Taxpayers may have to pay a bill of up to pound;17 million for penalties incurred under a PFI contract if plans to close the East Brighton College of Media Arts go ahead.
Comart, as it is known, has been fighting a losing battle against low grades, truancy and falling rolls for years. A struggling, unpopular school in one of Brighton's most deprived estates, it had already been closed and re-opened under the Government's Fresh Start programme in 1999.
The pound;1m investment failed to stop the school slipping into special measures - a tag it managed to shake off last year. It was plunged into further difficulty in this March when "superhead" Jill Clough retired through ill-health, prompting the appointment of its fifth head in as many years.
Comart's inclusion in a pound;105m PFI deal to regenerate four schools in the city was expected to give it much needed stability. Brighton and Hove city council anticipated the school would grow to take in more than 900 pupils. But in May the council decided the school was untenable. It said rolls had continued to fall and GCSE results failed to improve. It wants to shut Comart in 2005.
However, the school's involvement in the 25-year PFI deal complicates matters. The private contractor Jarvis only completed a pound;2.5m redevelopment of Comart in the summer and moved in last month to start running non-education services.
The city council will face a massive fine for costs already incurred and future loss of profits if Comart shuts and the buildings are not reused for education purposes.
Keith Taylor, the Green party convenor on the council, said: "The council has had its fingers badly burned. Some estimates for the penalty are as high as pound;17m. That is money we do not have."
Elizabeth Rylie, the council's assistant director for children, families and schools, said the deal covering the three other schools in the city was not affected by Comart's closure and talks were underway with Jarvis over the possible renegotiation of the contract. She said it was possible Comart could become a 14 to 19 centre, offsetting the threat of a fine. Jarvis refused to comment on the possible closure, saying it was a matter for the LEA.