Neoliberalism and the Privatisation of Education

Last Updated on August 30, 2026 by Karl Thompson

Neoliberals believe education should be run on free-market principles. In practice this has meant four things:

1. Competition between schools, through marketisation — what Ball and Youdell call endogenous privatisation
2. Private companies taking over educational services — exogenous privatisation
3. More choice and voice for parents and pupils
4. Surveillance of teachers and top-down performance management

Neoliberalism has shaped education policy in England since the 1988 Education Reform Act, and every government since has continued the direction of travel. The privatisation of education is one of the largest topics within the sociology of education module and comes up regularly on Paper 1.

What is privatisation?

Privatisation is where services once owned and provided by the state are transferred to private companies, charities or religious institutions.

There is a great deal to transfer. Total public spending on education across the UK ran to around £122 billion in 2024–25, roughly 4.1% of national income. The core schools budget for England alone — day-to-day spending on five to sixteen year olds — is £67 billion in 2026–27, up from £65.3 billion the year before. That money pays for teachers’ salaries, support staff, resources, buildings, curriculum development, examinations and inspection. Every one of those is something a private company could be paid to provide.

Most aspects of education in England have traditionally been run by the state and funded by the taxpayer, managed by Local Education Authorities. Under the influence of neoliberal and New Right ideas, an increasing share of that money now goes directly to private companies rather than to local authorities.

Why neoliberals want education privatised

The neoliberal argument is that state-run education is inefficient. Because state schools have no competitors and cannot go out of business, they have no incentive to improve. Neoliberals argue this produces what they call ‘bureaucratic self-interest’ — a system run for the convenience of the people working in it rather than for pupils and parents — along with stifled initiative and low standards.

The solution, on this view, is to expose education to market disciplines: let parents choose, make schools compete for them, and let private providers run whatever they can run more cheaply than the state.

Neoliberalism is closely related to the New Right, and the former informed the latter, but they are not the same thing. Neoliberalism is the broader economic doctrine; the New Right was a specific political movement that applied it. For a fuller treatment of the distinction, see The New Right and Neoliberalism: An Introduction.

Private education is not the same as privatisation

This trips students up every year, so it is worth being precise.

Private education means fee-paying independent schools, funded by parents. Britain has always had these. The ISC Census 2026 recorded just over 526,000 pupils across 1,455 independent schools in the UK — around 6% of all pupils, the lowest number in almost a decade. That sector is entirely private and always has been.

Privatisation means something different: private companies being paid public money to deliver state education. The pupils are still in state schools. The funding is still taxpayers’. What has changed is who runs the service and who takes the profit.

A student who writes an essay about private schools when the question asks about privatisation will lose most of the marks available. The two topics overlap only at the edges.

State education in England grew out of the Forster Act of 1870, which created school boards to fill gaps in provision where there were not enough church or voluntary schools. It is worth being accurate about what that Act did and did not do: it did not make education free — fees were still charged until the Elementary Education Act of 1891 — and it applied to children aged roughly five to thirteen. Attendance did not become compulsory until 1880. Successive Acts expanded state provision through the twentieth century, and by the 1970s Britain had one of the broadest comprehensive systems in the world.

Endogenous and exogenous privatisation

Stephen Ball and Deborah Youdell drew this distinction in Hidden Privatisation in Public Education, a report written for Education International and presented to its 5th World Congress in 2007. It is the single most examinable idea in this topic, and the AQA uses both terms by name.

Their two categories are:

Endogenous privatisation — privatisation IN public education. This involves “the importing of ideas, techniques and practices from the private sector in order to make the public sector more like businesses and more business-like”. The schools stay in public hands. What changes is that they are made to behave like firms competing in a market.

Exogenous privatisation — privatisation OF public education. This involves “the opening up of public education services to private sector participation on a for-profit basis”, using private companies to design, manage or deliver aspects of public education. Here actual businesses move in and take the work.

The mnemonic that works: endo = in, exo = out. Endogenous privatisation brings private-sector methods into state schools. Exogenous privatisation brings outside companies in to run the services. Ball and Youdell’s own phrasing — privatisation in public education versus privatisation of public education — is the cleanest way to remember which is which.

