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Reuters

When one of the biggest private education firms in Sweden went bankrupt earlier this year, it left 11,000 students in the lurch and made Stockholm rethink its pioneering market reform of the state schools system.
School shutdowns and deteriorating results have taken the shine off an education model admired and emulated around the world, in Britain in particular.
"I think we have had too much blind faith in that more private schools would guarantee greater educational quality," says Tomas Tobé, head of the parliament's education committee and spokesman on education for the ruling Moderate Party.
In a country with the fastest growing rate of economic inequality of any OECD nation, basic aspects of the deregulated school market are now being reconsidered, raising questions over private sector involvement in other areas such as health.
Two decades into its free-market experiment, about a quarter of once staunchly socialist Sweden's secondary school students now attend publicly funded but privately run schools - almost twice the global average.
Nearly half of those study at schools fully or partly owned by private equity firms.
Ahead of elections next year, politicians of all stripes are questioning the role of such firms, who are accused of putting profits first with practices such as letting students decide when they have learned enough and keeping no record of their grades.
The opposition Green Party, who, like the Moderates, were long-time supporters of privately run schools but now back the clampdown, issued a public apology in a Swedish daily last month headlined "Forgive us, our policy led our schools astray".
In the early 1990s, parents were given tax-funded vouchers to pay for a school of their choice.
Private schools were allowed for the first time and could even turn a profit.
Britain has taken on board many features of the system, although it has stopped short of allowing publicly funded schools to make a profit.
Swedish school corporations also have expanded as far afield as India.
This year's demise of JB Education, owned by Danish private equity firm Axcel, was the biggest but not the only bankruptcy in Sweden's reformed education sector.
It stripped almost 1,000 staff of their jobs and left more than one billion kroner (HK$1.18 billion) of debt, mainly to banks and suppliers, as well as abandoning its students.
"I was furious," says Margarete Grugel, 56, whose 16-year-old daughter Tina had one week left of her first term of a hairstyling course at the JB school in Jonkoping when it folded. "Tina was absolutely shattered by it."
Axcel says mistakes were made. "Of course, we could have been better at managing the schools," senior communication adviser Joachim Sperling says. "Many of the schools were in bad shape and even though we knew that from the start, we did not manage to deal with the challenges in due time."
It is a cautionary tale in a market estimated to have been worth more than US$400 billion worldwide in a 2010 report by the International Finance Corporation.
With annual turnover in Sweden of roughly 20 billion kroner, according to a recent parliamentary study, education should be an attractive prospect.
But while some of the early players sold quickly at a profit, nowadays it is no cash cow.
One in four secondary schools is loss-making and, since 2008, the risk of insolvency has shot up 188 per cent and is 25 per cent above the average for Swedish corporations, says UC, a business and credit information firm. "Few sectors can show figures as bad as this."
Part of the problem stems from demographics, with overall secondary school numbers in sharp decline since 2008 and unlikely to recover to the past peak for a generation or more.
A lax regulatory environment is also to blame.
Sweden replaced one of the world's most tightly regulated school systems with one of the most deregulated, leading to scandals like the 2011 case of the convicted paedophile who set up schools quite legally.
"In the push toward freedom of choice, one lost sight of quality control," says Eva-Lis Sirén, head of Lararforbundet, a Swedish teachers' union.
Reuters


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Sweden is paying the price for pioneering state school reforms

Swedish Prime Minister Fredrik Reinfeldt visits a school west of Stockholm. Photo: AFP

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