Education: Are vouchers the answer?

‘Education, education, education’

When asked about his priorities for office Labour’s then young and exciting leader, Tony Blair, proclaimed; ‘Education, education, education’. Both politically and in wider society there has long been an obsession with how we advance our knowledge through the process of education. Thomas Jefferson viewed education as a ‘key tool against tyranny’ and education is widely seen as a merit good with positive externalities; there are benefits that accrue to wider society as a result of my consumption of education. Its status as a merit good implies government intervention in the market for education, but not necessarily government provision.

Government provision of education is often criticised as being inefficient, with many arguing that creating a market for education will lead to better outcomes. The evidence from country comparison education league tables would certainly seem to support this, as we continue with government provision in England we continue to slide down the tables. Meanwhile countries such as Sweden have had marked success with vouchers.

To outline how one type of voucher scheme would work in theory I will look at the beliefs of Milton Friedman, a strong and passionate advocate of vouchers. In his seminal work Capitalism and Freedom he outlined how his ideal education system would work ‘Governments could require a minimum level of schooling financed by giving parents vouchers redeemable for a specified maximum sum per child per year if spent on ‘approved’ educational services’. Under Friedman’s system, which is an example of an extreme voucher system, parents would be able to ‘top- up’ their voucher with additional income to send their child to a more expensive school. Schools would also be allowed to operate their own entrance policies. In implementations of various voucher systems in reality these freedoms are often restricted. Proponents of voucher schemes and creating a market for education argue that efficiency gains resulting from competition between schools will lead to an education system that better meets the needs of society.

Countries that have experimented with vouchers include Chile, New Zealand and the Czech Republic. However, it is the case of Sweden that draws most people’s attention, and we are often told that their education system is a shining example to follow.

Sweden introduced school vouchers in 1992 as part of a large scale reform of the education system which gave prominence to both a voucher system and parental choice reform. Following the reforms independent and public schools in Sweden operate on equal terms and the reform applies to everyone. The reforms undertaken in Sweden were wide-ranging with all kinds of schools eligible, including faith schools and schools run by for profit businesses. However, although Friedman is a big fan of the Swedish education system there are some limitations. Schools cannot charge additional fees on top of the cost of the voucher and must accept students of all abilities. So whilst Sweden is often championed as having a free market for education, these restrictions are quite severe.

The results of the implementation of this voucher scheme in Sweden are on the surface incredibly positive with evidence that results improve due to the competition between schools. Moreover there is no evidence that low achievers have been aversely affected by the reforms. Nevertheless there remain concerns about students being ‘left behind’ and the Minister of Education for Sweden at the time of implementation, Carl Thom, surprisingly stated that ‘there is inevitably a conflict between freedom of choice and a good school for everybody’. Still, Sweden remains an example of a country where a large scale voucher scheme has been implemented, with some success. However, the particular nature of the Swedish education system helped to make the introduction of a voucher scheme much easier than it would be in a country such as the UK. Whilst, this voucher scheme may be a good solution for Sweden, that does not mean it is a good solution for us all.

For example, it is interesting to note that our existing independent schools would almost certainly not want to be part of a framework that stopped them from admitting by ability or charging the price they wished to charge. However, the counter to this argument is that independent schools could remain outside the voucher system and that their existence should not affect reform of public provision of education. Nevertheless, implementing a voucher system in England would certainly be complex.

There are also some common, widespread criticisms of voucher schemes which I will now explore. Firstly, there is a belief that vouchers will lead to everyone at the same school being from a certain economic background. This is usually regarded to be a negative effect as it ingrains segregation within society from an incredibly young age, and potentially exasperates the class system. Secondly, there is an argument which states that wealthier families will be better placed to play the system and see their children gain admission to the best schools. Therefore, if a voucher scheme of one type or another is implemented it is important that the state provides high quality, free information to all. Thirdly, any plan for reform of school choice must include a plan for transportation. For vouchers and school choice to work there must be an expanded network of state funded transportation. If this is not the case then transport costs can negate the impact of vouchers, making school choice unattainable for those who could not afford the transportation costs.

Voucher schemes are clearly a contentious issue. In spite of the support of prominent economists such as Milton Friedman and their appeal to Conservative ideology and free market thinking, implementation remains rare. In spite of the intrinsic appeal of vouchers as a clever, economic solution I have profound misgivings about voucher schemes. I am especially concerned by the potential for the creation of a hierarchy of schools with smarter, wealthier students moving to certain schools and low-achievers left to struggle. So-called ‘peer effects’ state that students benefit from being around high ability students, and I would have to agree.

Therefore, in conclusion, I would not recommend the adoption of vouchers in England, in spite of our current league table woes. The benefits in terms of efficiency may well be overstated and there is at the moment no compelling evidence of significant gains in outcomes. Vouchers remain an education provision solution with real appeal for economists, but they are not a silver bullet.

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