James Ashton: A cautionary lesson? Sweden’s technical edge under threat after education reforms

Some think fees for foreign students are having a detrimental effect
  • @mrjamesashton

Other than the mildest, snow-free winter for decades, dinner-party conversation during a new year break in Sweden was dominated by the country’s education system.

An awful showing in last month’s Pisa results – the OECD’s triennial global measure of reading, maths and science standards among 15-year-olds – sparked a debate that is sure to last until the country’s election in the autumn. Here is the free schools model that has been seen as a solution to Britain’s own education ills. The standard of English spoken by Swedes is exceptional by European standards, but it is youngsters’ grasp of maths that worries parents and university leaders most.

The country has become one of Europe’s hi-tech centres in the last decade because its colleges churn out bright, computer-literate graduates. Now, its open-door policy means the state is groaning under the weight of Iraqi and Somalian refugees who call Stockholm or Malmo home.

One technology entrepreneur I met said his industry lost its edge a couple of years ago when fees for foreign students were introduced at Sweden’s technology-focused colleges, to the benefit of Germany and Estonia, which has lured them instead.

The country is still capable of creating clever companies that have going global written into their DNA – no surprise in a country with just 9 million people. Skype, Spotify and Unibet, a gambling group that quietly employs hundreds of people in south-west London, all have Swedish roots. Many of their peers locate in London when the time comes to raise serious money. The many sources of finance here are one reason why Silicon Roundabout is prospering.

The latest Swedish prospect is Magine, a service that pipes programmes from the TV schedule on to tablets and smartphones, a little reminiscent of how Spotify’s streaming service deconstructed listening to music.

Will Sweden retain first-mover advantage in future? The British Government, which let universities hike tuition fees in 2012, should keep close watch.

Peer-to-peer lenders sense the start of a brave new world

This could be the year when peer-to-peer lending grows up. From April, outfits such as RateSetter, Zopa and Funding Circle, which claim to be filling a gap left by reticent banks, will start to be regulated.

It means that people who lend in a bid to make a better return on their money than that offered by rock-bottom interest rates will be a given a cooling-off period. The individuals and small firms that borrow from them, instead of the banks, will be able to withdraw from deals without penalty.

For his part, Samir Desai, the boss of Funding Circle, can’t wait to follow the new rules if it gives his company greater legitimacy. When we met in his crowded basement office off Fleet Street, it was striking to hear him spell out ambitious plans. After starting up in mid 2010, Funding Circle has just passed the £200m mark for total loans granted. When you consider that anything from £7bn to £14bn is lent to small businesses every month, its £16m monthly run-rate is a drop in the ocean. But Mr Desai foresees the day when he could be lending billions, not millions.

As well as regulation which he believes can help his cause, another step-change will come when he can persuade institutions to invest through him. Unlike retail backers, they will be happier to see their funds put to work internationally, which explains why Mr Desai is spending one week in three in America after opening up shop there too.

Be careful what you wish for with the big supermarkets

After a discount Christmas, the bright spots for the retail industry, especially the supermarket chains, came in the form of improving convenience-store trade and online deliveries.

There is a certain irony that careful consumers are putting less in the baskets on the weekly shop, only to be caught short by the end of the week and forced into local top-ups that are invariably more expensive. While they are happy to capture more of these last-minute dashes, supermarket bosses must put their thinking caps on as to how to keep big-box stores busy too.

Footfall at out-of-town centres is holding up better than on most high streets, but it is all relative. Tesco chief Philip Clarke, who reported that his larger stores had been quieter, is already giving over space to coffee shops Harris + Hoole and family restaurant chain Giraffe to lure in shoppers.

Meanwhile, Kingfisher has sub-let half of its B&Q store in Kent to Asda – one of 18 outlets where it is in talks with planning authorities to share with someone else. Boss Sir Ian Cheshire believes he can retain  80 per cent of the sales with half the space in some locations, which can do a lot for profit when rent, rates, heating and lighting costs are taken into account.

The space race is over. With the trend for smaller stores and, more markedly, a continued boom in internet shopping, it can’t be long before retailers close some of their large-format stores instead of just curtailing new openings. Would the communities who campaigned against their arrival celebrate or commiserate if Tesco chose to leave?