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Private Equity in Public Services: The Case of Special Educational Needs Schools

Private equity companies – many with connections to the Conservative Party – have been buying up large swathes of the public sector, including care homes, schools and GP surgeries. Special schools appear to be the latest hot property

Children at a school for pupils with Hemiplegia and other moderate learning disabilities. Photo: David Taylor/Alamy

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Earlier this month, a meeting of Nuneaton Borough Council attracted controversyl after a video showed members referring to children with Special Educational Needs and Disabilities (SEND) as “just badly behaved” and flippantly asking whether the growing numbers of SEND pupils in state schools was “something in the water”. 

Nuneaton currently has 15,000 SEND children in state schools, which reflects growth in SEND pupils across the country, but the funding for such children has failed to rise in response leaving parents at the end of their tether.

Byline Times investigated to find out why. 

Problems in the State Sector

Kate Atrill-Hewitt is 37 years old and lives in Ivybridge, Devon with her husband and 9-year-old son “J”  who is Autistic. Earlier this month, she spoke to Byline Times expressing her frustration at the Local Authority’s inability to provide adequate help for J, whose Education Health & Care Plan (EHCP) has not been updated since he was in Reception class. “I’m having a nightmare and very likely going to de-register my son because of it, [because] his needs are not being met,” she told us. “The constant fight is getting to me and I just don’t know where to go to get this heard and sorted”. 

No longer coping in his mainstream primary school, J has become a target for bullies and Kate believes he needs to be in a special school, but the Local Authority has told her that he does not meet the threshold. J’s SENDCO (teacher in charge of the in-school SEND team) agrees with Kate and has also presented his needs to the Local Authority, who Kate says “aren’t listening”. 

At the end of her patience, Kate told us that she is now looking into finding an Educational Psychologist to assess J and hopefully get him the help he needs, but a House of Commons debate on SEND Provision and Funding last month suggests that this may not be any easier. 

Held on January 14th, the debate heard from a number of MPs on the Government’s failure to support SEND departments across the country. The presence of Educational Psychologists was raised by John McDonnell, Labour MP for Hayes and Harlington, who pointed out that “88% of local authorities are reporting difficulty in recruitment; 48% are citing pay as a reason”; adding that “this year, for the first time in its history, the Association of Educational Psychologists took industrial action because it was desperate on the issue of pay.

Pay and funding was a central focus of the debate, with MPs from various wards pointing out that local councils sat on the verge of bankruptcy. The reasons for this are numerous but appear to be partly caused by a growth in the number of privately-run special schools siphoning funding from the public pocket.

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The Rise of the Private Sector

Private schools operate outside the Local Authority and are funded independently but, according to a report by the British Educational Research Journal last year, demand for special school placements has so outstripped the number of places available in state special schools, that Local Authorities have had no choice but to place children in private provision. These placements are, according to the National Audit Office, one of the main reasons that Local Authority ‘high-needs’ budgets are so painfully stretched.

Private schools are permitted to run as for-profit enterprises, meaning that there are no laws limiting the amount they can charge in fees. Whilst many private special schools are run by charities, a growing number are not leading them to operate on the same for-profit basis as other private establishments. 

Places at state-owned special schools currently cost local authorities between ten and thirty thousand pounds per pupil, per year. Their privately-owned counterparts are charging councils up to three times more than this, sucking money from an already decimated public sector. The government has declined to raise state school SEND funding for the last ten years for reasons unknown, but a deep dive into the owners of the private schools led to some interesting revelations.

For the last few years, private equity companies have been buying up large swathes of the public sector, including care homes, schools and GP surgeries. Special schools appear to be the latest hot property and our investigation has revealed the owners of some companies to be major Tory donors, giving the Conservative party more than a quarter of a million pounds between them.

Sovereign Capital Partners and Octopus Investments are the heaviest hitters, with Sovereign’s CEOs donating £211,844 to the Conservative party between 2008 and 2012.

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In 2018 Sir John Nash, founder of Sovereign, was also revealed by openDemocracy to be the sponsor of a number of “free schools” and had previously been made schools minister by Michael Gove. Whilst this sponsorship did not give him ownership of the schools, it did allow total control over their governance. According to Companies House, Sovereign made £2.4 million profit in the last financial year.  They did not reply to Byline Times requests to comment.

Octopus Investments have also forged close bonds with the Conservative Party. In 2018, their CEO, Christopher Hulatt, spoke at a Conservative conference arranged by the opaquely-funded Adam Smith Institute. Giving more than £26k to the Tories between 2018 and 2019, they are the main investors in the Aurora Group, which runs 15 special schools across the UK. 

A spokesperson for Aurora told Byline Times that the company plays a key role in providing high-quality education, care and support services for people with special educational needs, and that since 2015 they have provided more than 1,000 much-needed places for children, young people and adults.

The spokesperson also confirmed that their CEO Chris Hulatt “made a personal donation of £2,500 to the local association of his constituency MP, Bim Afolami MP, who represents the Conservative Party” but went on to say that Hulatt “is not a member of any political party and attends both Labour and Conservative party conferences. In his role as a co-founder of Octopus Group, Chris engages with politicians from all parties.”

Sovereign Capital had not responded to our request for comment by the time of publication.


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Troubling Conservative Attitudes

Attitudes of Conservative MPs towards SEND children are another part of the problem.  Selaine Saxby, MP for North Devon, spoke out in the January debate, describing Devon as being “in the middle of a special educational needs pandemic” and said that “we seem to have far too many children being given a label, rather than the help they need to fulfil their potential.” 

The idea that the problem lies in growing diagnoses and parents’ desire to “label” their children, was echoed by Councillor Clare Golby at the now-infamous Nuneaton Council meeting and appears to be the basis for many Tory rebuttals to their decade of SEND failures.

Golby’s statement, that parents were “swapping tips” on how to get a diagnosis, does not reflect reality, which is that children in wealthy families were significantly more likely to receive accurate, timely EHCP diagnoses than their poorer peers because parents in wealthier areas tend to be better educated and more aware of what to say on forms to ensure they get the help their child needs. 

Byline Times contacted Devon County Council for comment but has, as yet, received no reply. We also reached out to the Department for Education and their spokesperson said: 

“Every child deserves to have access to education that meets their needs. Our recent Improvement Plan will reform the support system for children with Special Educational Needs and Disabilities, prioritising earlier intervention and creating consistent high standards across the country.

“We are also putting significant investment into the high needs budget, which will have risen by over 60% to £10.5 billion next year since 2019/20.”

Theatre director and parent of a disabled adult child, Stephen Unwin, has written extensively on this subject, comparing the Conservative presentation of disabled people as a burden on the state to the Nazi eugenics programme.

In a recent piece for Byline Times, Unwin noted that part of the problem with council budgets is that parents of disabled children often take them to tribunal to get their children’s cases reviewed. These tribunals are, more often than not, won by the parents and have so far cost Local Authorities more than £92 million in legal fees. Likewise, Unwin has noted that “£66 million of state and private investments held in child trust funds set up for disabled children cannot be accessed by their beneficiaries because they lack ‘capacity’, which also adds to the burden on Local Authority budgets.”

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