Market nuances

A blog by Warwick Mansell has alerted me to a speech given by Nick Timothy before the referendum, when he was head of the New Schools Network.

The relevance for HE lies in the manner in which he outlines his view of competition in education, particularly the idea that free schools should be opened in areas served by poor schools, rather than in areas suffering from a lack of places.

The following paragraph is critical for shedding further light on the topics of the two posts published on here this week about changes to HE policy after Theresa May’s elevation to prime minister.

The government is trying to create a market in the education system. This … is the right track for reform, but at the moment there’s a risk that we’re building in the potential for market failures too. A functioning market needs enough genuinely new entrants to challenge existing providers, enough capacity for competition to be meaningful, enough information for providers and users alike, ways of breaking up failing or monopolistic providers, and exit points for providers that aren’t doing a good enough job. The direction of travel is the right one, but there’s a lot that still needs to be done.

Picking over the bones of those sentences, I would focus on the emphatic use of ‘enough’ (remember proposed free schools go through an application process that has to evidence demand and need) and the more activist line on ‘breaking up’ failing or monopolistic providers. That is, market exit isn’t just about having plans in place if providers decide to shut down their education provision; there’s a role for the interventionist state in precipitating market exit if provision is deemed to be poor.