THE authority that runs London’s financial centre, the City, is discussing setting up a new school in the capital’s East End.

Hackney Council wants the Corporation of London - the unelected body that governs the Square Mile - to sponsor one of the first wave of the new “city academies” the Government hopes will transform inner-city schooling.

The corporation would put up up to 20 per cent of the cost of a new specialist science school in the borough’s Shoreditch area, which borders the City. The remainder of the cash would come from central government.

The school would be independent of, but work closely with, Hackney, which needs more places for local children.

The corporation would help run the academy and have places on the governing body.

Its spokeswoman said talks were still going on about the plan, but no commitment had yet been made.

Hackney’s chair of education, Ian Peacock, said the borough had a long standing need for more mixed secondary places. “A city academy would provide a fast, effective way of securing such provision,” he said.

Because of the demand for places, the Hackney academy would be a brand-new school. However, most of the initial city academies will replace existing, failing secondaries.

Education Secretary David Blunkett is expected to nnounce up to half-a-dozen “pathfinder” city academies next month, including at least two in London and others in the north-east of England.

As with many government initiatives, civil servants are working to a breakneck timetable - the proposal for city academies was only made in March.

The scheme will run alongside and have the same aims as the ailing Fresh Start programme - though, unlike academies, failing schools re-opened as Fresh Starts are run by local authorities.

The independent academies are modelled on the old City Technology Colleges; their progress will be keenly watched to see if the lessons of that controversial initiative have been learned.

The City of London has no secondary schools of its own, but has been developing an increasingly close relationship with Hackney. It is already involved in the borough’s education action zone.

Hackney has been keen to develop private-sector parterships since its education service was condemned as failing by the Office for Standards in Education.

The Government forced the council to hand over its school improvement and ethnic minority support services to private firm Nord Anglia, but it is now voluntarily looking for partnerships.

However the borough has high unemployment and few big firms who could be potential partners. The Corporation offers ready access to the huge wealth of the City and, perhaps more importantly, its expertise.