination and responsiveness through government to the taxpayer.

Margaret Thatcher drinking a cup of tea with Christine Greensmith, who bought her GLC council house under the right to buy scheme in 1978 (Getty)

This was a radical transformation in public policy through the Labour government at that time, until the late 1970s when Thatcher’s policy of “no such thing as society” led to right-to-buy council houses, the sale of utilities, erosion of NHS and gifts to the private sector.

New Labour, under the Third Way banner, believing that the government could and would control the terms of the relationship with business, embraced Public Finance Initiatives (PFIs) and Public-Private Partnerships (PPPs) enthusiastically – with uncalculated long-term consequences in health and education.

The coalition government in 2010 stepped up the liberation agenda and the most recent administrations have taken the public money-for-private organisations to a new level. The government is the biggest source of funds, with total tax revenues for 2018-19 of £623bn.

In the Spending Round 2019 policy paper, health and social care was worth £132bn and education £64bn. No wonder business should target ever larger sums from these massive state budgets.

Tony Blair chats with pupils at Highlands School in Enfield, north London, the first newly built school in the country to be totally funded by PFI (AFP/Getty)

In April 2020, there were 217 hospital trusts, employing around 800,000 of the NHS’s 1.2 million staff. November 2019 figures recorded the equivalent of 945,805 people working full-time in state-funded schools in England: 453,813 teachers.

Health and education are two huge sectors into which private enterprise has made large inroads, and, having established a solid position, is out to get more money, make more profit, pursuing business objectives rather than service ethics.

Recent annual Department of Health and Social Care accounts show that the NHS spent £9.18bn on the independent sector in 2018-19, up from £8.76bn the previous year; these figures may not include servicing of PFI or PPP contracts.

In the education sector, the proportion of the schools’ budget allocation going to quasi-private academy chains is probably greater than for health, complicated further by the 125-year leases on property and buildings that academy transfer now entails.

Then prime minister David Cameron welcomes his deputy Nick Clegg to Downing Street for their first day of coalition government in May 2010 (Getty)

The academy system became not a rescue mission for failed schools, as when Labour set them up, but a policy of tempting schools away from local government control and encouraging grouping into multi-academy trusts (MATs).

Education is being gobbled up by hedge fund-backed MATs. However, England has over 20,000 state-funded schools: 65 per cent of primary schools and 23 per cent of secondary schools are LA-maintained.

Private enterprise came in through the side door with the disastrous PFIs. NHS hospital trusts are being crippled by the private finance initiative

A fraction over 50 per cent of pupils, 4,469,227, attend LA-maintained schools as shown by the January 2020 census figures, yet people would be surprised that local authorities were active at all in education, let alone that their stake was high.

In an already established business-friendly legal and financial environment, Covid-19 funding has proved to be a bonanza for business. Government and private enterprises, in being so flagrant, have brought the whole sordid, amoral smash and grab process to a head.

Under cover of the Covid-19 emergency in 2020, the government has financed unproven, or failed, private agencies for work that England’s existing public services should have been supported to manage. In education, but more explicitly in health, the privatisation game is up and exposed for all to see.

Soldiers and private contractors help to prepare the ExCel centre as it is being made into the temporary NHS Nightingale Hospital (Getty)

Aside from the chaotic overall government policy on tackling the pandemic, we have seen the most extreme and extraordinarily brazen decisions to subcontract out the virus track and trace system, and the building of emergency Nightingale hospitals and the same favouring of private companies – some registered as charities. This is also plain to see in the allocation of the £1bn Covid catch-up funding in education.

England’s once well-funded and admirable health and education structures suffered semi-privatisation through PFIs, PPPs, removal of local government controls and were then hit with austerity cuts, and, in 2020, are judged not capable of rising to the challenge of managing a health emergency or supporting disadvantaged students in schools.

Private enterprise came in through the side door with the disastrous PFIs. NHS hospital trusts are being crippled by the private finance initiative. The IPPR calculate that the initial £13bn of private sector investment in new hospitals will finally cost the NHS in England £80bn by the time all contracts come to an end in 2050.

They have been referred to as “toxic contracts”. London’s Barts Health Trust has the largest PFI at £1.25bn but it will eventually cost £6.2bn. Servicing the debt costs £116m a year, which is equivalent to 7.66 per cent of its income.

