Five More Beautiful Years of Tory Education Policy

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Perhaps I'm missing something here, but how exactly do private companies make a profit from public services (such as education or the NHS) without creating a gap between what the government is giving them and what they are spending on delivering the service?

The argument is that public-sector services tend to be pretty ****ing inefficient, when compared to private services in the free market. For instance some private schools operate on lower budgets than state schools, but manage to attract parents to cough up the cash because they provide a better service. I know they have other advantages, but the point stands. Compare, the government used to have a big influence in the production of food, ostensibly to protect consumers. But we get it much cheaper now Tesco, Aldi et al. are having a price war. Actually there is evidence that increased funding in schools has practically no effect on performance. At least, it is dwarfed by other factors. If you think that unbelievable, see this report the government commissioned when it was trying to justify the pupil premium. In particular, this fun graph:

But the point is not to just privatise some schools and trust them to do better. The idea of allowing profit goes hand in hand with increased parental choice and competition between schools. The reason they introduced free schools and academies was with the aim that parents would always be able to choose where their child went. Currently if you're in an area with crap schools and a dearth of spaces...tough. If parents can take their children out of bad schools and put them into good ones (as defined by the parent, not bureaucrats with a vested interest in justifying mediocrity) then the bad ones will close down and the good ones expand.

The profit motive is an attempt to turbo-charge this, basically. In Sweden, specialist educational companies that can turn a profit will invest in managing or starting up schools, but they only make a profit if parents are happy with their offering, as is true with any other consumer-orientated business. An area with unsatisfactory schools is an opportunity to provide a service people want. The profit-motive and competition between schools provides an incentive to improve which barely exists now, and didn't at all until Gove came in.

That's the theory anyway, but it's working fine in Sweden.