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Scandinavian success story: Banning academic selection in Sweden has allowed competition between schools to improve results

One of the most important lessons from the past decade of public service reform is that poorly performing institutions do not reform on their own. Faced with a failing school, hospital, or children's social care department, it is tempting for the government to throw resources at it (if it can find them) and hope that these, coupled with the intrinsic motivation of staff, and their public service ethos, are enough to drive improvements. 

But we now know that extra resources on their own are insufficient to turn around the vast majority of failing institutions. Cultural and organisational barriers mean that some form of external challenge or pressure is needed to create improvement. This challenge can come from a variety of sources: from government departments themselves through the setting of targets and the direct management of providers; from regulators such as Ofsted in education or Monitor in the NHS; from the various forms of what Albert Hirschman called the users' "voice", such as complaints procedures or public meetings; or from user choice and provider competition.

In education, successive UK governments have used all four methods to challenge poor performance, but with an increasing emphasis on user choice and provider competition — often from  non-traditional providers. In the previous government Andrew Adonis initiated the academies programme to challenge local authorities' monopolies in schools. Michael Gove has extended it while also stimulating competition further by supporting parents, teachers and other groups who set up free schools from scratch.

Does competition from non-traditional providers improve outcomes? In the heated debate about this issue, proponents and opponents alike often back up their arguments with research that is far from easy to interpret. It is notoriously difficult to evaluate the effects of market-based reforms, which means that good methodology is necessary for drawing persuasive conclusions. All research is not equal, which generally is not acknowledged outside academia.

In particular, the role of system design is rarely emphasised. All markets have rules that determine the playing field, which in turn impacts on outcomes. This is especially true in education, which is a "quasi-market", characterised by parental choice and school competition but with public funding. The regulatory framework of such markets is crucial — but it differs substantially worldwide and even within countries. It is therefore difficult to make sweeping statements regarding the efficacy or inefficacy of school competition without analysing the overall structure in which it operates. In other words, all competition is not equal either.

The importance of separating good and bad research is clearly shown in the discussion regarding the impact of competition on countries' performances in international tests, such as PISA and TIMSS, which have become increasingly important in education debates worldwide. The conclusion from much of that discussion appears to be that competition from autonomous providers is irrelevant. When the latest PISA results were released last December, Andreas Schleicher, deputy education director at the OECD, claimed there was no evidence that competition raised pupil achievement. So did researchers of the Institute for Public Policy Research, who argued that this finding demands an answer from advocates of independent providers in the state-funded education system.

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