Ball and Youdell also make a point students rarely pick up and examiners reward: the two forms are related, and the first paves the way for the second. Once a school system has been broken into competing units with devolved budgets and contracted-out services, it is already in a shape that private providers can move into. Endogenous privatisation makes exogenous privatisation possible.

Endogenous privatisation and the 1988 Education Reform Act

Endogenous privatisation in England was achieved almost entirely through the 1988 Education Reform Act, passed by Margaret Thatcher’s government and directly informed by neoliberal thinking. This is the policy the exam questions circle around, so it is worth knowing which mechanisms did the work:

• League tables, so parents could compare schools
• Open enrolment, giving parents the right to choose rather than being allocated the local school
• Formula funding, tying a school’s budget to the number of pupils it attracted
• The National Curriculum, establishing common terms on which schools could be compared
• OFSTED (from 1992), inspecting and publishing judgements

Together these created what sociologists call a quasi-market: not a real market, because no money changes hands between parents and schools, but a system with most of a market’s incentives. Schools compete for pupils because pupils bring funding.

Later policies extended the same logic. Performance-related pay for teachers, successful schools taking over failing ones, and academy chains managing groups of schools are all endogenous measures — private-sector management practice imported into publicly owned institutions.

HOWEVER, the market produced effects its designers had not intended. The best-performing schools in the league tables became oversubscribed and could select the higher-ability pupils — cream-skimming. The weakest schools were left with the pupils nobody else had chosen. Good schools got better, weak schools got worse, and the gap between them widened. Sociologists call this polarisation.

There was a further problem in the late 1980s and 1990s: schools worked out that excluding disruptive pupils improved their results, so they did.

Successive governments have spent thirty years tweaking the system to blunt these effects. League tables now report value added — what a school contributes relative to where its pupils started — rather than raw grades. Funding has been linked to retention to discourage exclusions. The Pupil Premium attaches extra money to disadvantaged pupils, giving schools a financial reason to want them. Each of these is an attempt to correct a market failure without abandoning the market.

Exogenous privatisation: private companies in state education

Exogenous privatisation accelerated under New Labour from 1997 and has continued under every government since. The main forms:

Academies and multi-academy trusts. Academies are state-funded schools run outside local authority control by an academy trust. Many trusts run dozens of schools. At January 2026, 83.9% of secondary schools in England were academies or free schools, along with 48.8% of primaries, and 60.4% of all pupils were in an academy. There are now more academies in England than council-maintained schools. The description of academies as a marginal experiment is thirty years out of date.

Building schools through the Private Finance Initiative. Under PFI, private consortia designed, built and maintained schools, and the school or local authority repaid them over contracts typically running 25 to 35 years. The buildings went up without upfront government borrowing; the repayments continue for decades.

Running the examination system. Edexcel is owned by Pearson, a global education corporation. Pearson sets exams, pays examiners, runs the training courses teachers attend to understand the mark schemes, and publishes textbooks for the specifications it assesses.

The wider education services industry. Supply teaching, catering, cleaning, IT, payroll, school improvement consultancy, curriculum materials and inspection services are all now bought from private providers. Technology companies have moved in especially fast, with Google and Microsoft platforms embedded in ordinary classroom practice.

Exogenous privatisation is not a free market in the ordinary sense. Parents do not pay Pearson. The government takes tax revenue and pays it to these companies instead of employing people directly. The claimed justification is efficiency: that a company under contract will deliver a service more cheaply than a public body doing it in-house.

Increased choice and diversity

Choice is not an optional extra in neoliberal policy — it is the mechanism that makes the whole thing work. Schools only compete if parents can choose, and standards only rise through competition if losing pupils hurts.

Two policies expanded the range of things parents could choose between. Academies, from the late 1990s, brought a wider range of organisations into running schools. Free schools, under the Coalition from 2010, went further: any parent group, charity or organisation with a viable proposal and evidence of demand could apply to open one.

Alongside diversity of provision came personalisation of learning — individual learning plans, target setting, periodic progress reviews. Students are treated as individual consumers of an education tailored to them, which reflects a wider shift towards late-modern consumer culture.

