Strategic Planning

The green shoots

Independent schools in the UK can bounce back from the effects of the current recession, according to a new assessment of likely developments over the next two decades. Dick Davison reports

The Independent Sector Report 2010, the second comprehensive overview from mtmconsulting of the health of a sector now worth £7billion annually, predicts that independent schools will recover strongly from the downturn.

It foresees a significant increase in independent school pupil numbers from 2012 onwards, but not only because of improving economic circumstances. Severe cuts in public expenditure, which will be forced on any incoming Government in 2010, of whichever party, is likely to produce unrest, industrial action and disruption in the state sector, leading to a renewed flight to the independent sector.

Out of focus
The report also forecasts that, as the educational landscape changes and the distinction between state and private sectors is further blurred, a variety of opportunities will open up for flexible and innovative schools. But it gives a sharp warning that further recovery will be imperilled if the sector fails to address the vital issue of affordability. In fact, unless schools control their costs more effectively and moderate their fee demands, the report predicts a lengthy period of steady decline in numbers from 2015 onwards.

The 160-page report, as with the first mtmconsulting Independent Sector Report, published in 2007, has been compiled by Gavin Humphries, a business analyst. He writes: “Affordability may be falling but if this can be reversed the potential market for independent schools is very large. We put the figure ... at more than two million pupils. But to achieve this, schools must restrain the continuing growth in fees by tackling their finances.”

The target market for independent schools is actually growing fast, says the report, because the UK professional and managerial classes are steadily expanding. But independent schools’ rolls have not kept pace with this expansion, largely because they have failed to control their costs and have become progressively more unaffordable. Without action to reverse this trend, independent school numbers could eventually start to decline by 0.5 per cent per year.

The report raises particular concerns about the sector’s failure to get a grip on costs. Administration and premises costs have been rising fast, it says, but teaching costs “appear to be out of control. Because teacher numbers have grown so much faster than pupil numbers, since 1981 the number of pupils per teacher has fallen by a third from 12.6 to 8.3 (with a fall of 4 per cent in 2009 alone). The net effect has been to put teaching costs up by 50 per cent. It would be hard to argue that the quality of education in schools had improved by an equivalent 50 per cent over the same period; their productivity has demonstrably not.” One result of this is a large swathe of schools which, because they are failing to achieve reasonable surpluses, will be especially vulnerable to the recession.

Deeper trends
Commenting on structural trends in the sector, the report says that, until the current recession, the total number of independent schools in the UK was increasing. Because the total number of pupils was relatively static, this meant that the average size of school actually started to decline for the first time in many years. But the necessity to seek economies of scale and to minimise costs per pupil will reverse this trend, with schools growing larger and more of them joining or being subsumed in groups and alliances.

There are other major structural trends within the sector. The market for independent education is polarising between “premier league” schools and niche schools, the report concludes, leading to ever-fewer opportunities for good but medium-sized, all-round schools. Premier league schools are those that have established themselves in a pre-eminent position in either the boarding or academic market. Niche schools are those that have carefully defined their educational market and present themselves as being the best in their chosen field. Perhaps the most established niche is for children with special educational needs such as dyslexia.

A new challenge for the sector will come if there is a Conservative victory in 2010. Their plans for privatelyprovided, but free, schools will both drive up standards in the state sector generally and attract pupils away from independent schools: “The Conservatives’ stated aspiration is for around 3,000 new schools, containing 220,000 new places. Is this number of new schools feasible? In Sweden, 900 new schools have been established during the last 15 years. That’s about 100 schools per million population, twice the 50 schools per million if 3,000 schools opened in the UK.

So although the Conservatives’ policy has been criticised for implying that one new school would have to open almost every working day for 15 years, the Swedish experience does suggest that this is physically achievable.”

In making its forecasts for 2020, the report takes into account the effects of the recession, demographic changes, unrest in the state sector and declining affordability of independent schools. It forecasts a strong but short recovery in numbers in the early years of the next decade, followed by a protracted period of decline. It emphasises that this forecast is based on the assumption that schools fail to control their costs.

The long haul
The report looks even further ahead, to 2030, and suggests that the changing face of education will present exciting opportunities for schools and organisations prepared to act imaginatively.

In the longer term, pressures produced by limited funds, increased regulation and higher parental expectations, will have an impact on both independent and state sectors and will change the face of education.

As well as producing new challenges, says the report: “It will mean new ways of doing things in state education – and we think that this is the real opportunity for independent schools. This is the chance to win 30 per cent or more of pupils. To seize these opportunities, schools will need vision and energy. But this abounds in a sector that has managed to stay resolutely ahead of anything thrown at it so far.”

Dick Davison is a senior consultant for mtmconsulting ltd. The Independent Sector Report 2010 (£395 incl VAT and P&P), is available from mtmconsulting ltd, Portland House, 43 High Street, Southwold, Suffolk, IP18 6AB or tel 01502 722787. 

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