PRIVATE companies are lobbying the Government for the right top hire and fire teachers as ministers prepare to give them powers to runs state schools. Firms such as CfBT and Nord Anglia say their attempts to take over failing or unsuccessful local authority schools will be hampered if staff are not under their direct control. But ministers know they face an explosive response from unions if they give in to the demands.

As the Queen’s Speech confirmed plans to extend privatisation in education, chancellor Gordon Brown and education secretary Estelle Morris announced a major review of how an “enterprise culture” can be fostered in schools. Teachers will be expected to extol the virtues of business as a re-elected Labour Government embraces the private sector even closer. Mr Brown said he wanted “every young person to hear about business and enterprise in school... (and) every teacher to be able to communicate the virtues and potential of business and enterprise”.

Unions united in a campaign against the privatisation of schools and other public services, while private education providers said they believed they had won the argument to be given the right to employ teachers directly. Neil McIntosh, of not-for-profit CfBT, said: “They’ve already bitten the bullet on that one.”

Private companies, charities, churches and other faiths will be allowed to run both failing andsuccessful schools under fixed-term “standards contracts” which will be introduced in an education Bill later this year. As trailed in the schools Green Paper - Labour’s unofficial education manifesto - the city academy programme will be expanded before the first even opens, and it will be made easier to create new faith schools. A new category of advanced specialist school will be created. Heads of successful schools will be given greater control over pay, while pupils can expect an individually-tailored curriculum from the age of 14, with more vocational opportunities.

Unions and the General Teaching Council said the plans ignored teacher shortages. Graham Lane, chairman of the National Employers’ Organisation for School Teachers, warned ministers privatisation of the school system would lead to industrial action. Unison, the largest public sector union, launched campaigns at its annual conference this week against privatisation and the Private Finance Initiative.

And the TUC executive called for the “restoration of the public sector ethos”, saying Tony Blair had gone beyond pragmatism and embraced the private sector in principle.

Sir Howard Davies, chairman of the Financial Services Authority, will conduct the enterprise review. It will look at existing programmes, financial literacy and attitudes to business. John Dunford, general secretary of the Secondary Heads Association, said that schools would treat the review with contempt.