Top-down performance management

The final strand is surveillance. Many academy chains are large organisations headed by a chief executive, sometimes called a ‘super head’, on a salary running into hundreds of thousands of pounds. That person monitors the performance of every school in the chain; each head monitors the staff in their own school. Underperforming management can be removed and replaced from elsewhere in the trust.

The result is continuous measurement of schools, teachers and pupils, so that those at the top can identify underperformance and intervene.

Forced academisation was the sharpest version of this. Under the Coalition from 2010, schools judged to be failing by OFSTED could be compelled to become academies and be handed to an existing chain, with their budgets transferred out of local authority control.

This is the point at which neoliberalism looks least like the small-state doctrine it claims to be. Creating and policing an education market has required a substantial and highly centralised state apparatus. That tension is a strong evaluation point in an essay.

Arguments for the privatisation of education

Competition raises standards. The core claim: schools that must attract pupils to secure funding have a reason to improve, and results did rise steadily through the 1990s and 2000s.

Private companies are more efficient. Firms accustomed to controlling costs can run services more cheaply than local authorities, and the argument runs that this is worthwhile even after their profit is taken.

Choice and diversity benefit parents. Parents are no longer allocated to whatever school happens to be nearest. Academies and free schools have widened what is available, particularly in areas where the local school was poor.

Innovation. Freed from local authority control, academy trusts can try approaches that a uniform state system would not permit.

Arguments against the privatisation of education

It is worth knowing that the main perspective the AQA associates with criticising privatisation is Marxism, though as you will see below, that is not the only line of attack and arguably not the strongest one.

The curriculum narrows. Where private companies shape what is taught, subjects that lead to measurable, marketable outcomes are favoured over critical humanities subjects that are harder to justify commercially.

The cola-isation of schools. Ball and Youdell devote a section of Hidden Privatisation in Public Education to commercialisation, which they describe using the American term the ‘cola-isation’ of schools: selling to schoolchildren through vending machines, and building brand loyalty through logos, sponsorships and equipment promotions. Note that Ball and Youdell report the term rather than coin it — they explicitly describe it as “what is called in the US” — and the underlying research is Alex Molnar’s work on school commercialism. Molnar’s argument, which Ball and Youdell quote, is that schools by their nature carry enormous goodwill and can therefore confer legitimacy on anything associated with them. A brand in a school gets an endorsement it could not buy anywhere else.

If you need to cite this in an essay: Ball, S. and Youdell, D. (2007) ‘Hidden Privatisation in Public Education’, Education International, section on ‘Commercialisation or cola-isation’. The underlying source is Molnar, A. (2005) ‘School Commercialism’. Most revision sites attribute the term to Ball alone; that is not quite what the report says.

Cherry-picking. Private providers take over the schools where improvement is achievable and profit is likely, leaving the hardest cases with the local authority — which increases inequality of provision rather than reducing it.

Universal provision requires the state. If education were left entirely to fee-paying provision, millions of children would receive none, because millions of parents could not pay. Some level of state involvement is the precondition for education being universal at all.

For-profit provision can be financially fragile. Research led by Antonia Simon at UCL’s Social Research Institute — Acquisitions, Mergers and Debt: the new language of childcare (2022), funded by the Nuffield Foundation — examined the early years sector in England, surveying around 80 nurseries and analysing the finances of five medium-to-large for-profit chains alongside six not-for-profit providers. The for-profit companies were heavily reliant on private equity, carried growing debts and held low or negative operating reserves. The researchers warned the sector risked being damaged the way adult social care had been, with providers closing at short notice. Their concern is that public money flows into complex corporate structures and out to shareholders rather than back into provision.

Is the strongest criticism financial rather than Marxist?

This section came out of a comment left on this post by a reader, Hugh Hayes, and I think he was right, so it is now in the body.

The AQA frames opposition to privatisation as Marxist, and Marxist arguments are genuinely available: Marxists see academisation as handing public assets to private capital, and the claim that competition drives up standards as an ideology that legitimates turning education into a source of profit.

