There have been claims today that the Gove school plan is flawed as school budgets will suffer. (See BBC & ASI Blog). The comments are put out by those who cannot see the twin advantages of such a policy – Of raising standards and raising productivity. Like in Sweden, it will serve to provide better value for the taxpayer and provide local communities with more diversity and innovation.

As I wrote in response to Hopi Sen’s article.

The claim that LEA schools budgets will suffer if schools go independent is only valid for fixed costs.

For instance, suppose an existing school 2 class per year primary school, loses 50% of its pupils to a start-up next door. Leaving aside the one-off costs of redundancies etc, the major costs are variable – the teaching staff. However the fixed costs (heating, maintenance, LEA admin) will go unchanged, so cost per pupil will rise. A 10% drop in pupil numbers may cause a 3% to 5% rise in costs per pupil.

However, this could be offset by three things.

1. Efficiency savings / productivity increases. Given that we have had 13 years of a government who throws money at problems, there should be plenty of opportunities for this.

2. Start-up schools being given tighter budgets from the outset.

3. In the long run, all fixed costs are variable. In other words, unpopular schools will close, LEAs will shrink their staff etc.

Hopi – You are right when you say that the education budget will be cut, like much else. The structural deficit created in the boom years will not be eliminated by a strong recovery. The best way to minimise the impact on public services is to first understand the nature of the costs and then find ways of improving productivity. Like in many areas of the private sector, this is by allowing for different types of solutions to a particular issue, initiated by people on the ground.

This country needs change, not because the Labour Government has run out of ideas, but because their top-down ideas do not exploit the real changes brought by utilising the best and most innovative talents in improving their own circumstances. In education, the Gove plan makes a start in this direction.