The crisis of international capitalism will have a myriad of unforeseen consequences, one of which will be its impact on the privatisation of public services.
In education the battle around the privatised city academies is set to intensify. In two simultaneous, but apparently contradictory, developments the government has announced that it is expanding the academies programme to include a further 70 secondary schools, while many private sponsors are reported to be having second thoughts about their involvement. Something clearly has to give.
Many optimists thought that the demise of Andrew Adonis, the chief ideologue of the academy project, would at least scale down the privatisation initiative. But Jim Knight, the schools minister, has been given the go-ahead by the Treasury to increase the number of academies to 310 by 2010. Yet already one major company, Amey, is in talks to end its sponsorship of Unity City Academy in Middlesbrough.
The Times Educational Supplement reported that Ark, a sponsor of six academies with plans to double that number, could be forced by the crisis to rein in its ambitions. A spokeswoman for Ark admitted euphemistically that some of their donors would be in "different circumstances".
Mary Bousted, general secretary of the Association of Teachers and Lecturers, argues that the impact of the crisis has "highlighted many of our fears about the entire academy programme". If an academy is abandoned by a defaulting sponsor who will take responsibility for it? These new circumstances should give added impetus to the campaign against the academies.
The government's continuing obsession with the academies programme is driven by an ideological commitment to privatisation, but this is coming up against some harsh realities.
Ed Balls, the education minister, shamelessly identified 683 secondary schools as "underperforming" (ie achieving less than the 30 percent target for A* to C grade passes at GCSE including maths and English). This was despite the fact that his own inspection regime, Ofsted, had described 25 of them as improving. (Ironically, some of the underperforming schools are academies.) The proposal to turn a further 70 of these schools into academies at a time when the willingness of private companies to fund them is coming into question is at best reckless.
It's reasonable to ask who these people are that Balls and co are so keen to be involved in our schools. One of the most prominent supporters of Ark is John Paulson, the billionaire hedge fund speculator who was involved in the betting that precipitated the HBOS collapse. Do we want these parasites running our schools? Bizarrely they are criticised for their speculative activity and simultaneously welcomed as academy investors. The government should instead be looking at ways in which public money can be invested properly in the education of our children through the direct financing of schools from the Treasury.
Even before the present crisis many potential sponsors from business were having second thoughts about their involvement and the government was looking increasingly at sponsorship from other educational institutions. But universities and colleges are not immune to financial pressures resulting from the current turmoil and will think twice before taking on the running of schools as well.
An additional problem for the funding of education arises out of the investment of local authorities' funds in high interest accounts in crisis ridden banks. More than 100 councils have invested funds in high risk Icelandic accounts alone and are already refusing to rule out cuts in jobs and services as a result. This is on top of the effect of local authorities' reliance on the private sector for providing contracted out services.
The mantra was always that the privatisation of services would minimise the risk to local councils. In fact the opposite is the case - it exposes them to greater risks if private companies default. The pension funds of local authority workers are similarly at risk, having been gambled on investments in the many major institutions that have gone belly-up in the last few weeks.
The urgent response of the unions in education and throughout the public sector must be to place specific demands on government and local authorities based on the principle that vital services, workers and local communities are not going to pay the price for the current crisis of capitalism. If governments have entered into a Faustian pact with private investors they must take the consequences of their erstwhile partners defaulting. Who can possibly argue now that the money isn't there for public services?