THE company which runs Leeds' education services will have to pay the city council pound;87,500 after failing to hit key performance targets.
Education Leeds missed five targets on exam passes and pupil attendance which could have earned it pound;17,500 each.
The company, owned by the city council and managed by Capita as part of a pound;3.7 million, three-year deal, is the second firm running failing local education services to be fined for not hitting targets.
Cambridge Education Associates, which runs education in Islington, north London, had pound;379,000 of its pound;600,000 annual management fee docked last year, after disappointing exam results.
Education Leeds had been paid in advance on the assumption it would meet at least 16 targets for the year to March 2002. But it only achieved 11 out of a possible 39. The value of each target has now been cut to pound;16,000, and from March 2004 will fall to pound;14,000, as part of the contract terms.
The performance targets are renegotiated annually and this year there are fewer relating to pupil performance. Council papers say that minimum targets for five good GCSEs and those for schools causing concern have not been included in the incentive scheme because of plans for a secondary reorganisation.
Headteachers wanted all the targets to be related to "organisational issues" which are examined by Ofsted as part of LEA inspections, such as strategy and special needs work, rather than to pupil performance.
The remaining pupil performance targets will be measured according to year-on-year percentage gains made by children compared to those in other LEAs, rather than, for example, actual exam performance.
This year 42 per cent of Leeds' 15-year-olds achieved five or more A* to C grades at GCSE, compared to a national average of 51 per cent. Results were much lower in inner-city schools, ranging from 9.5 to 23 per cent.
Council leader Brian Walker said there had been significant improvements and Education Leeds was making average progress.