Government policy change 'hit Pearson's UK business'

Government policy change 'hit Pearson's UK business'

Pearson’s UK business was hit in 2013 by a change in government policy which meant only the first exam attempts of students would be counted in calculating school league tables.

The policy change, announced by the department of education in September 2013, resulted in significant numbers of students pulling out of Pearson’s November exams, which impacted on the company’s trade.

A Pearson spokesperson pointed out the problem following a second profit warning from the company last Thursday (23rd January), saying “trading and financial performance has been weaker than expected” over Christmas in both the US and UK. Operating profits were approximately £865m in 2013, or £735m after restructuring charges, which were below analysts’ expectations after the costs of restructuring exceeded previous guidance by around £30m.

The spokesperson told The Bookseller that while “most of the challenges have been in the US rather than the UK” the new government exam policy change had led to “a significant number of withdrawals for students who had already entered exams in November, and a number which may have usually entered obviously didn't” which the spokesperson said had had “a big effect” on the examinations side of the business. The company was also in a quiet period while waiting for the new curriculum to come out, The Bookseller was told.

While Pearson was not in position to discuss the impact of the Kirtsaeng Vs Wiley ruling and subsequent hike in textbooks' r.r.p on sales in the UK, the Pearson spokesperson said: “It's worth noting that the school education business in the UK is much bigger than the Higher Education business, so it will have far less of an impact on us in the UK.”

Pearson will expect to see restructure charges to continue into 2014, in line with previous predictions.

Meanwhile an independent advisory group supported by Pearson has published a report urging the government to radically overhaul the way the current school curriculum is developed to ensure it better meets the needs of the future economy.

The report, Making Education Work, follows a six month review of England’s education system by an Independent Advisory Group, consisting of prominent business leaders and chaired by leading academic Professor Sir Roy Anderson.

The report calls for a new cross-party independent body to be created, made up of teachers, employers, higher education and politicians from all political parties. The new group would establish a long term political consensus on the school curriculum and carry ultimate responsibility for its delivery and that it continued to be vested in the government.

Rod Bristow of president of Pearson UK, who was a member of the advisory panel, said: “Study after study has identified a clear skills gap in the job market which has the potential to grow even larger as the UK and global economy continue to change at a rapid pace. The global economy is telling us that knowing things is no longer enough. Employers want people who can do things too; practitioners who can think and thinkers who can act…This report sets out a compelling vision. The next step is to dig in to these findings and investigate how we can all play our part in making the changes outlined real.”