NHS workers marching in London last month to call for a pay rise for nursing staff (AFP/Getty)

There are 109 such contracts and critics have looked at the numbers of nurses and doctors that could be employed with these sums. Cunning elements of these contracts were the charges for services like portering, repairs and estate management, often done poorly, and with an absence of strict, clear penalty and early termination clauses.

Private enterprise has “previous” in its involvement in health. Having diminished the NHS, privatisers argued that the emergency response to Covid-19 needed to be centralised and privatised, as the NHS and its traditionally associated parts could not respond.

Appointing big accountancy firms to oversee huge, new Covid-19 emergency billion-pound projects rammed home the message that private businesses can do the job – and existing health services cannot.

Deloitte handled the grants, outsourcing to firms such as Serco, Mitie, G4S, Sodexo and Boots, to manage the testing centres and the tracing operation, not by enhancing existing health services and centres.

It did not appear to matter that Serco was fined £22.9m (2019) and G4S £44m (2020) for overcharging the Ministry of Justice for their electronic tagging of released prisoners.

KPMG coordinated the setting-up of the first Nightingale at ExCel, east London, and Interserve, an outsourcing firm, coordinated the construction of the Birmingham Nightingale Hospital at the NEC, and was contracted to hire 1,500 staff to run the Manchester Nightingale with no local input or use of local intelligence and enterprises.

G4S supplied security guards for all five of the Nightingale hospitals.

The Nightingale hospitals were to be equipped to treat nearly 10,000 Covid-19 cases but the Excel centre had only 50 patients at its busiest and some of the facilities had none.

This was an ill-judged, centrally directed use of resources when set against infections and deaths in care homes, dementia wards and prisons.

The NHS Nightingale Hospital North West, built at the Manchester Central Convention Centre to care for coronavirus patients (PA)

The testing programme has been a shambles. Most people going to drive-through centres will rightly wonder at the numbers of workers, mostly directing the very light traffic through the initial vetting of the booking made online, to the person instructing through closed car windows how to self-administer the test, then directed to a parking spot to do it and finally driving out, passing the test material sealed in the plastic bag into a tray held by a waiting operative.

Lighthouse Labs, an American firm, has set up the testing facilities and has as partners the UK Biocentre, Medicines Discovery Catapult, AstraZeneca, GSK, BioAscent and the universities of Dundee, Glasgow and Cambridge.

Capita was in there too, with a lucrative contract to bring into play thousands of returning doctors and nurses.

After a decade of public sector reorganisation, marketisation and cuts to health services and local government in England, members of the independent Sage group described how an infrastructure that was once in place to respond to public health crises was pretty well demolished, undermining the NHS’s ability to respond to the pandemic or major health emergencies.

Normally (ie pre 2010), a Public Health England representative would be expected to contact local environmental health teams if a case of a notifiable disease – which Covid-19 is – was found in the area that needed following up, enabling them to set to work tracing contacts and contain an outbreak. But the government, having decimated local government wherein environmental health teams resided, automatically went private.

Aside from the chaotic overall government policy on tackling the pandemic, we have seen the most extreme and extraordinarily brazen decisions

The result has been, as published by Staista on 3 September 2020, that England has the fourth highest Covid-related death rate per million, behind Peru, Belgium and Spain, and no effective track and trace system. Huge contracts have been hastily let to the private sector with no sharing of contract details: how much money, for how long, to achieve what and monitored by whom.

Professor Anthony Costello, a member of the Independent Sage committee, has argued that GP surgeries should have been used as testing hubs, with GPs monitoring patients who test positive for Covid-19.

Contact tracers could work within existing health services and systems. He feels that the new parallel centralised and privatised services run by private companies are bypassing what is a world-beating system – the UK’s primary care – that would be much more cost effective and would introduce a faster turnaround of results.

The May report of Independent Sage said. “The government should focus on building local public health capacity to identify, test, treat and isolate every case, and to trace and quarantine contacts.”