HOWEVER, there is a purely financial critique that does not depend on Marxism at all, and it may be the harder one to answer. Privatisation is expensive to set up. It generates costs in drafting contracts, in consultancy fees, in legal disputes when contracts are broken, in PFI repayments running for decades, and in returns paid to shareholders. Where those shareholders are overseas, the money leaves the country entirely; where the state pays a public body directly, it stays in circulation. On this argument the objection is not that profit is immoral but that the arrangement is a bad deal.

A second, related argument holds that essential services such as education and health are not commodities. They are things a community requires, and so should be accountable to that community rather than to investors.

Both are usable in an essay and neither requires you to sign up to Marxism. A student who can distinguish the Marxist objection from the value-for-money objection is doing analysis rather than description.

Contemporary evidence to evaluate privatisation (2026 update)

Three developments since 2024 have changed this topic, and all three are usable as up-to-date evaluation.

The Children’s Wellbeing and Schools Act 2026

The most significant reversal of the academies programme since it began. The Act received royal assent on 29 April 2026, and its provisions are being phased in.

Under section 54, academies in England are required to teach the national curriculum from September 2026, bringing them into line with maintained schools and removing one of the founding freedoms of the academies programme. Academy trusts are also brought within a national pay framework, obliged to pay teachers at least the minimum set by reference to the national pay ranges — though they may still pay above it. For the first time, Ofsted has a statutory basis for inspecting multi-academy trusts rather than only individual schools, closing a gap that had allowed trusts to grow large without their overall governance being inspected. The Act also repeals the duty requiring failing schools to become academies, ending automatic forced academisation.

What this shows: privatisation is not a one-way ratchet. A government can reclaim territory it previously ceded. It also suggests the academy freedoms were partly ideological rather than evidence-based — if allowing academies to depart from the national curriculum had clearly improved standards, removing that freedom would be hard to justify. Details of implementation are still being settled through secondary legislation, so this is a live story rather than a settled one.

VAT on private school fees

From 1 January 2025, VAT at 20% has been charged on private school fees, and charitable business rates relief was withdrawn from April 2025.

The effects are now measurable. The ISC Census 2026 recorded pupil numbers falling 3.5% between 2025 and 2026, to just over 526,000 — around 30,000 fewer than before VAT was introduced, and the largest fall since ISC records began. Overseas pupils fell 10.1%, with new international enrolments down 17.6%. Independent schools’ own figures show baseline fees rising just 1.8% between January 2024 and January 2025, but a 22.6% rise for parents once VAT was added.

What this shows: it is a useful counterweight in an essay, because it runs the other way from privatisation. This is the state deliberately making private education more expensive. It also gives you a live example of the boundary between the private sector and the state being redrawn by policy rather than by markets. Treat the ISC’s figures with the usual caution — it represents independent schools and has an interest in the finding — and note the falling birth rate is a competing explanation for part of the decline.

The National Tutoring Programme

The clearest recent case of exogenous privatisation failing on its own terms. Set up to help pupils catch up after the pandemic, the programme’s delivery contract went to the recruitment company Randstad in 2021. By the end of the Easter term, only around a quarter of the targeted tuition partner courses had started, the target of directing 65% of tuition to pupil premium pupils had been dropped, and the contract was terminated early. Funding of £349 million was routed directly to schools instead from 2022–23.

What this shows: the efficiency argument for exogenous privatisation is an empirical claim, not a logical necessity. Contracting out can be slower and worse than the state doing the job. It also shows the state carries the risk when a contract fails — the pupils still needed tutoring and the government still had to pay for it.

Exam practice: a 10-mark question with item

This is the format used in the education section of Paper 1. In 10-mark questions with an item, you must take your two points from the item. Unlike the no-item 10-markers, analysis and application are credited here.

Full question including item

Read Item B below and answer the question that follows.

Item B

Since the 1980s, governments have introduced market principles into state education. Schools now compete with one another to attract pupils, and their funding depends on how many they attract.

At the same time, private companies have taken over the running of services that were once provided by local authorities.

