Private Eye on More Private Equity Firms in Government: Michael Gove Makes John Nash Minister

In my last post featuring an article from Private Eye, I discussed the Eye’s report that the then Tory health minister, Norman Lamb, appeared to be dimly aware that private equity firms actually weren’t very good at running hospitals and care homes. That didn’t seem set to stop them trying to increase such firms owning and running these services, and indeed it didn’t. Just a month later, in their issue for 25th January -7 February of this year, the Eye reported that Education secretary Michael Gove had appointed John Nash as minister. Nash is head of yet another private equity company. The Eye reported

Man in the Eye

John Nash

Education Secretary Michael Gove’s appointment of businessman John Nash as a minister suggests he wants private companies to be far more involved in running mainstream state schools.

Nash makes cash through his private equity firm, Sovereign Capital, which invests in higher education and training companies that receive millions for their poor performance on government contracts. Private firms are currently barred from investing in most state schools, but Nash’s new job might include opening up this market.

Given Sovereign’s record, this isn’t great news: it owns the private Greenwich School of Management, whose income from public funds has jumped to £22.6m – almost a quarter of the total going to private universities-since the coalition increased the number of private university courses funded by government-backed student loans (Eye 1330). Alas, when inspectors visited GSM in July student learning opportunities did “not meet UK expectations” and the college required “improvement to meet UK expectations”.

Meanwhile Sovereign’s website boasts of its backing for training firm ESG, which it bought in 2004. ESG training for the jobless was inspected five times by Ofsted between 2007 and 2009 and never received a single “good”. Inspection reports found “achievement and standards are inadequate”, a “low rate for job outcomes”, “slow progress in implementing quality assurance arrangements”, “insufficient resources in some centres” and “some poor learning resources”.

Despite this ESG won a £69m Work Programme contract from the Work and Pensions Department-and stumbled here too, failing to meet a 5.5 per cent minimum target for getting people into jobs. Sovereign says it sold ESG last July after it won the Work Programme contract, but documents at Companies House show Sovereign still owns about 20 per cent.

Press coverage of Nash’s appointment mentioned his investment in the Conservatives (he and his wife have given £300,000 to the party-and he now has a seat in the House of Lords and a government job!) but his Sovereign role wasn’t discussed because the Department for Education failed to mention it when announcing the appointment. The government did say Nash would step away “from all relevant business interests” while serving as minister. Sovereign Capital declined to comment.’

So the government is appointing yet another businessman from a private equity firm to oversee its privatisation of yet more state institutions. The private equity firm involved has an abysmal record in running those institutions it does possess. Its chairman is nevertheless rewarded for his persistent failure with a seat in the House of Lords, and position in government. It’s basically business as usual then, with the only difference being that this time it’s education that will suffer, rather than hospitals.

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