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Pressure to reduce independent schools ownership by Private equity firms in Sweden

Wednesday, 04 January 2012
A lot has been said recently about private equity firms that own schools in Sweden and ferry most of their profits to tax havens. It looks like that is about to change after there has emerged increased pressure for them to lay their hands off lay private schools especially if their interest is on a short term basis.

One of those sources of pressure is from the Swedish Social Democrats party which is now saying that they want to stop the venture capital companies from owning companies that operate private schools in Sweden.

The debate about private equity firms earning hundreds of millions in Swedish schools is something the Social Democrats want to capitalise on and to put more pressure on the government to eradicate what is described here as sending welfare resources to tax havens.

The aim is to stop the owners with ambitions of quick profits from owning private schools.
Mikael Damberg's Social Democratic school policy spokesperson told radio Sweden that
“It's pretty easy to change the rules and say that the School Inspectorate has the right to say no to a short-term venture capital company that just wants to own schools for say five to seven years and then resell them. These types of owners we do not need in Swedish schools.”

The Social Democrats are not opposed to private ownership of schools in a profit making manner. But when profit margins are unusually large and the profits are high, that is where the worried starts, according to Mikael Damberg.

He wants to prevent private equity firms and so-called short-term owners who are looking to make fast money, from school ownership. The tool for that, according to him is the Swedish School Board. The authority has the power to say no to requests to start free schools.

In the future, Mikael Damberg wants the School Inspectorate to make an examination of the owner and new owner's ambitions. If they are judged not to be long term, they will be refused permission.

He is a member of the public inquiry which is considering how the Schools Inspectorate should be given more powers to determine how schools will be created in Sweden in the future.

The inquiry is also about whether the inspection will have to intervene against private schools where it is proved that the gains are due to poor quality teaching.

The debate about how some schools are emptied of hundreds of millions in profits has grown in recent years. Today, the Swedish Teachers' Federation has demanded that the government puts a stop to it.
Recently, Swedish Finance Minister, Anders Borg said that he wants to prevent private equity firms from going out of the country untaxed.

“It's good, it's a little too late, they would have acted earlier on the tax issue. But it's the wrong question. The big question is whether it is okay for these private schools run by private equity firm to take out huge amounts of profit from these operations? It is the main issue and that which Borg had skipped,” said Mikael Damberg.
By Scancomark.se Team

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