London’s Barts Health Trust, which runs St Bartholomew’s Hospital, has the largest PFI at £1.25bn (PA)

Looking ahead, Professor Allyson Pollock, director of the Centre for Excellence in Regulatory Science at Newcastle University, urges: “Put local authorities, local public health teams and local health services (including GPs and NHS laboratories) back in charge of testing and tracing … and give them the resources to do this properly … the system Wales and Scotland have opted for, as has Germany.”

In the Covid-19 emergency era, we see a £5bn contract for microbiology services and £10bn for a centralised test-and-trace system, contracts which were awarded to private companies. Reportedly, Serco was contracted to supply 15,000 call centre workers for whom there would be brief training, ignoring 5,000 existing local authority environmental health workers.

A university social research department could have done this for a fifth of the money. Topham Guerin, a publicity firm set up in 2016, which had worked on the Conservative election campaign, was awarded a six-month, £3m contract to “help advise and generate social media content to support coronavirus communications”.

Faculty, an artificial intelligence firm, received a £400,000 pandemic-related project for the Ministry of Housing, Communities and Local Government. Faculty has worked on multiple projects worth at least £1.6m since 2018.

On the education front, academisation of schools is proceeding and one would not believe that local authorities, once guardians of services for children, even existed

The opaqueness, the hiding of the nature of the work, and the amounts paid are shocking.

Schools are not actually for sale but they are available for “transfer” to academy chains, which seems like a gift coming as it does with 125-year leases on property for peppercorn rents.

On the education front, academisation of schools is proceeding and one would not believe that local authorities, once guardians of services for children, even existed: reduced to peripheral roles, losing schools to academy chains if there is a bad Ofsted report, unable to build schools themselves and denied the right to bring back to local authority control schools which have failed in the academy sector.

In academy schools sector in England consolidated accounts for the year ending 31 August 2019, published in July 2020, Elizabeth Berridge, minister for schools, begins her overview with a premature claim that it has been “a milestone year in which 51 per cent of children in state-funded education were educated in academies”.

Minister for schools Elizabeth Berridge said it has been a ‘milestone year' (UK Parliament)

That may be so by August 2020, as forced academisation proceeds aided by government publicity, broadcasting the growth, activities and achievements of the sector at every opportunity.

Berridge’s report mentions high pay and “related party transactions”, both minor scandals the sector appears to weather. It should be noted that there is no complementary report for the other half, the LA-managed part of the school system.

State-run education services have not felt the need for flashy websites or extravagant six-word mottos plucked from the motto bran tub.

In this drive to push or pull as many schools as possible into the academy net, some local authorities have been lured or harassed into subsidising a conversion. Greenwich Council in 2018 handed over £1.5m to the Leigh Academy Trust (LAT) to enable Corelli College, an academy since 2011, to pass to the LAT.

Councillor Steve Drury’s blog shows anger at the decision, which was justified variously as “for essential health and safety work” from years back and a “£1m settlement in respect of a disputed interest in land”.

In July 2020, the Leamington Courier reported that Warwickshire council’s agreement to pay the £1,039,274 budget deficit to Our Lady of Lourdes Catholic MAT, so that the town’s Trinity School could join the MAT.

Then there are the “sweeteners” for one MAT to take over the schools of another; the Department for Education paid £3.1m in grants for this purpose in 2019-20, having allocated £6.8m to MATs the previous year to cover the takeover of 84 schools.

Millions of children across England have returned to school after the Covid-19 lockdown with many schools introducing measures to enable as safe an environment as possible (AFP/Getty)

Even the language of “rebrokering” sounds like a city deal.

Ark MAT received £260,000 from the DfE in the rebrokering of Oldknow Academy in Birmingham, the largest payout for a primary school, albeit one with 600 pupils. Sometimes the local council has been called upon to pay off deficits; Bradford’s bill for three primary schools was £250,000.

There has been a series of catastrophic educational and business failures in academy world. In July 2016 Lilac Sky Schools Academy Trust was forced to give up its nine schools. It had paid consultants a daily rate of more than £1,000 while drawing on emergency public funding.

It is not so much that this scandalous controversial management of educational establishments occurs but that it is tolerated as ‘normal for business’

In March 2017 the Education Fellowship Trust gave up its 12 schools after a series of damning Ofsted judgments and serious financial problems.

In November 2018 Bright Tribe Trust was wound up following accusations that most of its £1m northern hub funding was spent on senior staff.

