The Profit Motive

First off, cards on the table.

I make profits out of schools. In fact, I’m legally obliged to, being the director of a limited company and a supplier to schools. Now, and here’s where you may have to take a leap of faith, I’m not a bad person. Anyone reading this who knows me will hopefully testify that my motive is the improvement of education (we can agree or disagree on the particular method of that, but the motive is true).

But I am conflicted.

The education of others, particularly our young, is among the noblest actions of any society. It starts with an altruistic desire. However, we live and work in a capitalist society. And too often the outputs of education are measured by how they serve the needs of capital.

So, on the one hand I have an altruistic desire to educate and on the other I have a need to make a profit to put food on my children plates. Of course, don’t get me wrong here, we’re talking Morrison’s, not Waitrose food. And the plates are Ikea. Very few people make huge profits working in the sector. But its still a conflict.

On to the wider point. The gross spend per secondary school is around £6m. Approximately 30% of this spend is non-teaching staff related (based on 2009/10 data). This means that within that £1.8m there is an element of profit. Some goes to the exam boards, some goes to the power companies, to builders, to book suppliers, to furniture makers, to supply providers, to recruitment agencies, to computer suppliers, to phone companies. And I could go on and on. And of course, to people like me (but not actually that much).

Over many years there has been a failure to reign in those costs. Some schools do it very well, but generally speaking in many of these areas of expenditure its a sellers market. Local Authorities and Quango’s of various descriptions have singularly failed to get a grip of this. Its not because they don’t want to, or because they don’t have the best interests of the schools at heart. Perhaps its because they are not hard-nosed enough to tell the photocopier sales-person where they can stick their contract.

Now here’s my question.

If a group of 10 schools get together and buy through an agent, using their increased buying power, and the skills of the agent, to reduce that £18m by, say, 10% then why shouldn’t the agent get a cut of that? You could argue that the schools could employ the agent and do the same job. Well, they could, but isn’t that essentially the way its been tried before? I don’t think it generates the same savings. There is clearly something about the profit motive that makes a difference here. I don’t know why (maybe some economist or behavioural psychologist would explain that), but it certainly seems to.

And the final question.

If an agent can get a cut of the saving (i.e. make a profit) how far different is that from actually having profit making organisations running schools?

As I said, I’m conflicted.