Any government can set out on a journey of reform – the question is whether they can stay on course upon hitting turbulence. The coalition is entering this phase now. Its flagship reforms, universal credit and free schools, are encountering difficulty. We all know about the welfare problems, but not much attention has yet fallen on the nature of Michael Gove’s impending headache. I looked at this in my Telegraph column.

There are now 174 free schools in England, and by this time next year it’ll be almost 300. Statistically, some of these are going to have problems – and this is the test for the government. If you were a venture capitalist and backed 300 businesses, how many would you expect to fail? You’d be lucky if it were as few as 30. Gove does not pretend to have invented a formula for guaranteed education success – instead, he is simply inviting teachers and school groups to set up choice in the state system, and see how they get on. The test is not whether these schools stumble, but how they recover. And how quickly the problem is diagnosed.

Any day now, Ofsted will release its report in Britain’s first profit-seeking school, IES Breckland. It’s likely to be a dismal report, and I’d be surprised if it didn’t deliver the worst verdict (‘inadequate’). [Update: this has now happened.] So – proof of failure? Not quite. There’s more to the story, and it’s one I’ve been following for a while. For CoffeeHousers who are interested, here it is…

IES is Sweden’s no. 1 schools group, and Breckland was their flagship British school. They already worked out that things were not going right, so they dealt with it in the Swedish way. They sent over their chief operating officer, a Lancastrian ex-head teacher named John Fyles, to take over and recruit a new head teacher. Other staff changes were made. But midway through all this, a week before the new head teacher was about to start, Ofsted inspectors arrived. They had got wind that there was trouble, and in their 36-hour inspection found a school that was, to put it politely, in transition. With so many temporary staff, and a temporary head teacher, IES Breckland will have been a pretty depressing sight. The Ofsted report will be a snapshot of chaos in this transition period, rather than a snapshot of what it’s like now under the new head teacher. But one damning Ofsted report may well be enough to put IES’s British expansion plans on ice.

I visited to IES Breckland soon after it opened, shown around by a beaming Matthew Hancock, the skills minister. He’s the local MP and it was his idea for parents to open a free school. Breckland Middle School had been earmarked for closure by Suffolk County Council, as part of some bureaucratic reorganization. Parents protested, but Hancock told them they could do better. Under Gove’s system, parents simply cannot be pushed about by the council anymore. If the council doesn’t want to run a school, the parents have the power to find someone who will. The parents held a beauty parade, and IES won. The snag: IES is a profit-seeking school, and the government is technically against them. Nick Clegg went bananas, and said he’d veto any more profitmaking schools.

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IES started with two teachers, one who believed in profit and the other who didn’t. The one who didn’t is still running a very successful school in Stockholm, with a long waiting list to be manipulated by middle class parents. The one who believed in profit, Barbara Bergstrom, went on to make Internationella Engelska Skolan the biggest, most successful free school chain in Sweden. That’s what the profit motive does: it expands success. And deals quickly with failure.

The Breckland parents went to visit IES Enskede in Stockholm, as did I last week when trying to work out what had gone wrong with IES in Suffolk. You can see why the Breckland parents were impressed. It has 900 students of around 40 nationalities, but 100 per cent of its kids get the grades for pre-university sixth-form college. In a nearby comparable school, it’s 67 per cent. The Swedish average is 76 per cent. Overall, IES’s average is 98 per cent.