from mtm School Matters newsletter, Issue 02.
mtmconsulting’s Principal, Melanie Tucker writes about the implications of the recession on independent school business strategies, and how outstanding educational marketing and effective school and college cost-management are essential if school and college business leaders are to effectively lead their group through the next decade.
A new road map of the likely development of independent schools in the UK has just been provided by mtmconsulting.
The Independent Sector Report 2010, mtmconsulting’s second overview of the health of a sector now worth £7billion annually, predicts that independent schools and colleges will bounce back strongly from the current recession.
A significant increase in independent school pupil numbers from 2012 onwards will be boosted by a parental reaction to unrest and disruption in the state sector, brought on by the consequences of the likely cuts in public expenditure which any incoming Government is bound to make.
It also forecasts a variety of opportunities for flexible and innovative schools as the educational landscape changes and the distinction between state and private sectors is further blurred.
But the report gives a sharp warning that further recovery will be imperilled if the sector fails to address the vital issue of affordability. 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 report, like its 2007 predecessor, has been compiled by Gavin Humphries, an experienced 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 160-page report has seven main sections, supplemented by profiles of significant developments in schools and school groups and an analysis of regional trends. The sections are:
- Pupil trends: The target market for independent schools is growing fast, says the report, as the professional and managerial classes expand. 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 year.
- Financial trends: Administration and premises costs have been rising fast but teaching costs “appear to be out of control,” says the report. “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% in 2009 alone). The net effect has been to put teaching costs up by 50%. It would be hard to argue that the quality of education in schools had improved by an equivalent 50% over the same period; their productivity has demonstrably not.” One result is a large swathe of schools failing to achieve reasonable surpluses, which will be vulnerable to the recession.
- Structural trends: until the current recession, the total number of independent schools in the UK was increasing. Against a relatively static total number of pupils, this meant that the average size of school started to decline. The need to seek economies of scale and to minimise costs per pupil will see this trend reversed, says the report, with schools growing larger and more of them joining or being subsumed in groups and alliances.
- Segment trends: The market for independent education is polarising between ‘premier league’ schools and niche schools, the report concludes. There are 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.
- Political trends: A Conservative victory in 2010 will represent a significant new challenge for the independent sector, says the report. Their plans for privately-provided, but free, schools will both drive up standards in the state sector generally and attract pupils away from independent schools.
- Forecasts to 2020: Taking the effects of the recession, demographic changes, unrest in the state sector and declining affordability of independent schools, the report forecasts a strong but short recovery in numbers in the early years of the next decade, followed by a protracted period of decline. It stresses, however, that this forecast is based on the assumption that schools fail to control their costs.
- Scenarios to 2030: The report suggests some longer term scenarios, produced by the pressures of limited funds, increased regulation and higher parental expectations. These will have an impact on both 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% 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.”
For more information on the mtmconsulting Independent Education Sector Report 2010, which is essential reading for all schools and college business leaders, marketing professionals or educational businesses (and is used for our own management consulting for schools) please click here.