Exclusive analysis conducted by the LSN shows the free schools project is going to be a very inefficient use of resources and will not, in all probability, raise standards. This is because the vast majority of free schools that are going to be set up will be small in size and our analysis of the Department for Education’s own spending data shows small schools (fewer than 700 pupils) are much more expensive to run and less successful academically than their bigger counter-parts. While a major selling point about the free schools scheme is that they are small, our analysis reveals that this is actually something that counts significantly against them, particularly in terms of being an efficient use of resources. For example, the average cost per pupil in Toby Young’s West London Free School during its first year will be £7000 more than the average cost per pupil in secondary state schools and this figure does not include the costs of actually setting up the school. Furthermore, our analysis reveals that smaller schools achieve worse results than their larger counter-parts. We can also show that the most economical solution to stop this waste and under-achievement would be to close a small school immediately if there were spare places in schools nearby; this would be the most fiscally prudent and best academic solution all round. Thus, this analysis is important for any new government to consider.

The truth is that small is not beautiful where cost is concerned. Our calculations show (spelt out in detail below) that many free schools are liable to cost thousands of pounds more than their larger maintained counterparts. Even this is a conservative estimate because this calculation does not “factor in” the costs of setting up school, which runs into millions (we have put a Freedom of Information request to the DfE for these figures). In other words, the total costs per pupil for our free schools are astronomical; the taxpayer will, in effect, be paying tens of thousands pounds more per pupil in free schools, compared with the costs per pupil in the maintained sector. It is a shocking and needless waste of money at a time when the government is claiming that it’s being fiscally prudent.

Let’s explain these points in more detail. Our number-crunching of the 2009-2010 data about schools shows that that smaller schools tend to be more expensive to run and attain worse results compared with larger schools. If you plot a graph of cost per pupil against school size, it shows a very interesting story. From the largest schools down to a size of about 700, the most efficient schools have similar costs per pupil. Even for these sizes, as the schools get smaller the range of costs increases (thus, the smaller the size the higher the average cost). But below a school size of about 700 – which most free schools will be — even the minimum cost increases, and it is of course there that you see the highest costs per pupil.

It also tends to be the biggest schools that do best in exams. A graph of FTE pupils against exam results (% achieving 5 GCSEs or better including Maths and English) shows two main groups: (a) a general mass of schools who have tend to have better results the bigger the school; (b) a smaller group of schools with outstanding results (90-100% success). Closer examination shows that this latter group is essentially made up of the selective schools, and that they tend to have 700-1400 FTE pupils and fewer than 10% free school meals; but that it makes little difference whether they are community, voluntary aided, voluntary controlled, or foundation.

If you run a linear regression (the process of fitting the best possible straight line through a series of points) of the cost of a school against its size, it provides a simple estimate which illustrates how much more expensive a small school is to run. A simple linear regression shows that 77% of the variance in the cost of a secondary school is accounted for by the number of pupils. The regression line follows the formula: Total gross revenue expenditure = 957,798 + (4435 times the number of pupils).

Thus, in round figures to the accuracy of the regression, the average running cost of a school per year is £1m, plus another £4,400 per pupil. This obviously means that the smallest schools are the most expensive per pupil. The DfE’s data base includes 2,960,878.5 FTE secondary pupils, educated at a total cost of £15.9 billion pounds. The average school size is 1,032 FTE pupils and the average cost of educating a child is £5,353 per year. According to the regression, a school with 400 pupils would cost £2.732m to run per year, an average cost of £6,829 per year. If in its first year it had only 60 pupils, as many free schools will do, it would in theory cost £1.224 million, a cost of £20,000 per pupil – nearly fifteen thousand pounds more than the average cost of a pupil. And that of course is before considering setting-up costs.

According to Toby Young, Year 1 of his West London Free School will have 120 pupils, which will cost the taxpayer £12,416 per pupil for next year — £7064 more than the average cost per pupil in maintained state schools. This cost per pupil does not include the cost of setting up the school, which will no doubt run into millions. Since we do not have the figures yet from the DfE we can’t calculate this fully. But judging by the costs of the Bolingbroke Academy, which is costing £14m to set up, this means that the cost per pupil in total in free schools will be astronomical in their first five years — at the end of which, of course, they could be closed down by a new government! Toby’s school will in the end be one of the more “economical” free schools because he is envisaging it admitting 840 pupils when it is full, which will be in seven years time. Most free schools will be considerably smaller and thus much less economical than his.

In other words, most secondary free schools will cost the taxpayer thousands of pounds more per pupil than their bigger maintained counterparts. Our calculations show that the most cost-effective way of solving this waste of money would be to shut down the school immediately (thus saving £1million straightaway) and allocating the pupils to the nearest school with places. This would, also in the long run, probably boost the results of the school with extra pupils because as we have seen bigger schools do gain better results on the whole.