Local authorities are resorting to setting up John Lewis-style cooperatives in a bid to provide schools with vital support services after drastic cuts to their budgets.

Sandwell Council has become the latest town hall to set out plans for a non-profit-making cooperative, of which schools will be the majority stakeholders, after a 30 per cent reduction in funding.

The move follows a similar decision by Birmingham Council, which has proposed to move 3,000 of its staff to a schools cooperative after a decision by the council to make #163;300 million in savings.

According to the Local Government Association (LGA), the decisions by town hall chiefs to set up cooperatives are part of a growing trend across the country as councils attempt to fill the increasing void between schools and central government.

“Creating a cooperative is one of a number of ways to provide central services that would otherwise be under huge pressure because of government savings,” said councillor David Simmonds, chair of the LGA’s children and young people board.

Sandwell Council said its planned cooperative, called the Sandwell Industrial and Provident Society, would hire nearly 500 staff currently employed by the council if approved by a cabinet meeting next month.

Councillor Bob Badham, Sandwell Council cabinet member for children and families, said the project had already received encouraging feedback from headteachers, adding that it would be “good for jobs and good for schools”.

“The proposal is to place control of the services schools need into their own hands,” Mr Badham said. “Education shouldn’t be about making profit, so the industrial and provident society set-up ensures all the money made stays within schools.”

The new company will provide a range of services such as school meals, broadband, health and safety, and staff and governor training, on which schools in the area spend nearly #163;9 million a year. A shadow board of directors made up of heads, governors and council representatives has already been put in place, in preparation for the plans being given the go-ahead as expected.

Chris Evans, head of Moat Farm Junior School in Oldbury, West Midlands, and chair of the shadow board, said that if the project works it will give schools more control.

“Previously, the local authority would top-slice money from our budgets to take care of these services without us having much of a say. Now we will be the main stakeholders and so can be the driving force behind where we think things should go,” he said.

Birmingham’s transfer to a schools’ cooperative has been approved by the council and is in the process of being set up. If successful, Sandwell’s cooperative could even provide services to schools beyond its borders, potentially competing with other, private education providers.

The NAHT heads’ union described the move as the “acceptable face” of the free market at work within education. “It is a canny way of the council to keep employing staff, but that doesn’t mean it is a bad idea,” said Russell Hobby, the NAHT’s general secretary. “It is a very creative solution but it will all depend on the quality of the services. Schools will not buy into it if they are not very good, but then it is up to schools to shape that.”

But the NUT said it was concerned about how democratically accountable companies like Sandwell’s initiative would be. “The situation demonstrates the dilemma that the school system is facing nationally, where Michael Gove has made every possible effort to decimate the middle tier of education,” said Kevin Courtney, deputy general secretary of the NUT.

The plans are expected to go before Sandwell Council’s cabinet next month and, if approved, the company will open for business in January next year.

Missing ‘middle tier’

As local authorities face ever-shrinking budgets and more schools opt to become academies, growing calls are being made for the introduction of a “middle tier” between schools and central government.

Sir Michael Wilshaw, Ofsted’s chief inspector, and schools minister Nick Gibb have both acknowledged the growing void between Whitehall and the staffroom.

But for education secretary Michael Gove, the creation of a new “layer of bureaucracy” would simply “stifle” the innovative work taking place in schools.

In a letter last month to the Commons Education Select Committee, Mr Gove wrote: “As you will know, headteachers are rarely shy about voicing their concerns, but I’m yet to meet one worried about a lack of regulation.”