In November 2018 Schools Company Academy Trust, which ran three alternative provision academies in Devon, apologised to parents for financial mismanagement and poor quality of education. In March 2020 the TBAP MAT running 11 alternative provision facilities for excluded and vulnerable children had a deficit of £2.4m.

The Conservative peer John Nash, as a schools minister from 2013 to 2017 also chaired a Future Academies Trust which was accountable to the government department he had formerly helped to run.

It is not so much that this scandalous controversial management of educational establishments occurs but that it is tolerated as “normal for business”, and therefore normal for educational business. The House of Commons Public Accounts Committee in 2018 was full of criticism of trust finances and noted that 125 trusts paid salaries of £150,000 or more to senior school staff in 2016-17. In 2020 these exorbitant pay levels are still being questioned in Berridge’s 2020 review.

Children studying maths, English and science from home while schools were closed at the height of the lockdown during April (PA)

In the Covid-19 era, it is to the academy sector and to the Educational Endowment Foundation (EEF) that the Department for Education turns to fund support for “left behind areas” and “tutoring and catch-up provision”.

The EEF’s founder, dubbed by the press the “philanthropist”, Peter Lampl, described his the organisation as “dedicated to creating fairer access to education”. He was also knighted in 2003, feted by government ministers of every stripe, and even called “Blair’s favourite millionaire”.

He has ploughed at least £20m into the charity but most of the rest of the funding has been from government sources. Tutoring organisations will be vetted by EEF. Teach First, the UK variant of Teach for America, has the subcontract for the initial delivery of the National Tutoring Programme, including the recruitment and training academic of mentors at £350,000.

All this at the start of the September term is recognised as too late. This provision could have been effectively managed by local authority education departments – with the appropriate funding.

Oak National Academy, “incubated” by the Reach Foundation, was set up speedily to provide online lessons, weekly assemblies, resources for pupils from reception to year 10 and a curriculum for pupils normally at special schools.

It claimed in April to have delivered 2 million lessons in its first week and in June received £4.3m in government funding for provision in the 2020-21 academic year. This could have been done by university departments of education and a consortia of local authorities.

MATs are the DfE’s preferred vehicle for school improvement. Leora Cruddas, chief executive of the Confederation of School Trusts, welcomed new projects and new senior jobs in this area, all for the academy sector, saying that there was “no doubt that groups of schools working together in a single governance structure have shown themselves to be the most resilient of school structures during the Covid-19 pandemic”.

Year 10 pupils attending an English lesson at Moor End Academy in Huddersfield on 11 September 2020 (AFP/Getty)

This disregards local government, which was once that “single governance structure”, locally focused and under democratic control.

It is the associated business opportunities which edupreneurs have not overlooked, from staff development and computer support to classroom materials and management coaching.

Hundreds of firms and organisations touting for business are to be found at the two-day Schools and Academies Show annually at London’s ExCeL centre and the National Exhibition Centre in Birmingham.

The London version has been cancelled for 2020 but the Birmingham one goes ahead in November, but since the new Covid-19 guidance only as an online event. These have been impressively monstrous affairs with big name speakers, always a Conservative minister among them and upwards of 200 stands selling services to schools and trusts.

A favourite has to be Building Schools for Nothing, which “provides consultancy services to develop unique strategies for generating funding to deliver new school buildings and facilities” often by selling surplus land and like parts of the playing fields and using receipts to finance the building of additional classrooms or facilities.

This is edubusiness.

The privatisation of major services like health and education is not simply an evolution. The scheming for it is most notably set out by Gove and others in their 2005 Direct Democracy – An Agenda for a New Model Party, which sets out all the proposals now coming to pass.

In 2020, it is no longer the covert, sneaky programme it was. Privatisation has been ramped up, but it fails to deliver and must surely be forced to retreat, terminally damaged by greed and incompetence. Reagan got it wrong. The UK government must be able to manage health and education provision for its citizens better than this.

These issues are examined in greater length in ‘How to Dismantle the English State Education System in 10 Easy Steps’ (Zero Books, 2020) by Terry Edwards and Carl Parsons and 'How to Dismantle the NHS in 10 Easy Steps’ (Zero Books, 2018) by Youssef El-Gingihy