Applying material from Item B, analyse two effects of the privatisation of education. (10 marks)

Hints for answering this question

You must use the item. In this question there are only two ideas in it, and they are your two lead points:

• Schools competing for pupils, with funding attached — this is endogenous privatisation
• Private companies taking over services from local authorities — this is exogenous privatisation

The examiner is looking for you to name the concept, explain the mechanism, and then trace an effect through to a consequence. Two developed points score far better than four thin ones. You will not get credit for a general essay about marketisation that ignores the item.

Sources you could use include Ball and Youdell, Molnar, and Simon et al., though named sources are not required for full marks.

A possible answer

One effect of endogenous privatisation is that competition between schools has produced cream-skimming and polarisation.

As the item says, schools compete for pupils and funding follows those pupils. The 1988 Education Reform Act created this competition through league tables, open enrolment and formula funding. Because a school’s budget depends on recruitment, and because its position in the league tables determines how attractive it looks to parents, schools have a strong incentive to admit pupils likely to achieve good results.

The consequence is that oversubscribed schools can select higher-ability pupils, while less popular schools take those who were not chosen elsewhere. Successful schools improve further and struggling schools decline, so the gap between them widens rather than closing. This is the opposite of what the policy intended: competition was supposed to raise standards across the system, but it has raised them unevenly and increased inequality between schools. Sociologists call this polarisation.

Governments have recognised the problem and tried to correct it — value-added league tables and the Pupil Premium both exist to reduce the incentive to select — which is itself evidence that the market did not work as designed.

A second effect of exogenous privatisation is that public money now flows to private companies, which changes who is accountable for education.

The item refers to private companies taking over services from local authorities. This is what Ball and Youdell call exogenous privatisation: opening public education to private sector participation on a for-profit basis. Academy trusts run the majority of secondary schools, PFI consortia built and maintain school buildings, and Pearson runs an exam board.

The effect is a shift in accountability. A local authority is answerable to elected councillors and, through them, to the local electorate. An academy trust is answerable to its board and to the Department for Education; a PFI consortium is answerable to its shareholders. Parents who disagree with how a school is run have fewer democratic routes to challenge it than they had under local authority control.

There is also a financial effect. Money that would have been spent on provision is spent on contracts, consultancy and shareholder returns. The National Tutoring Programme illustrates the risk: the contract underdelivered, was terminated, and the funding had to be redirected to schools directly. The Children’s Wellbeing and Schools Act 2026 suggests the state is now pulling some of this accountability back, requiring academies to teach the national curriculum and giving Ofsted power to inspect trusts.

Sociology of Education Revision Bundle

If you like this sort of thing, then you might like my sociology of education revision notes bundle – which contains the following:

1. 34 pages of revision notes
2. mind maps in pdf and png format – 9 in total, covering various topics within the sociology of education
3. short answer exam practice questions and exemplar answers
4. how to write sociology essays, including 7 specific templates and model answers on the sociology of education

Written by someone who taught A-level sociology for eighteen years (2000–2018) and marked all three AQA papers as an examiner from 2010 to 2018, including the first two years of the current 7192 specification.

Signposting and Related Posts

This post has been written primarily for students studying the education topic as part of the AQA’s A-Level Sociology course, specification 7192. Privatisation appears in the education policies section and comes up on Paper 1.

The policy that introduced most of what is described above is covered in detail in these class notes on the 1988 Education Reform Act.

For the theory behind the policies, see The New Right View of Education and The New Right and Neoliberalism: An Introduction. Note that Haralambos treats neoliberalism and the New Right as interchangeable; they are not, although for most exam purposes the overlap is close enough that you will not be penalised.

For how privatisation fits into the wider policy chronology, see this summary of UK education policies, and for the most recent phase, Education Policy Since 2020.

Two related posts go deeper on particular aspects: Technology Companies and the Digital Privatisation of Public Education, and China’s anti-privatisation education policy changes, which is a useful comparative case of a government moving hard in the opposite direction.

This post is a summary of the argument set out at more length in The Neoliberal Approach to Education Reform, which draws on Stephen Ball’s (2013) The Education Debate.

For more exam questions and model answers, see my page on exams, short answer questions and essays.

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