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Is this the future? Or will it be this?

Will local authorities prove to be the dinosaurs of the education world? Jon Slater opens a six-page special on how the privatisation creed has changed from heresy to orthodoxy.

AFTER half a century of a state-led status quo, private sector involvement in education is back on the agenda. The Tories' first tentative steps down the privatisation path have been followed by Labour's self-confident march.

Education action zones have been introduced with the aim of harnessing business's help to improve education in under-

performing and deprived areas. The renamed public-private partnerships (formerly the Public Finance Initiative) have been used to tackle Britain's school buildings. And two years after the Labour victory that many of them had long hoped for, local education authorities are staring privatisation in the face.

So far it has been a quiet revolution. The left's traditional opposition to private involvement in education has been trampled in the Blairite rush to "modernise" public services. Pragmatism - "what works" in new Labour speak - has beaten principle.

This is partly because ministers' deeds do not always match the spin. While action zones are still bedding down, they do not look like living up to the hopes of those who saw them as a private sector-led alternative to LEAs. Companies have got involved, but the overwhelming majority so far are junior partners in zones led by local authorities.

And although public-private partnerships in education are growing, the scheme has not been as successful as in other areas - notably the health service.

But looking at what has happened in the London boroughs of Hackney and Islington, councils can have little doubt that if they fail to deliver high-quality education services the private sector will be given a chance.

As Prime Minister Tony Blair told The TES last week: "If we've got local authorities not doing their job, we've got to find ways of making sure the job is done differently."

Of those authorities inspected by the Office for Standards in Education so far, about a third have been found to have some weaknesses and around a sixth could be considered "failing".

Inspectors' assessment of the extent of poorly-managed services is underlined in a survey carried out by The TES which shows a third of secondaries are dissatisfied with the services they currently receive (page 23).

With 150 LEAs in England, the potential market if private companies pick up where the LEAs have failed, is considerable. Capital Strategies, a corporate finance house, has estimated it at pound;500 million.

But allowing companies to take over the functions of failing LEAs is only the start. This will change in April when the Best Value legislation (Labour's replacement for compulsory competitive tendering) comes into force. It will require councils to review services and consider if they are being provided in the best way. This will mean councils being forced to consider if services such as inspection and advice and school improvement should be privatised.

Councils hoping to dismiss contracting out will get a rude awakening. OFSTED is expected to report on how well authorities meet their new statutory duty when they inspect.

Ministers are also likely to apply pressure. They talk of creating a new market in education services and of bringing fresh talent and attitudes into the system.

Just before Christmas, schools minister Estelle Morris told the House of Commons select committee: "An ideal situation would be where LEAs decide on their own to bring in contractors for certain services because it is in the best interest of their schools."

This does not mean the end of local authority involvement in education. Instead of providing services to schools, local authorities will act as a pocurer of services - awarding contracts to the companies. However, councils will retain legal reponsibility for their services. A model for this evolving system can be seen in the arrangements currently being established in Islington (page 25).

Opponents of change will be dismayed at the increasing acceptance by policy-makers, of a place for profit-making in education.

And while accepting a place for the private sector in the school system, Phil Willis, Liberal Democrat spokesman for education believes LEAs should be given the chance to improve themselves.

"We have seen LEAs kicked from pillar to post over the past 15 years as services have been taken away from them. My great criticism is that the Government is in danger of throwing the baby out with the bath water. What can the private sector bring that LEAs can't do themselves? The expertise actually lies within LEAs," he said.

But the Local Government Association takes a more relaxed view. "We don't have a problem with private-sector involvement. The days when local government was run entirely in house disappeared about 20 years ago," said Neil Fletcher, education officer at the LGA. "But local government would expect to stay in charge, to decide when and at what price services are contracted out. Some of the discussions concentrating on failing LEAs have been unhelpful. There has not been a single statutory intervention - everything has been done with the agreement of authorities."

Supporters of private-sector involvement argue that the public doesn't care who provides the service or whether they make money out of it as long as standards in schools rise.

They point to two key advantages which will help this happen. Removing the conflict LEAs face between their role as service providers and their role as employers. And the chance for schools to benefit from private sector expertise.

For the strongest supporters of the private sector, the Government is not going far enough. They would like to see schools dealing directly with companies - with local authorities stripped of any role in education. "The Government's proposals for LEAs are misguided. Councils are part of the problem. Even if you privatise the services you'll still have the lunatics in charge of the asylum," said Professor James Tooley, a leading advocate of private sector involvement.

He has been involved with 3Es education company which has taken over the running of Kings' Manor school in Surrey. Professor Tooley would like to see individual schools working in partnership with firms who would provide support services.

The Government's Fair Funding' regime - which gives schools greater scope to buy in non-LEA services - may have brought the dream of right wingers such as Professor Tooley a step closer, but ministers - despite backing the Kings' Manor experiment are still keen for local authorities to have a role. Under the new dispensation, private-sector involvement is likely to be LEA-wide rather than with individual schools.

However, it is a much reduced one. If ministers get their way, over the next few years education services will be provided increasingly by private companies. The LEA with act solely as a buying agent for local communities and schools. In his TES interview, Mr Blair said the Government wanted to develop a group of private-sector providers "that are able to come in from outside" whenever LEAs fail to deliver.

This will be an anathema to many in local government and perhaps most of all in Labour-run city councils where concern about poor standards of service is greatest. But councillors realise that fighting against the combined forces of Tony Blair, Education Secretary David Blunkett and chief inspector of schools Chris Woodhead could lead to them losing the powers they have left.

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