Regulation: Lessons from finance?
Shifting goalposts, lack of certainty, massive changes in public opinion; just a few factors many in the teaching profession are feeling at the moment. As I have found out in the last week, we are not the only ones. Although it might seem an unlikely link, many of those in the banking and finance industry are currently experiencing similar circumstances…
A chance series of opportunities recently has caused me to begin to look at the world of finance, and this has provided some interesting contrasts to bring to my thinking about education. One of the wonderful things about working in a University is the regular opportunities to get learn about fields other than your own. Recently I had the opportunity to listen to a lecture by Mark Moody-Stuart on his take on the future of capitalism. This was closely followed by a kind invitation from Asim Butt, who I met at Startup Weekend London Education, to the ‘Swift Business forum’ event which I attended with some of our economics students.
In the wake of the financial crisis, one of the hottest topics in banking and finance is that of regulation. I was not surprised to hear regulation was a big area, but I was amazed to find out just how much. One speaker at the Swift event claimed (and was not contested on this) that senior bankers spend around 50% of their time on managing the compliance of their organisations with the ever increasing rules and regulations set by governments, and the complex systems of sanctions that are imposed should they transgress these. I wonder how this would compare with how much time senior school leaders spend on attending to compliance with regulation?
Mark Moody-Stuart had much to say on this topic. He put forth a strong argument for what he termed ‘smart regulation’. Whilst he came across as a strong advocate for free markets, he acknowledged that a certain amount of regulation is needed. The problem, he said, is that much regulation is concerned with controlling processes rather than controlling outcomes.
To illustrate this, he discussed the legislation around catalytic convertors in vehicles. The legislation we have, he claimed, puts controls on exactly how a catalytic convertor should work, how it should be made, and with what materials. The result is that a certain level of emissions levels is achieved, however he argued that this has also resulted in an almost total lack of innovation in this field for decades. His solution was that legislation should be focused on the outcomes, in this case only stipulating the levels of emissions, and allow the manufacturers to innovate to provide the best process for achieving this outcome. When outcomes are regulated, but process is left alone then market forces come in to play; in this case manufacturers would be able to either reach the outcome cheaper (therefore more attractively for consumers) or they might even beat the target for outcomes (another selling point for environmentally conscious consumers).
When you closely regulate process, he argued, you constrain innovation and reduce the positive effects of the free market.
So, what does this mean for education?
This way of looking at regulation of process and outcomes as separate casts an interesting light on some of the regulation we currently have in UK schools. Where do we currently regulate for outcomes and leave the process free for innovation? Where are we regulating the actual process? With all the ‘good practice’ examples, descriptions of what ‘outstanding’ looks like and, dare I say it, all the sharing of practice we engage in, are we actually regulating process where we should be making space for innovation in order to reach the desired outcomes in the most efficient, effective, or interesting ways?
Of course it isn’t as simple as that; it is all very well to decide to regulate purely for outcomes, but we might need to reach a more consistent agreement on what the desirable outcomes of education actually are. One time summative testing is a fairly straightforward outcome to set targets to, but teachers, parents, and young people themselves are far from being in agreement that this is the outcome they desire from education (just see this recent campaign on not letting exams define you). Having said that, it would be easy to see price as the single most important outcome for consumers in the free market, which when you think about it is as much a gross simplification as saying test results are the most important outcome for education.
It’s an interesting model, and in the current ‘marketisation’ of some aspects of UK education I think it is worth looking at some of these models from the market to see what insights we might gain into where we might be headed, or even to better understand where we are already. Our current system regulates both outcomes in the form of results and targets and process in the form of Ofsted inspections of teaching (although that is of course not their only focus).
Would a move to Moody-Stuart’s ‘smart regulation’ allow space for innovation and improvement whilst giving us the accountability and checks needed to ensure young people are getting the education they are entitled to?
This post has grown out of conversations with my colleague Pete Yeomans and thus the thinking is shared, although the expression is mine and may not wholly represent his views.